Posted on Sat, Nov. 14, 2009
By Alan J. Heavens
First-time buyers racing toward a Nov. 30 deadline for the $8,000 tax credit boosted the Philadelphia region's October sales of previously owned homes 25.8 percent over the level from the same month last year.
Data released yesterday from Prudential Fox & Roach's HomExpert Market Report showed 4,625 houses went to settlement in the eight-county region last month, 949 more than in October 2008 and just seven fewer than in October 2007, at the end of the area's housing boom.
What's more, the data indicated, would-be buyers signed agreements of sale for 4,456 homes and condos during the month - a whopping 53.1 percent more than last October and only 43 contracts fewer than in October 2007.
It's in sale price, though, that the overwhelming influence of first-time buyers is reflected. The sweet spot, area real estate agents say, is in the lower end of the market, and the preponderance of such houses in the sales mix pushed October's median price down 6 percent from the same month in 2008 - to $202,000 from $214,900.
"The market has improved dramatically," said Art Herling, regional vice president of Long & Foster Real Estate. Resales are "back to 2007 levels, with homes priced between $350,000 and $425,000 doing well."
Though U.S. sales numbers for October won't be available until Nov. 23, what's happening locally mirrors the nation. The National Association of Realtors reported yesterday that first-time buyers accounted for a record 47 percent of sales in the last year, up from 41 percent in its 2008 survey.
The Realtors' survey also showed that the median age of first-time buyers was 30 and their median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 survey, and plans to stay in the house for 10 years.
The first-timers' buying spree intensified as Congress debated extending the credit. The extension, now official, will end April 30, providing the $8,000 tax credit to those purchasing their first homes after Nov. 30. It also expands the program to offer credits of $6,500 to buyers who have lived in their current homes for at least five years.
Income limits have been raised from $75,000 for a single purchaser to $125,000, and from $125,000 to $225,000 for a couple. Credits are available on a diminishing basis above those limits.
Over the last few months, first-time buyers have whittled down the historically high levels of housing inventory in this region to nine months' supply at the current sales pace, from 16 months' worth last year, said Philadelphia economist Kevin Gillen, vice president of Econsult.
That, plus the drop over the summer in the average time a house spent on the market - 88 days, down from 97 - indicates that "the region's housing market may be nearing a turning point," Gillen said.
Low mortgage-interest rates also have helped, with 30-year fixed rates averaging under 5 percent for the last seven weeks. Freddie Mac reported a 4.91 percent 30-year fixed rate Thursday, down 1.23 percentage points from the same week a year ago.
Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.
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