Bounce in Hampton Roads home sales hints at market reaching bottom

First-time home buyers and investors waded into the housing market looking for deals in May, pushing sales of existing homes higher again in South Hampton Roads, according to a report released Monday.

Real Estate Information Network Inc. released data showing that 963 homes sold last month, up 14.5 percent from April but 3.6 percent below the number sold in May 2008.

The number of homes sold last month was down by its narrowest margin in more than year, offering a glimmer of hope that the local housing market might be reaching a bottom.

Sales volume year-to-date is down about 15 percent in South Hampton Roads, according to the Virginia Beach-based multiple listing service.

The service also reported the median sale price in May was $219,900, up 2.3 percent from $215,000 in April but down 2.3 percent from $225,000 a year earlier. The median is the point at which half the prices are higher and half are lower.

Spring and summer months are typically the strongest for home sales, and prices usually rise over their winter levels.

John Terlaje was among the first-time home buyers last month. The 47-year-old and his wife, Carol, had rented in Norfolk for five years.

"We kind of waited until our credit rating got up to the point so we could get the best interest rates," he said. "That all happened when the housing market started falling."

The couple spent four months looking before finding a three-bedroom Norfolk home listed by an owner who needed to sell quickly. The Terlajes purchased the home off Granby Street near Norfolk Naval Station for $205,000.

"We were looking for deals, something well within our budget of $250,000," Terlaje said. "And I think we found the perfect house for us."

First-time home buyers are a driving force in the local market, said Dorcas Helfant-Browning, CEO and managing partner of Coldwell Banker Professional, Realtors. "It's folks who thought they couldn't afford a home, but are taking advantage of the tax credit and interest rates," she said, referring to the $8,000 federal tax credit for first-time home buyers.

Home sales at the lower end of the market typically result in homeowners moving up and spurring sales in the higher price ranges, she said. However, based on what she's seeing and hearing from her agents, many of the homes sold in recent months have been vacant, either because of foreclosure or owners who moved but couldn't sell immediately, Helfant-Browning said.

If true across the market, that would result in fewer homeowners trading up to homes priced between $215,000 and $510,000. Homes in that price range make up the largest segment of standing inventory in Hampton Roads, with about 8,500 listings.

Investors have also returned to the market, hoping to turned foreclosed or distressed properties into rentals, Helfant-Browning said. Homes that had been foreclosed on accounted for about 19 percent of the sales last month, according the multiple listing service.

Virginia Beach was easily the strongest market in South Hampton Roads last month, with 430 sales in May compared with 433 sales a year earlier.

James Koch, an economist at Old Dominion University, called sales figures from last month a positive sign.

"We need to see this for a couple more months to call it the bottom," he said. "My sense is we still have a ways to go. I would expect to have lower sales this year until the jobs figures turn around."

Homes throughout the region are still overpriced, Koch added, "not by a huge amount, but somewhere around 5 percent-plus."

The report showed that the number of homes on the market last month in Hampton Roads rose less than 1 percent, to 14,401 from 14,326 in April.

The inventory of homes tends to swell during the spring and summer as more buyers shop for homes. It's the highest number of homes on the market since October.

The average time on the market for existing homes in all of Hampton Roads was 89 days in May, compared with 78 days at the same point last year.

Both of those figures include the Peninsula and outlying regions such as Williamsburg and northeastern North Carolina.

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com