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The race is on to buy before the tax credit expires

April 24, 2010|By ARNOLD PLATOU
  • Dwayne Bovey, right, of Allied Van Lines moves music stands for the Maryland Symphony Orchestra into The Maryland Theatre Friday with the help of the theater's production director, Lea Ann Hudson and theater crew member William Beam. The current surge in housing sales offers a promise of busier times this spring for recession-racked businesses such as Martin Storage Co. Inc., which is the agent for Allied Van Lines here.
By Colleen McGrath/Staff Photographer,

Businesses start to see a turn in the economy

WASHINGTON COUNTY -- Brent and Heather Porterfield are hoping to buy a bigger house in Washington County soon.

And at least three strangers -- moving company owner Bob Dooley, furniture sales manager Kim Teska and flooring company vice president Eric Peifer -- are cheering them on.

They and a whole host of other recession-racked businesses have their eyes on the area's sudden increase in home sales and the April 30 deadline for the federal tax credits that are powering the surge.

"We all are kind of hoping -- Realtors, bankers, landscapers and movers," Hagerstown Realtor Frannie Parks said. "What's happening can really help us all."

Thus far, the numbers are encouraging.

Beginning last October, the home-buying market has risen here every month through February. October and November alone marked the first time in almost four years that sales here had increased two straight months.

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The turnaround is being fueled by three key factors -- comparatively low loan interest rates, the low-price pressure of large numbers of distressed sales and the federal tax credits for home buyers.

In March, according to the latest figures, the total value of all sales actually fell, but the underlying numbers still show a strong pattern of sales leading into April.

"You're going to see a really big increase when the April statistics come out," Hagerstown Realtor Shirley Bayer said.

Looking at the figures, Bayer said, as of April 22, there were 313 properties that local Realtors have under contract pending settlement -- which is a 50 percent increase over what was under contract pending settlement for the entire month of March.

"Lot of activity," Bayer said. "It's driven by the home-buyer tax credits."

And that bodes well, at least for this spring, for many businesses in the economy.

Buying frenzy



The Porterfields didn't even know about the tax credits late last summer when the Hagerstown couple began thinking about buying a larger house.

"The credit was something we found out after we'd already decided," Brent Porterfield said. "That was a bonus."

Brent, 34, who works in a store in Frederick, Md., and Heather, 36, who is a nurse for a local pediatrician, bought the half-a-double at 907 Mulberry Ave., where they live now, in 2004.

At the time, the local housing market was accelerating fast and prices were shooting up with it.

Everybody, it seemed, was buying as subprime loans were granted to anybody who walked into a lender's office. And prices, whipped by the frenzy, made houses into investments that, it seemed, could never go wrong.

By the end of 2004, sales in the county totaled $397 million, a whopping 34.6 percent over 2003's, which itself had soared 34.3 percent over 2002's. The average price jumped in 2004 to $205,138 compared to 2003's $170,685.

And even the median price -- which tosses out the very highest and the very lowest sales prices to paint what's considered a more realistic picture -- leaped in 2004 to $176,000 compared to $149,900 in 2003.

The fantastic, almost frantic, buying peak that was to follow in 2005 hadn't hit yet when the Porterfields, married since 2003, bought their very first house, the two-bedroom, one-bath half-a-double on Mulberry Avenue, on April 15, 2004.

They paid the full asking price of $119,000, recalled Parks, who was their Realtor back then and is again now. The house "was only on the market 23 days," Parks said.

To Brent and Heather Porterfield, the house and its small yard were adorable.

"Oh, this house is great," Heather said. "It's got such charming character to it. I mean, we love this old house. It's just not enough room."

And that, of course, recognizes the changes that came into their lives beginning three years ago, when their daughter was born, and eight months ago, when their son was born.

So buying a larger house now seemed a very good idea, especially considering the recession's impact on the market, Brent said.

"With the economy, we thought it would be a good time," he said. "You know, everybody says house prices are going down to lower prices. So I figured we might be able to get a better house for a cheaper price and move into a house that we all like. Just have more room."

Recession gives and takes



But what this recession gives to buyers, it also is taking away from sellers.

And, Heather said, she and her husband realized that when they retained Parks again.

"A couple years ago, we talked about putting the house on the market and Frannie said we could probably ask $180 (thousand)," Heather said.

But not now.

And the couple knew that the $20,000 they had spent creating another room in their attic wasn't going to count for much now in the down market, she said.

"It's like playing the lottery, but you have to do what you have to do," Heather said. "We've so outgrown this house."

So they put their house on the market.

"It was last November, which was a horrible time to do that," Heather said.

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