It might be time to buy

September 28, 2008|By ARNOLD S. PLATOU

WASHINGTON COUNTY - Ralph Crawford Jr. of Hagerstown is making the biggest investment of his life - during what might be the rockiest economy of his life.

Crawford, 37, a single father with three children, bought his very first house this past week.

He is excited. And nervous.

"I was kind of getting a little bit of cold feet with everything going on right now," Crawford said. "... I've had friends lose their house, have bankruptcy."

Ditto the feelings of Hagerstown residents Natasha Vincent and Nathaniel Rollins, and Tawn Gelvin, who also are buying their very first houses.

But all of them also see this as the best time in a long while to buy a house. The biggest reason, they say, is that with both prices and interest rates down, their payments to buy a house aren't much more than to rent one.


"The thing is, we've been renting for so long, our mortgage is going to be a $1,114 a month, so we figure we might well take a chance and pay $100 more a month than what we're paying for rent," Vincent said.

Home sales falling

Discussing a difference of $100 seems so small compared to the staggering amounts of money that Americans have seen emblazoned across newspaper pages and TV and computer screens in the past two weeks.

The Bush administration is pushing Congress to approve a $700 billion bailout of giant financial institutions for, in simplest terms, the loans across America that have gone bad. Much of it is the accumulation of debt on mortgages that Americans got to buy houses this decade and then couldn't afford when interest rates rose.

In a TV address broadcast into the nation's living rooms this past week, President Bush warned that failing to take action soon risks wiping out retirement savings, causing more foreclosures, losing more jobs and shutting more businesses.

"Without immediate action by Congress, America could slip into a financial panic and a distressing scenario could unfold," Bush said.

Congressional leaders said Saturday they hoped to reach an agreement on the plan before the financial markets open Monday.

In Washington County as elsewhere, the turbulence on Wall Street and the resulting fears in our own lives have become common household and lunchroom conversation.

But until recently, the most visible signs of economic engine failure here have been the "For Sale" signs on more and more houses as the real estate market fell.

Down 28 percent to $417 million in home sales here in 2006, the market shrunk another 32 percent to $263 million in 2007.

And according to the latest figures from Metropolitan Regional Information Systems (MRIS), which tracks the industry, sales continued to sink every month this year from January through August, compared to a year ago.

In August alone, according to MRIS, local housing sales totaled $18.7 million - 25 percent lower than in August 2007. In all, last month, 89 housing units were sold at an average price of $210,797.

A win-win situation

Looking at this on the positive side, as a potential buyer, the news is good.

The average sales price was $229,497 this past January, meaning it's dropped a lot. And August's $210,797 average is itself nearly 11 percent less than the average price a year ago, according to the MRIS figures.

Joan McLernon, president-elect of the Pen Mar Regional Association of Realtors, which has 827 members in Maryland and Pennsylvania, said this is the time to buy for two reasons - both win-win for Americans.

There is the win for buyers.

"There are tremendous opportunities out there because there are a lot of houses out there and the sellers are willing to negotiate," McLernon said.

Plus, she said, there's the win for the economy as buying a house makes a big splash, doing multiple good across many sectors.

"The housing market obviously affects so many different types of careers, that definitely is one purchase that definitely puts a lot of cash back into our economy," McLernon said.

For first-time home buyers, there is even more reason to buy now, said Kendra Peacher, manager of the Hagerstown branch of National City Mortgage.

Peacher pointed to the tax credit that Congress passed as part of the Housing and Economic Recovery Act of 2008.

The $7,500 credit is for people who are buying their first homes - between this past April 8 and July 1, 2009. For the full $7,500, an individual must earn less than $75,000 per year, while couples can earn up to $150,000.

People who haven't owned a house in at least three years also can qualify.

Peacher said she is astounded that more consumers haven't heard about the credit. She said she was working with five first-time home buyers this past week, "and none of them knew about it, which was shocking."

How the credit works is explained at - the official Web site of the U.S. Internal Revenue Service. Click on "Information About ... Newsroom" and look for the Sept. 16 news release titled "Tax Credit to Aid First-Time Homebuyers: Must Be Repaid Over 15 Years."

Yes, you read that correctly.

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