The Virginian-Pilot
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First-time home buyers and investors continued to drive sales of existing homes in South Hampton Roads last month.
Real Estate Information Network Inc. released data showing that 1,043 homes in the region sold in August. Although it fell 15.6 percent from July, the sales activity last month was
1 percent higher than the 1,033 homes that sold in August 2008, the Virginia Beach-based multiple listing service said.
It is the third consecutive month that sales volume inched higher than the same month last year, suggesting the local housing market might have reached a bottom. June was the first month with a year-over-year volume increase since January 2007.
"I think people are aware of the tax credit and aware of the low interest rates," said Dick Thurmond, president of William E. Wood and Associates. "So people are thinking they need to make a move now to take advantage of that."
Any first-time home buyer or any buyer who has not owned a principal residence for three years is eligible for an $8,000 federal tax credit. Thurmond said he expects the credit to encourage many more buyers to enter the market before the incentive expires Dec. 1.
Local real estate experts attribute the increase in sales partly to foreclosed or distressed homes, which also has driven down prices. More than 15 percent of August's sales were marked as a foreclosure or short sale, compared with less than 7 percent in August 2008, the service reported.
Investors are snapping up some foreclosed homes with plans to renovate them and put them back on the market, taking advantage of strong sales in lower price ranges, said Dorcas Helfant-Browning, CEO and managing partner of Coldwell Banker Professional, Realtors.
The median price for an existing home in August was $225,000, up 3.7 percent from July but down 2.6 percent from a year earlier, according to the multiple listing service. The median is the point at which half the prices are higher and half are lower. For the year to date, median prices for existing homes in South Hampton Roads have fallen 5.5 percent.
"I think foreclosed homes have had an impact on prices, and it will continue for some time," Thurmond said.
The report showed that the number of homes on the market in Hampton Roads last month fell less than 1 percent, to 14,417 from 14,458 in July and is down 3.2 percent from a year ago. Meanwhile, the average time on the market for homes in all of Hampton Roads was 85 days in August, compared with 80 days a year earlier. Both of those figures include the Peninsula and outlying regions such as Williamsburg and northeastern North Carolina.
Vinod B. Agarwal, an economist at Old Dominion University, said the number of homes on the market represents about 10 months of inventory, which essentially means at the current sales rate, it would take 10 months to work through the backlog of homes for sale. A four- to six-month supply is considered normal.
"We still have a way to go," he said. "To work through this, sales need to pick up more, and in order for that to happen, sellers need to continue to lower prices."
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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And in another interesting article today:
"The National Association of Realtors estimates that about 350,000 sales this year would not have happened without the lure of the tax credit. Moody’s Economy.com used computer modeling to put the number at 400,000".
In other words, don't break out the champagne just yet. Things are NOT getting better. If it ain't flippers taking advantage of cheap interest rates and foreclosures, it's first-time buyers sticking their hands in our pockets, and grabbing our money, to fund $8,000 of their purchase price.
If that's not bad enough, the National Association of Realtors is lobbying Congress not only to keep the so-called federal tax credit past November, but also to allow it for all buyers, even "investors" (aka "flippers"). I have two words for the NAR, and they ain't pretty!
Pessimists wouldn't know an economic rebound if it
stared them in the face. The V.P. just reported this week that Hampton Roads was one of the best regions in the COUNTRY with unemployment. Jobs = people that need a place to live. Pricing has come down, and interest rates are at historic lows. The facts show the average trend is increased activity. Spin it like you usually do though to make it look like the world is ending. I'm sure the home buyers, sellers, real estate agents, home inspectors, loan officers, title companies, and everyone else that feed their families off of housing also have 2 words for you, and they aint' pretty!
This area is "special" though...
The thing is that while prices here had gone up as much as most other places, they have not fallen as much. It's to the point where housing in HR is now priced almost as much as in NoVa... but without the NoVa incomes.
This is likely the result of no-down-payment VA mortgages - an enormous part of the market here due to all the military folks, combined with the $8K tax credit.
Prices do need to come down eventually though because compared to incomes, they're quite out of whack here. Unfortunately, that may not happen until the govt. stops interfering with the housing market. By the time that happens though, the mountain of debt built by the gov. to bail out Wall Street and keep the housing market artificially high will be so vast that there may not be much of a govt or an economy left and houses won't be selling at any price