Spurred by the pending demise of the federal homebuyer tax credit, buyers are awakening from their snowy winters’ nap. Reports from agents and brokers across the county suggest February and March sales are picking up as buyers realize credit has just six weeks to go.
Mortgage applications rose last week for the second week in a row, led by an increase in purchases that may be another indication the homebuyer tax credit is starting to invigorate demand. The Mortgage Bankers Association’s index increased 0.5 percent in the week ended March 5. The MBA said purchases climbed 5.7 percent, while refinancings fell 1.5 percent.
However, field reports confirm that move-up buyers are evidencing little interest in the $6500 credit, which is worth about two percent of the average purchase price for current homeowners who want to buy a new home. The amount is apparently not large enough to create much of an incentive for many homeowners who are handcuffed by negative equity or who don’t believe they can sell their homes in the current market.
In Charlotte, North Carolina the market is picking up, thanks in large part to the looming deadline for receiving first-time home-buyer tax incentives. Local realtors say more people are buying homes, taking advantage of lower-than-usual interest rates and the credit.
“Financially, I don’t even know if I’d be able to do it without that, so yeah, it’s definitely the reason I’m buying,” a first-time buyer told the Charlotte News-Observer.
In February, 49 more homes closed compared to February 2009. “We’re up 14 percent in pending sales from the previous year, so that’s a real strong indicator of what’s happening,” said Lyn Kessie, the president of the Charlotte Regional Realtor Association.
Sales were also up last month in the Des Moines, Iowa metro area. More contracts were let in .ny February since 2006. February pending home sales were 25 percent higher than a year earlier and 33 percent higher than in January. February’s closed sales rose 3.4 percent over a year ago and 18 percent over January sales.
“I think we’re over the worst of the housing market downturn,” said Joanne Mangold, president of the Des Moines Area Association of Realtors, told the Des Moines Register. “We suffered with the rest of the nation … but I think the tax credit momentum will help carry us into a more normal summer and fall markets.”
Home sales in Lafayette, La. remain flat, but real estate agents are confident the market will heat up during the spring and summer months.
While homes aren’t selling as fast as they did from 2005-07, Lafayette hasn’t experienced the same drop in values as other markets.
“We’re stable,” said Jim Keaty, broker of Keaty Real Estate in Lafayette. “We’ve still got lots of people coming into the market, and we’ve got a lot of people moving up.”
In Covington County, Ky. home sales were up more than $1.1 million in February when compared to the same period in 2009 - a sign local Realtors say is “encouraging.”
“So far this year we’ve sold nearly $3.5 million in residential sales, compared to $2.39 million this time last year,” said Tripp Bass of the Bass Agency.
According to Bass and Covington Association of Realtors president Debra Donaldson, the majority of local Realtors are seeing more activity in the housing market - a fact they attributed to two things.
“February and March have seen most of the transactions, and some of that could be from people getting their tax refunds,” Donaldson said. “We are also seeing a lot of people who are wanting to buy before the April 30 deadline (to take advantage the homebuyer.
In Redlands, Calif., Local home sales are holding steady, and some Realtors say there is more business because of the new homebuyer tax credit.
“We’re seeing a lot more activity - sales are picking up,” said Carol Meulenkamp, broker-owner of The Real Estate Group on West State Street.
“Of course, the main sales are in the lower end, but a lot of buyers are looking to take advantage of the tax credit at this time,” she said.
Century 21 Lois Lauer agent Shirley Harry said agents have not seen the rush they thought they would, but sales have been consistent except two years ago, “when we all died.”
“It’s picked up nicely,” she said. “It’s not going leaps and bounds and we’re glad about that because that makes things unaffordable for most people. But it’s nicely inching up.”
“The outlook is for steady improvement,” said Dave Coy, president of Redlands-based Century 21 Lois Lauer. “I can’t put my finger on it, but we’re starting to see things loosen up a little.”
Greater Nashville, Tenn. saw an increase in home sales in February, according to the Greater Nashville Association of Realtors, the fifth consecutive month of year-over-year increases. There were 1,614 sales pending at the end of the month, compared with 1,452 pending sales a year ago. Inventory ended slightly up, at 23,159, compared to 23,122 in February 2009.
”With median residential prices virtually the same as last year, median condo price down slightly and interest rates still remarkably low, the overall market remains stable with some cause for optimism as people take advantage of these conditions,” said GNAR President Lucy Smith. “It was expected that the market would stabilize after the significant increases in closings at the end of 2009 due to the tax credit deadline. But, with the next deadline at the end of April, it is reasonable to think that we could see another burst of activity in spring and early summer.”
North Texas is one of the few areas reporting a drop in sales. They fell 5 percent in January and February, the third month in a row that sales by area real estate agents were down from a year ago.
“If we don’t see significant pickup starting in March, then the credit likely isn’t going to have much impact on the housing market at all, and overall recovery will be slower and dependent on general economic improvement,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M. “If this situation exists and the sales numbers continue to slide from last year, we’re in for a very difficult year.”
Gaines said he hopes to see the first results of the expanded homebuyer tax credit show up in this month’s sales figures. The federal program provides up to an $8,000 tax credit for first-time buyers and as much as $6,500 for other purchasers who qualify.
“If the credit helps at all, the percentage increases should look pretty good as they will be compared to the same months last year, which typically were not very good,” he told the Dallas Morning News.
Contra Costa, Calif. Is seeking sales pitck up and the credit was one of a number of reasons he bought, Taylor Heanue, a 34-year-old mechanical engineer, told the Contra Costa Times. “The interest rates being low played a big part in our decision as well. Another factor is the housing market. It’s a good time because of the prices,” he said.
“One of the reasons the first-time buyer credit is so appealing is that people are not wiped out of their savings,” said David Kerr, a Realtor with Zip Realty who helped the Heanues find their home.
As far as the repeat-buyer credit, Kerr has not seen many people use it. For it to be practical, someone has to either have substantial equity in their existing home or substantial savings on hand to help swing the loan on the replacement home, he said
“What I’m seeing is that the (tax credit) is not a make-it or break-it for people,” said another Realtor. “Nobody in my pool of preapproved buyers is basing a home purchase solely on the tax credit, but every single one of them knows about it and is very motivated by it.”
In Rutherford County, Arkansas they take housing seriously. Local community leaders have banded together to try to jumpstart the housing industry with the SmartMove Campaign.
“We’ve lost thousands of jobs in the homebuilding and construction industries since the recession began,” said Bill Jones, Chair of Destination Rutherford, a program of the Rutherford County Chamber of Commerce focused on economic development.
The Chamber and Destination Rutherford, in partnership with the Middle Tennessee Association of Realtors and Rutherford County Homebuilders Association, launched SmartMove today.
“The purpose of the campaign is to stimulate and remind those who are thinking about buying their first home or moving up into a new home to act now, especially while unprecedented tax credit programs are still available to ease their way into a new house,” Jones said.
The SmartMove program will culminate April 10 and 11 with a SmartMove Homes Weekend event, featuring consumer education seminars on many aspects of how to buy a home, a trade show and open houses at homes for sale.
The SmartMove program will use advertising and publicity to provide information about not only the federal Homebuyer Tax Credit Program but also additional loan programs that are available to homebuyers, including loan programs from the City of Murfreesboro, the Tennessee Housing Development Agency, the United States Department of Agriculture Rural Development and others.