LOS ANGELES – Home sales surged in the Western region of the country last month as many first-time homebuyers rushed to complete their deals before a temporary tax credit expires next month, according to two reports released Friday.
Sales in the 13-state region rose 5 percent from September a year ago, according to the National Association of Realtors. Foreclosures and other financially distressed homes continued to dominate transactions in some parts of California, Arizona and Nevada. That dragged the median price down 15 percent to $219,000.
Nationally, sales posted an 8 percent annual increase in September, without adjusting for seasonal factors. The median price fell about 9 percent to $174,900.
Many buyers zeroed in on those bargain-priced properties with an eye toward reaping a federal tax credit of up to $8,000 for first-time homebuyers. To qualify, transactions must be complete by Nov. 30.
As Congress debates whether to extend the credit, sales will likely slow in coming weeks once buyers can no longer take advantage of the incentive, said Sung Won Sohn, an economics professor at California State University, Channel Islands.
“I expect December home sales to be falling off quite a bit,” Sohn said.
An extension of the tax incentive would likely continue to help spur sales of homes in the lower-end of the market. But it wouldn’t address a lag in sales of more expensive homes, which are out of reach for most first-time buyers, Sohn said.
“Unfortunately, I think it’s going to take not months but years for the housing market to (recover) fully,” he said.
Several major Western metros registered sales increases last month, according to The Associated Press-Re/Max Monthly Housing Report, which tallies all home sales in the metropolitan statistical area by all real estate agents, regardless of company affiliation.
Las Vegas, Phoenix, Honolulu, San Francisco, San Diego, Portland, Ore., Albuquerque, N.M., and Boise, Idaho posted an annual increase in home sales in September. While Denver, Los Angeles, Seattle and Anchorage, Alaska, all saw sales drop last month from year-ago levels, according to the AP-Re/Max report.
Las Vegas has been one of the hottest markets this year and it showed little signs of slowing in September. Sales soared more than 32 percent compared to the same month last year, according to the AP-Re/Max report.
The median sales price tumbled about 33 percent from September last year to $125,000, and was about 3 percent above the median asking price.
“A lot of the properties that are coming on the market are selling for more than they’re listed for, because there are multiple offers,” said Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev.
Investors, which have been snapping up foreclosures in Las Vegas since last year, appeared to pull back last month, Herwick noted.
The home buying rush has put a dent in the supply of bank-owned homes on the market and that’s leading more buyers to pursue short sales, where the sales price is lower than the mortgage balance.
Meanwhile, there’s been a pickup in traditional home sales. “There are slightly more regular sellers who have equity, who I guess are accepting the market, accepting that prices are not going to jump back to 2005-2006 levels quickly and are going ahead and putting their properties on the market,” Herwick said.
The bidding wars over bargain-priced properties and the first-time buyers’ race to qualify for the tax credit has created a frenzy in some parts of Southern California. The heightened competition posed a challenge to first-time buyers like Aldo Martin of Covina, Calif.
Martin, 28, put offers on 16 different houses since early September before reaching agreement with a seller this week on a three-bedroom, two-bath house in Fontana, about 50 miles east of Los Angeles.
“We’d go look at eight houses and if we liked five of them, make offers,” said Martin, a sales supervisor. “Your odds are better. We got aggressive.”
Most of the houses Martin and his fiancee put bids on were bank-owned, including the one they now hope to enter escrow into this week. It was listed at $235,000, but Martin offered $259,000.
“This was the first one where we got a deal,” Martin said. “So we’re going to go with it and that way we can close in time for the credit.”
John Kindschi of Marysville, about 34 miles north of Seattle, was among those first-time buyers determined to beat the tax credit deadline clock.
After a yearlong search that included a nine-month wait on a short sale that didn’t pan out, the aircraft mechanic bought a 1,064 square-foot, three-bedroom house for $206,000 last month and completed the purchase last week.
“It was getting down to crunch time and we were still trying to find the house and November was right there,” said Kindschi, 33. “We had no idea if the credit was going to be extended for another year. You hear rumors, but nothing’s confirmed.”