Despite the heated controversy surrounding the federal economic stimulus program, Alexandria realtors are enthusiastic about at least one aspect of it.
They praised the Housing and Economic Recovery Act, containing a tax credit for first-time home buyers equal to 10 percent of the purchase price with an $8,000 maximum. The National Association of Realtors explains that first-time buyers are actually defined as anyone who has not owned a home in the past three years, with an annual household income below $170,000.
Most agreed that the program played a vital role in creating the market gains they saw during the first half of the year. Heres what they had to say:
I closed about twice as many contracts
I have had a wonderful year so far. The market is definitely showing a turnaround. The average number of days on the market for homes in Alexandria dropped by 45 percent this June (compared to the same month last year). It is now less than 60 days.
There is more and quicker movement in the range of $400,000 and below. This is mostly due to people with Federal Housing Administration (insured) loans, but the tax credit has made a lot of difference, too, in getting those buyers off the fence.
There are a lot more first-time buyers out there. They know they have a short time before the (December 1) expiration date. I closed about twice as many contracts for them during the first half of this year compared to the same period in 2008.
Our sales have been good.
Our sales have been good. More properties are selling for less than $500,000. It is a little slower at $900,000 and above, but things are starting to sell there, too. We started hearing from people at the end of last year, when they came back into the market. We saw much more activity then than we had had that fall. A lot of calls came from buyers who were spurred on by the good interest rates (in the 5 percent range) and the $8,000 tax credit for first-time buyers.
All that combined to make it a good time for the first-time buyers. And as the year has progressed, we see that things are also starting to pick up at the next level, of $700,000 to $900,000. That is because, if you sell your $400,000 home (often to a first-time buyer), you can take the next step. We are very fortunate in Alexandria, where the market has been much better than in other places.
We have been getting multiple offers.
Allison Jensen, Keller Williams
I see a lot of (buyers) who were sitting it out, but they are starting to get into the swing of things, with the $8,000 credit, so I see brisk sales through the deadline. I just hope they will extend it, because it really got things moving. We are seeing multiple offers in the range between $200,000 and $350,000.
Things are crazy, in a good way.
Karen Leonard, Coldwell Banker Residential Brokerage
Our agents are working very hard to keep up with the demand. I needed two agents to cover for me when I went on vacation. Things are crazy, in a good way.
Buyers are finally realizing that the prices are attractive and they are taking advantage of them. There are some who think they are going to get a great deal and find something really cheap, but the market is settling down. If it is priced right and looks nice, it will sell quickly with multiple contracts. If you wait too long, it is gone.
Even in the upper brackets, there is more activity than there was a year ago. In the Alexandria part of Fairfax County, anything priced between $800,000 and $850,000 is gone in two weeks and there is no inventory left. Of course, many of their prices had been reduced, showing the trend toward a more balanced market.
It is almost like another boom.
There are actually two markets. For homes in the $400,000-and-under range, it is almost like another boom, with three, four and five contract offers and some even over the asking price. But in the upper brackets, it is still on the slow side.
There is a gap in the food chain. People are buying homes in the $400,000 to $500,000 range, where a huge percent are empty, with foreclosures and short sales, and therefore without sellers who can afford to move up to the upper brackets.
The original tax credit proposal was $15,000 for anyone who bought a house in any price range, he recalled. Now that it is $8,000 for first-time buyers, there is more pressure in the lower brackets but nothing to help the upper brackets where the need is greater. Making matters worse for those owners, he added, Often they bought when the price was high, so now they are limited in how far they can come down, to reach a realistic figure.
the bottom has been hit in this area.
Still, there are dissenting voices. There will be a lot more foreclosures, and it will be a long climb back up, but I think the bottom has been hit in this area, said George Candelori at Weichert.
Unfortunately, the lenders are still a problem. They have gone overboard with restrictions. The appraisers are under the gun to under-appraise and they are using foreclosures as comparables, in determining market value. This will continue to undermine the market.
To illustrate how tight the money is, he said, I know the case of a multi-millionaire who wanted to refinance his million-dollar property for only $100,000, and he had plenty of assets, but they turned him down because the banks did not like his cash flow. The bankers have caused this problem.
On the other side of the spectrum, he charged that, The $8,000 credit will start the bubble again if people use it to buy houses they cannot afford.