Home sales soared in the Washington area last month as people closed deals in advance of the original Nov. 30 deadline for the federal tax credit for first-time buyers.
Real estate watchers expect that trend to continue through this summer thanks to the newly extended and now expanded tax break. Prices may not recover much, however, as another jump in foreclosures — fueled by properties already in arrears — is expected to hit in 2010.
The number of homes valued between $100,000 and $5 million that sold in Washington in November almost doubled to 620 from the 313 properties that sold in November 2008. That’s also up from the 582 sold in October this year, according to Rockville-based Metropolitan Regional Information Systems, which tracks real estate data.
In the Maryland suburbs, 923 Montgomery County homes sold in November, up 74.8 percent from the same month last year and just below the 942 properties that traded hands this October. There were 632 home sales in Prince George’s County last month, for a jump of 89.8 percent month over the prior year and 11 percent below this October.
“We’re seeing things start to recover thanks to the drop in prices, thanks to the federal tax credit and thanks to the [Prince George’s] county mortgage program,” said Realtor Don Frederick with Re/Max United in Upper Marlboro.
He said the Temple Hills market where he specializes — which has modest homes that often attract first-time buyers — has shown a rebound in recent months. Part of the reason is that Prince George’s County in July started its Down Payment on Your Dream initiative, which offers up to $20,000 in down payment and closing cost help to buyers of vacant, foreclosed properties.
Temple Hills seemed in free fall recently, with average prices of homes sold in September down by 30.9 percent in September over the prior year and down by more than 40 percent in October. But the number of homes sold last month almost tripled to 29, up from 10 last year, and prices fell only by 21 percent.
“Now we see three or four offers on each property,” Frederick said.
In Northern Virginia, sales increased by more than 42 percent to 1,567 over November 2008; just below the 1604 homes sold in October 2009.
In Virginia’s outer suburbs, which were hit first and worse by the original crash in subprime mortgages in 2007, the rebound also gained strength. In Loudoun County, the sale of 391 homes marked a 23 percent increase on an annual basis and was down 6.9 percent from October.
The big exception in the generally improved market was Prince William County, where 651 homes sold — a drop of 29.9 percent in November from the previous year and 8.8 percent from October. There was a 14.4 percent increase in average sales price over the prior year, however, continuing an upward trend and suggesting that the market has reached its bottom.
“Prince William is clearing it out, primarily due to low prices,” Realtor Barb Northam, an associate broker with Re/Max Choice, wrote in her market report. She noted there was now a 3.5-month inventory of homes, which is generally a tipping point in favor of sellers.
Locally the foreclosure picture has moderated, with foreclosure activity dropping again in November in the worst-hit areas of Prince William and Loudoun counties. Foreclosures fell by 4.4 percent statewide in Maryland from October, but the number is up 83.6 percent from November 2008.
In Montgomery County, foreclosures more than doubled to 952 last month over November 2008, RealtyTrac reported. That, coupled with 2,089 foreclosures in Prince George’s County, helped keep Maryland the nation’s ninth-worst state for foreclosures.
Foreclosures are also expected to surge again in the coming year as lenders begin to take back tens of thousands of homes with mortgages already in default (see accompanying story). Such an uptick in distressed properties would likely keep prices down or force them lower still.
But Bob Frederick sees a glimmer of hope in that the number of mortgage defaults is forcing more banks to be more flexible.
“Banks now seem more willing to try to work out loan modifications,” he said, “or they are approving more short sales rather than forcing foreclosure.
“They see that is to everybody’s benefit,” Frederick said. “We are all part of a community, and it’s better to work through this in an orderly fashion.”
