Home sales climbed in August across West
AP Real Estate Writer
LOS ANGELES – Homebuyers scrambling to qualify for a temporary tax credit helped propel home sales in the Western region of the country last month nearly 5 percent higher than a year ago, according to two reports released Thursday.
Foreclosures continued to fuel much of the sales surge in the 13-state region, primarily in California, Arizona and Nevada. That helped drag down the region’s median home sales price more than 12 percent from August last year to $220,500, according to the National Association of Realtors.
The national median declined almost 13 percent to $177,700.
“The story in the West is still very much one of foreclosure sales occurring,” said Celia Chen, senior director at Moody’s Economy.com. “Prices have fallen so much in the West that I think that’s also encouraging some buyers – both investors and those who intend to actually live in their units – to come back into the market.”
The West’s sales edged up nearly 1 percent from July. That bucked the national trend, which saw sales tumble 6.2 percent from July to August, but rise 2 percent above prior-year levels, without adjusting for seasonal factors.
Several of the largest Western metros saw improved sales last month, according to The Associated Press-Re/Max Monthly Housing Report, which tallies all home sales in the metropolitan statistical area by all real estate agents, regardless of company affiliation.
Phoenix, Las Vegas, Boise, Idaho, Los Angeles and San Diego registered an increase in home sales in August. While Denver, Seattle, Billings, Mont., Honolulu, Anchorage, Alaska, San Francisco and Albuquerque, N.M., all saw sales slip last month from a year earlier, according to the AP-Re/Max report.
Many of the buyers who purchased homes last month were first-timers eager to close the deal before Nov. 30, the deadline to qualify for a tax credit of up to $8,000. The closing process can easily take more than a month, which leaves buyers less wiggle room as November nears.
“Some of them are getting a little freaked out about finding a house to get the tax credit,” said Floyd Scott, broker-owner of Century 21 Arizona-Foothills in Phoenix.
Sales in Phoenix were up more than 44 percent compared to August last year. The median sales price, meanwhile, tumbled about 32 percent to $125,000, according to the AP-Re/Max report.
About a quarter of the buyers his firm dealt with in August were first-time buyers. Another 20 percent were investors, and the rest were homeowners moving to the area or looking to trade up.
Scott expects his September sales will be ahead of August’s, but concedes the scheduled sunset of the tax credit could dampen traffic next month.
“I’m crossing my fingers and hoping sales don’t drop too much starting in October,” he said.
The average days a home was on the market fell between July and August in several Western metros, including Los Angeles, San Diego, San Francisco, Phoenix, Denver and Seattle.
Buyers have snapped up bank-owned homes while fewer foreclosures have been coming on the market, and that has helped cut down the number of unsold homes.
Foreclosures made up about 31 percent of all sales nationally in August, according to NAR. But in some Western states, they overwhelmed regular sales.
In California and Arizona, financially distressed sales made up more than half of all sales in August. In Nevada, four out of five were distressed.
Still, even in Arizona, the inventory of bank-owned homes has been falling as bargain hunters snapped up properties this summer. In Phoenix, roughly 15 percent to 18 percent of the houses on the market now are bank-owned properties, Scott said.
In San Francisco, where foreclosures haven’t been nearly as common as they are in Oakland and other swaths of the Bay area, home sales have begun to slow.
Sales fell nearly 2 percent compared to August last year, while the median sales price dropped about 13 percent to $430,000, according to the AP/Re-Max report.
And yet, the inventory of unsold, single-family homes is down to a 2.6 month supply – the lowest level in more than two years, according to the San Francisco Association of Realtors.
Sales didn’t dip for Century 21 Hartford Properties in San Francisco. They climbed about 10 percent in August, said sales manager Romeo Aurelio.
The worst period was between October through November last year, “so things have definitely rebounded since then,” he said, noting September has been on par with August.
The majority of the sales are for homes under $400,000, because financing remains an obstacle for more expensive properties.
“People who should be qualifying just aren’t able to get loans right now,” Aurelio said. “And it’s really making it tough to sell these properties between $800,000 and $1.2 million.”
Many buyers looking to collar a bargain-priced foreclosed property are finding stiff competition from investors willing to pay cash and outbid newcomers.
In markets like Denver, real estate investors like Ramon Navarro are also beginning to pounce on homes that aren’t distressed.
Denver sales plunged nearly 20 percent versus August last year, while the median sales price jumped 4.6 percent to $209,000, according to the AP/Re-Max report.
Navarro, a health insurance consultant who lives in the Denver suburb of Castle Rock, got into escrow last month on a four-bedroom, three-bath house in Aurora, about 15 miles east of Denver.
The 3,620 square-foot house was initially priced at $350,000, but the seller agreed to take $342,000. The appraisal came back too low, however, so Navarro lowered his offer to $335,000, and the seller accepted.
“It was a good deal and I already got a renter,” said Navarro, 52, who has a bid on another property, which he plans to fix and flip.
“There’s still some investments to be made out here,” he said. “How much longer it’s going to continue, I don’t know.”