National Housing Market Recovery Near?

Latest HouseHunt Random Survey Finds Encouraging Signs - First Time Buyers Taking Advantage of $8,000 Tax Credit

Like the legendary phoenix which rose renewed from its ashes, the U.S. housing market appears to be on the verge of emerging from the worst real estate market in three years. Several encouraging signs are there.

Just consider: A surge in sales activity was reported in many areas in the past three months; first-time buyers continue to bring vitality to the marketplace all across the country; buyers with good credit are able to get mortgage financing; inventories of unsold homes are flat or decreasing in many areas, and listings with the lowest prices in nearly a decade are being cherry-picked in many communities, according to HouseHunt’s latest random survey of current market conditions across the country. Even repeat buyers are starting to leave the sidelines.

Many HouseHunt member-agents interviewed in this quarterly survey also reported they are using the government’s $8,000 tax credit incentive for first-time buyers as an effective marketing tool. The credit – which expires on November 30 of 2009 – can be claimed on the purchaser’s tax return and does not require repayment unless the home is resold within three years. Every dollar of the tax credit reduces income taxes by one dollar. A person is considered a first-time buyer if he/she has not had an ownership interest in a home for at least three years.

Case in point: “I’ve sent out nearly 1,100 tax credit and FHA mailings to prospects on my client list,” said Teri Arbogast of Keller Williams Properties in Weston, FL, exclusive HouseHunt member-agent for Plantation, Davie and Southwest Ranches. “The tax credit is a tremendous marketing tool and is producing good results. It also provides a sense of urgency for buyers. Currently, I’m working with several qualified buyers. My business has definitely picked up in the past three months. People feel like that now is a really good time to buy a home.”

Unemployment, the economy, short sales and foreclosures have forced sellers to lower their prices, Arbogast added. Her average home price is $350,000, down 15-20% in the past year. Average time on the market from listing to contract is more than 120 days.

Also reporting a surge in buyer activity is John Alfasi of RE/MAX Allegiance, exclusive HouseHunt member-Agent in Fredericksburg, VA. He described his market as “robust” and said the average time on the market required to sell a listing is down from 150 days to 90 days. “Our inventory of unsold homes is also down. We have experiencing lots of traffic on distressed properties, mostly short sales and foreclosures.,” he said. Average home price is $225,000. “We still have job growth here and several military bases are being expanded. This gives us both the $8,000 tax credit for first-time buyers and terrific VA financing for new and repeat buyers in the military,” he said. Even though average home prices are down 15-20%, he said sellers are getting 90-95% of their asking prices.

Another area benefiting from military buyers, retirees and first-time buyer clients and financing is the beach community of Oceanside, CA. Chris Montano of Real Estate Traditions, exclusive HouseHunt member- agent for Oceanside, reports an active market: “We have more buyers than sellers and a limited supply of properties,” he said. “Average time on the market is 10-30 days, and that’s decreasing. Good properties are generally picked up as soon as they are listed, many times receiving multiple offers higher than the asking price,” Montano said. ”Oceanside is the last affordable beach community in Southern California. The average home price is $250,000. Although we’re down 25-30% in the past year, any market rebound is expected to benefit the entire area.” Camp Pendleton Marine Base is adjacent to the city.

Lois Johnson of Keller Williams Realty Greater Omaha, exclusive HouseHunt member-agent for Bellevue, NE, reports a significant improvement in both sales and activity since the holidays: “Younger buyers are coming out of the closet after hearing about the $8,000 tax credit. More people are thinking about buying or selling a home. So far, financing does not seem to be a problem for them even though 100% financing is gone and FHA has changed. We’re also getting good leads from the Internet.” Johnson said her market is about 50-50 between buyers and sellers. Average price of an existing home is $175,000. “Time on the market from listing to contract averages 60-90 days, and this is decreasing.”

James Hendricks of Equity Trust Group, exclusive HouseHunt member-agent for Portland, OR, said he has experienced a surge in activity in the first quarter of 2009: “Absolutely! I have as many buyers under contract now as I had in the last six months. Homes priced competitively in the $200,000 and $400,000 range are in demand.” Hendricks said there is still a 12 to 14 month supply on the market but he expects this figure to improve this spring. “This is the best time in many, many years for first-time and move-up buyers and investors to purchase a home,” he said. “So far, financing is available.”

Eva Kallick of Prudential Americana Group Realtors, exclusive HouseHunt member-agent for West Henderson, NV, in the Las Vegas metro area, also noted an increase in activity: “It’s a wonderful time for qualified buyers to be in the market -- and yes, qualified buyers have funds to cover down payments and closing costs. Home prices dropped 30% in one year after a sharp run-up. Current levels have not been seen since 2003. Average price is $225,000. Greatest activity is coming from first-time buyers, Kallick added.

Lynn Fink of Coldwell Banker in Birmingham, MI, exclusive HouseHunt member-agent for Bloomfield Hills, reports that the $8,000 first-time buyer tax incentive is helping to attract customers but that overall activity in this suburban Detroit market is being impacted by 22% unemployment, falling prices and reluctant lenders. “Loans are difficult to get but available to buyers with good credit scores,” she said. “Many people are leaving the area because of the auto industry cutbacks. Our average price is $300,000. One bright spot is that movie production companies are coming here to make movies, utilizing existing plants, factories and the state’s natural resources.”

Trying to find qualified buyers is also a challenge for Brian Burke of Kenna Real Estate in Highlands Ranch, CO, exclusive HouseHunt member-agent for Highlands Ranch and Lone Tree in suburban Denver. “Our sales activity is up since the holidays and good quality homes are selling quickly in the $300,000 price range. The problem is trying to find qualified people. That’s the missing piece of the puzzle. Home prices are up five to 10% over last year and our inventory of unsold homes is down 40%, compared to last year. We also have a huge influx of people looking to lease and/or doing lease-options.

Optimistic of increased activity this summer is Sue West of Elliott Realty/GMAC Real Estate, exclusive HouseHunt member-agent for Carolina Shores, SC, in the Myrtle Beach area: “Our business since the holidays has been better than the last half of 2007 and all of 2008. We’re getting tons of inquiries, especially from Baby Boomers moving to this area for our quality of life. Our lenders are anxious to work with our clients, so financing should not be a problem. Our average price is $200,000.” West added: “Our weather is good, our people are nice and our taxes are fair. The South shall rise again!”

Finally, Lee Seaton of Prudential Real Estate Professionals, exclusive HouseHunt member agent for Eugene, OR, hired a professional staging consultant to help sellers attract buyers to their properties. “The consultant devotes two hours to tour each property, consult with the owners, and prepare a plan to better utilize furniture placement and recommend cosmetic improvements, if needed. We want the property to show well as possible,” Seaton explained. “People are feeling better about the economy and are once again attending open houses. Our inventory of unsold homes has dropped from a 17 to 12-month supply.” Average home price is $225,000.

Michael Bearden, president and CEO of HouseHunt, Inc., said he is very encouraged with the increase in buyer activity in recent months and urged member-agents to take full advantage of opportunities in their own communities: “Historically, national housing recoveries start in local neighborhoods and spread through communties across the country like a slow tide. Bankruptcy and foreclosure signs disappear as homes are sold and pent-up demand catches up with supply. The steady drumbeat of plant closings and layoff announcements publicized in the media will subside and lenders—who are already more selective to meet tougher qualifying standards -- will actively welcome new and repeat business once again.”

HouseHunt, Inc., a consumer-oriented Internet firm that provides free information and services to homeowners, home buyers and home sellers in 47 states through its member-agents and through its primary web site HouseHunt.com, measures seven critical components of housing sales activity every quarter.

For example, preliminary results from HouseHunt’s national first quarter survey show that sellers outnumber buyers two-to-one; 88% of sellers report that it is taking more than 60 days, on average, to sell a house; first-time buyers are accounting for 65% of existing home transactions; there is a good selection of homes for sale in virtually every community; most sellers have experienced at least some negative appreciation in the past 12 months; nearly one-half of sellers are getting multiple offers; and 35% of sellers are getting at least 95% of their asking prices.

Nationally, existing home sales in February increased 5.1% over January, according to the National Association of Realtors. Lawrence Yun, NAR economist, said distressed sales accounted for 40 to 45% of transactions. He said first-time buyers accounted for about half of all sales. “Recovery in the West – led by California-- is much stronger than expected ”he said. The nation’s inventory of unsold homes remained at 9.7 months in February. A six-month supply is considered balanced between supply and demand.