Washington-area home sales saw a significant increase in April, driven in part by buyers seeking to take advantage of federal tax credits. The question is, will the brisk pace continue?
There was a 25 percent jump in the number of homes sold in the metro area in April 2010 compared with the same period a year ago, according to the Metropolitan Regional Information Service, the region’s service for listing homes for sale.
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Meanwhile, homes sold faster and for more. The number of days properties stayed on the market dropped by more than 26 percent, and the average sales price jumped by nearly 4 percent, said David Charron, MRIS’s chief executive officer and president. The biggest sellers were houses priced between $200,000 and $350,000, Charron said.
Nationwide, the National Association of Realtors said about 4.4 million Americans benefited from the tax credit, which offered up to $8,000 for first-time homebuyers and up to $6,500 for some repeat homebuyers. About 900,000 buyers — who all had to have a ratified contract in hand by April 30 — made purchases they might not otherwise have made because of the tax credit, NAR numbers show.
Stephen Fuller, director of the Center for Regional Analysis at George Mason University, said he expects a slowdown in real estate — but still robust activity — in the coming months.
“There is going to be some softening of pricing and slowing of sales,” he said. “Eager buyers have already bought. … Mortgage interest rates are still around 5 percent, which is good.”
Offsetting low interest rates is the return of rising prices in some areas, which could encourage some homebuyers to get moving. Many areas of Northern Virginia have seen double-digit price increases, while price increases were around 5 percent in most other Washington-area communities, Fuller said. The Northern Virginia Association of Realtors reports the average price increase was 12 percent in April and 12 percent year-to-date.
Nate Guggenheim, a Realtor with Coldwell Banker in Georgetown, said he and business partner Anne Savage did a “huge amount of business” on properties under $729,000, the FHA loan limit for the area, in April. Many buyers in that price range were first-timers.
“I would say [the tax credit] significantly improved the market for the last four months,” Guggenheim said. “Right now, we have 15 properties under contract and have closed 17 so far this year. We usually don’t have that kind of volume until later in the spring.”
Guggenheim said the next few months will determine whether the effect can continue.
“I think the tax credit acted as a Cash for Clunkers in real estate,” he said, referring to the program for car trade-ins that offered a temporary boost for car dealers last year. “A lot of people entered the market based on the credit.”
Guggenheim predicts a healthy market for both buyers and sellers this summer. He said most downtown D.C. ZIP codes are seeing homes selling for about 2 percent less than asking price. He is also seeing multiple offers in popular neighborhoods such as Chevy Chase and American University Park, and in the up-and-coming LeDroit Park neighborhood, where buyers can still get a Victorian row house for under $500,000.
Charnella Rosenthal, a Realtor with Long & Foster’s College Park office, said the market has slowed a bit in the Maryland suburbs, but is still brisk.
“It was crazy before the tax credit expired,” she said. “But people are still out there looking. Rates are good and prices are good. It is encouraging.”
