Spike in home sales has roots in tax credit

LOS ANGELES – Home sales rose 10 percent in the Western region of the country in October, driven largely by first-time homebuyers racing to qualify for a tax credit that had been set to expire at the end of this month, according to two reports released Monday.

Sales in the 13-state region have improved this year, aided by the tax incentive, and the data last month benefited from an easy comparison to October 2008 sales, which declined sharply as the U.S. financial crisis worsened.

Nationally, sales rose 21 percent from October last year, without adjusting for seasonal factors, the National Association of Realtors said Monday. The median price fell 7 percent to $173,100.

In the West, foreclosures and other financially distressed homes in the lower end of the price spectrum continued to account for many of the transactions in some parts of California, Arizona and Nevada. That dragged the region’s median price down 15 percent to $220,200. Prices are now down about 38 percent from the peak four years ago, but up about 8 percent from the bottom last April.

Real estate agents credited lively sales to low mortgage interest rates and the tax credit. First-time buyers faced an initial November deadline to qualify for a credit of up to $8,000.

“People were finally getting off the dime because they were worried about closing by the 30th,” said Tom Ogden, an agent with ZipRealty Inc. in Portland.

Congress recently extended the incentive through April 30, and buyers must complete their deals by the end of June. Lawmakers also expanded the program to include a $6,500 credit for existing homeowners who have lived in their current residence for at least five years.

Ten major Western metros registered annual sales increases last month, according to The Associated Press-Re/Max Monthly Housing Report, which tallies all home sales in the metropolitan statistical areas. The report counts sales filed by real estate agents, regardless of company affiliation.

Eight metros posted annual median price declines, according to the AP-Re/Max report.

Some highlights from the region:

•Steepest price drop: The median home sales price in Las Vegas tumbled almost 31 percent from a year ago to $125,000 as homebuyers continued to snap up discounted bank-owned properties.

Nevada has the highest foreclosure rate in the nation and Las Vegas tops the list of metros with one in 68 homes receiving a foreclosure filing in October, according to RealtyTrac Inc.

Sales, meanwhile, jumped 40 percent from a year earlier.

“We didn’t see a slowdown in October even though nobody really knew whether the tax credit (extension) was going to be passed or not,” said Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson.

Herwick said first-time buyers made up more than half of her clients in October and most bought bank-owned properties, often with cash.

The supply of homes on the market is down to about four months.

Herwick expects November sales will be stronger than last year and about the same pace as October.

“We’re busier than we usually are this time of year,” Herwick said.

•Sharpest price gain: Denver, where the median price posted an annual increase of nearly 10 percent to $201,700.

•Biggest sales gain: Sales soared by nearly 57 percent from a year ago in Boise. But the metro’s median home price declined versus a year ago by almost 22 percent to $139,900.

•Largest sales decline: Los Angeles saw sales drop about 6 percent from October 2008, while the median sale price fell about 9 percent to $259,000.

•Persistent trend: Financially distressed properties fetching multiple offers.

Many buyers are facing off against other bidders, particularly for the homes selling below the median price.

That’s the case in Portland, where sales rose nearly 35 percent from October last year, said Ogden.

“If you’re a first-time buyer in Portland and you’re looking at (a home) under $200,000, it’s usually gone before you can shake a stick at it,” Ogden said.