It is always difficult to discern what the real estate statistics for the first 6 months predict for any particular year.
This year, the end of the federal home buyer tax credit was a wild card. Buyers who put a home under contract before April 30, and closed before the end of June were eligible for up to an $8,000 benefit.
Although the expiration of the tax credit was expected to prompt a drop in home sales, the actual numbers were dramatic.
Following the expiration deadline, the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI) dropped 33.3 % for homes put under contract in May of this year compared with May of 2009. (Using seasonally adjusted figures, the drop was 30%).
Chief economist for NAR, Lawrence Yun, believes that home buyers rushing to buy homes before the expiration, meant that the high April figure “borrowed” from what would have been May demand, and that sales figures will re-adjust. Critics say that this is industry happy talk.
Vermont real estate experienced a similar uptick followed by a plunge Northern New England Real Estate Network (NNEREN) Multiple Listing Service (MLS) statistics record that 496 Vermont homes went under contract in May of 2009, as compared with 349 homes during May of 2010: A drop of almost 30%, similar to the national figure.
For Windham County, 49 homes went under contract in May last year, as compared with 23 in May this year: A 53% decline. For June this year compared with June a year ago, the number fell from 43 to 37, a dip of just 14%.
One optimistic sign is that, even with the downturn in May and June, the total number of homes going under contract in Windham County for the first half of 2010 was up — if only slightly — compared with the same period last year. From January 1 to June 30 of this year the number was 249, up from 231 last year: a 7% rise.
Although the tax credit expiration is an anomaly which makes it difficult to interpret real estate demand; other figures are unambiguous: Home sales are up, prices are up.
During the first half of 2009 in Windham County, 194 homes closed at a median price of $185,500; for the same period this year 242 homes sold with a median price of $195,500, which is a 5% increase.
Of note is that, despite higher sale prices this year, asking prices were lower. Last year the median asking price was $207,000, but this year the median asking price was $200,000.
Look at those numbers… they should raise eyebrows! It shows that during the first half of 2009, homes in Windham County typically sold at $21,500 below asking price. During the same period this year, asking prices were more reasonable so that, on average, a concession of only $4,500 was sufficient to clinch a deal.
Reading the tea leaves, it appears that sellers are pricing their homes more realistically so that there are fewer deadlocks and more successful transactions.
[Real Estate Roundup is updated twice weekly, so you may want to bookmark this page.]
Tags: tax credit