Home sales jump in October, beating expectations

By Alan Zibel
AP Real Estate Writer
November 23, 2009

WASHINGTON — Home sales surged for the second month in a row in October, climbing to the highest level in 2½ years as first-time buyers rushed to take advantage of an expiring tax credit.

Home sales nationwide are now up nearly 37% from their bottom in January, data Monday showed, though they are still 16% below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.

Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.

It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."

The National Association of Realtors said home resales rose 10.1% to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.

The Northeast saw a large increase in home sales. The nine-state region registered 85,000 home resales last month, up 25% from a year ago when the financial crisis gripped the country. The median price, however, fell about 3% to $235,400.

The recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7% from a year earlier and off roughly 2% from September.

Many experts predict prices will hit a new low next spring, perhaps falling another 5% to 10%, as more foreclosures get pushed onto the market.

The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5% since the spring.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended.

"The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage Zip Realty.

But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.

"When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."

For link to article, visit http://www.usatoday.com/money/economy/2009-11-23-existing-home-sales-oct_N.htm

Tacoma's Esplanade condos back on market

Less than three months after foreclosure sale of building, condos generate some interest

By John Gillie
The News Tribune
November 14, 2009

The housing bust’s most visible Tacoma casualty, a nine-story, 162-unit waterfront condominium, has quietly been put back on the market.

The Esplanade, a building whose size and timing doomed it to financial peril, is being shown to buyers who previously had shown strong interest in purchasing a condo unit. The resumption of the sales market comes less than three months after the building was sold at a foreclosure auction on the Pierce County courthouse plaza.

The building’s financing bank bought the structure in foreclosure when the only other bidder stopped at $6.1 million, less than 15 percent of the $48 million the bank had lent on the structure.

The building’s original developer, Mark Ossola, who now works for the bank that financed the $80 million building at 1515 Dock St., said he’s optimistic the building will sell out within 12 to 18 months. The new building owner, IStar Financial, counts 10 prospects who have made commitments to buy in recent days.

The crucial difference between now and when he owned the building is the availability of ready financing for potential buyers, Ossola said.

Met Life has agreed to provide financing for qualified prospective buyers, and the Federal Housing Administration has agreed to begin offering financing guarantees once the building is 30 percent sold. That’s down from the traditional 50 percent requirement for FHA loans.

Judy Mayfield, a real estate agent who marketed the building from early 2007 through last June, said she had signed purchase and sale agreements with 119 buyers, but the collapse of the housing market made completing those deals almost impossible. Before the building went into foreclosure, only 10 units sold.

Once the housing market softened, she said, banks were unwilling to finance individual condo buyers because the building had made too few sales. But without banks’ willingness to take a risk that the building would sell up, the building didn’t.

An additional complicating factor was that potential buyers were unable to sell their existing homes without wholesale price discounts after the housing market went comatose.

The bank is reducing prices for the units, another factor that is bringing potential buyers back, Ossola said. He declined to say how much the prices are being cut. The units are not yet officially listed on multiple listing sites.

“We’re doing a kind of soft reopening now,” Ossola said. “Once we get past the holidays, we expect we’ll start a big sales campaign.”

Real estate sales people say they expect the price reductions will have to be substantial to spur new interest.

When she was selling the units, list prices ranged from $278,000 for a smaller unit to $989,000 for a penthouse, said Mayfield, though buyers did negotiate some lower.

Mayfield said she has no inside knowledge about the new pricing, though she wouldn’t be surprised if asking prices were 20 percent to 30 percent off previous list prices.

“That’s not a reflection on the building. It’s an excellent building. It’s just the market,” she said.

Seventeen unsold units at the Marcato, another downtown Tacoma condo, recently sold at auction for an average of 55 percent of their original asking prices. That building, though a quality structure, didn’t have the waterfront views that make the Esplanade especially attractive.

Ossola said he’ll likely seek a zoning change to allow the use of some of the building’s ground-floor commercial space for offices. Present zoning allows only retail and restaurant operations.

The four corner commercial spaces likely will still be reserved for restaurant use, Ossola said, but other spaces could become professional offices. The building had seen considerable interest from lawyers, doctors and accountants to rent some of the waterfront commercial spaces, but the zoning forbade it, he said.

Several restaurants had expressed interest in the waterfront commercial units, but they remained hesitant to commit until more people live in the building.

“It’s a numbers game. When we have more people living down here, I think we’ll see more restaurants,” he said.

Ossola said the building was a victim of bad timing.

“Had we got it on the market a year earlier, I think it would be sold out now,” he said.

For link to article, visit http://www.thenewstribune.com/business/story/954133.html?pageNum=1&&mi_pluck_action=page_nav#Comments_Container

Tax credit brings house buyers out in October in King, Snohomish counties

The federal tax credit for first-time homebuyers pushed sales in the Seattle area to new highs for the year in October.

By Eric Pryne
Seattle Times business reporter
November 6, 2009

Give credit to the credit.

Home sales in the Seattle area reached new highs for the year in October, a burst real-estate professionals attributed in large part to the $8,000 federal tax credit for first-time buyers.

p>In King County, closed sales of single-family homes were up 33 percent from last October, the Northwest Multiple Listing Service said in a report released Thursday.

In Snohomish County the bump was even more dramatic: 42 percent.

Even condos finally came to the party. Closed sales in King County last month were up 18 percent, the first year-over-year increase since July 2007.

But at least some buyers were rushing to meet a deadline: The credit was due to expire Nov. 30. Congress this week approved legislation that extends it by seven months.

Will that turn down the heat for the next few months?

"It could be the catalyst that kills the buzz, because people have more time," said Dean Jones, president of the condo-marketing firm Realogics in Seattle.

Or it could push sales to new heights, he added: The bill establishes a new, $6,500 credit for many buyers who aren't first-timers. "It's too early to tell."

While more houses were sold in King County in October than in any month since August 2007, prices continued to slip. The median price of a single-family home that closed last month was $377,500, down from $392,000 in October 2008.

But the year-over-year decline — 3.7 percent — was the smallest in a year.

The median price of King County condos was down 8.7 percent, to $251,000. The median house price in Snohomish County slid 12.2 percent, to $292,725.

October marked the fifth straight month of year-over-year increases in house sales in King County.

A breakdown of the numbers reveals some surprises.

• Sales were up a whopping 54 percent on the Eastside — the county's most expensive area — and nearly 40 percent in Seattle.

• Sales declined in Auburn, Federal Way, Des Moines, Burien and SeaTac — all among the county's most affordable cities, places to which you'd think many first-time buyers would gravitate.

"I wish I had an answer for that," said Barry Crittenden, broker in Windermere Real Estate's Burien office. "I've been puzzling over that myself."

Perhaps, he said, lower prices and the first-time buyers' tax credit are allowing budget-conscious buyers to consider neighborhoods that are "a little more upscale."

On the Eastside, the tax credit has helped spur sales in neighborhoods south of Interstate 90, said Thadine Bak, broker in Windermere's Bellevue South office.

It also has created what she called "trickle-up" buyers: Homeowners looking for new, often more expensive homes once they sell their houses to first-timers. There has been a burst of interest recently in houses in South Bellevue in the $600,000-$700,000 price range, Bak said.

Eastside sales increased partly because sellers are getting more realistic in pricing their homes, said Mona Spencer, broker in John L. Scott's Redmond office: "They're finally getting it."

But the impact of the federal tax credit can't be understated, she added: "It gives [buyers] an incentive to go out and look."

Same goes for condos, said Jones, of the condo-marketing firm: "It's what's getting them off the fence."

The median condo sale price in Seattle actually was up 4.4 percent in October from the same month last year, hitting an even $300,000. The biggest increases came on Queen Anne and Capitol Hill.

But Jones and Ben Kakimoto, a condo specialist for John L. Scott, said sales in some new condo buildings aren't included in the listing-service statistics because developers market units directly.

If sales in those buildings had been included, Kakimoto said, the median October condo sales price would have been even higher.

For link to article, visit http://seattletimes.nwsource.com/html/realestate/2010212918_homesales06.html