First-time homebuyers power sales jump

December 19, 2009|By ARNOLD S. PLATOU

WASHINGTON COUNTY -- Washington County's home-buying market came roaring back last month, rising to $20.48 million -- nearly double sales of a year ago.

November's results strengthened signs of a rally in October, marking the first time in almost four years that sales here have increased two straight months.

The surge was powered mostly by first-time homebuyers, scrambling to meet the Nov. 30 deadline to qualify for a federal tax credit, said Joan McLernon, president of the PenMar Regional Association of Realtors.

The rush bodes well for sales early next year because Congress has extended the credit offer through April, and even widened it to include some homeowners who might want to move up to larger, more expensive houses, McLernon said.


"That's going to open up sales in other price ranges, which is going to grow other transactions," she said. "That's really what we needed to happen."

Whether this surge will be strong enough to fire up other segments of the local economy remains to be seen.

When home sales jump, one might expect to see the homebuilding, repair and home furnishings markets grow, too.

But the latest construction and sales tax data shows that isn't happening here yet.

A Herald-Mail analysis of sales tax data issued this past week by the Maryland Comptroller of the Treasury, shows spending at businesses throughout the local economy continued to fall in October.

November's results won't be available until mid-January.

In October, spending was down 6.6 percent from a year ago.

Spending in the construction industry -- building contractors, electricians, roofers, lumber suppliers and others -- sunk 16.5 percent overall in October.

Likewise, in the furniture and appliances sector, spending dropped 16.3 percent that month.

Doubling up

According to the latest home-buying report from Metropolitan Regional Information Systems Inc. (MRIS), 118 properties were sold in the county in November.

That's almost twice the 60 properties it reported sold here in November 2008, when the deals totaled $10.85 million.

This past October was 2009's first month to break through an icy economic ceiling that had kept every month's sales from 7 percent to 46 percent lower than a year ago.

But the market picked up enough strength this October to bust loose, selling 112 properties -- nearly 26 percent more than the 89 sold a year ago.

Dollar-wise, this October's sales were rosier, too, rising to $22.15 million compared to $19.28 million last October.

The October-November upward stretch -- as short as it is -- is important to note for a couple of reasons.

One is that the same trend was shaping up last year. From January to September 2008, every month's sales were lower than in 2007 -- until October.

That month, the real estate market punched through the ceiling, rising 2.4 percent above the year-ago mark.

But 2008 closed with two more down months. The market fell 23 percent that November and it sunk 40 percent that December, leading into 2009's long slide.

The other reason it's important to celebrate this year's October-November sales gain is that it's been a long time since that's happened here.

According to Herald-Mail records, the last time there were at least two months of growth was in November and December 2005. That was such a boom year that sales soared all 12 months.

In fact, 2005 was the county's peak year in real estate sales.

That year, the market jumped a mind-numbing 45 percent to $578 million in selling 2,254 properties. The median sales price -- a measurement which basically ignores the priciest deals to set a midpoint -- was $225,000 and, on average, it took only 50 days to sell a house.

A lot has happened since then.

First came news across the nation about the riskiness of subprime loans. Then, loan credit standards tightened, "foreclosure" became a household word and housing prices slowed their ascent, and then began to drop.

In 2006, the number of houses sold in the county fell to 1,605 and the total sales to $417 million. In 2007, total sales shrunk to $291 million for 1,199 properties.

By last year, sales had sunk to $226 million for 1,041 properties, according to an adjusted record from MRIS.

By then, too, MRIS said, the median sales price had fallen to $195,000 and, on average, it had taken 163 days to sell a house.

This year is on track to be even more disappointing overall.

A quick look by The Herald-Mail shows that in the first 11 months of this year, sales totalled $178 million -- 14 percent less than in the same period of 2008.

Tax credit helps

McLernon, whose association represents 658 Realtor members in Washington County, and in Pennsylvania's Franklin and Fulton counties, said the federal tax credit has energized the market.

The offer, which was recently extended, gives up to $8,000 in "credits" to qualified first-time homebuyers.

A "credit" reduces your income taxes, and if your tax is less than your "credit," you could get the difference as a refund, according to the Internal Revenue Service's Website.

The Herald-Mail Articles