Like many Realtors, Deanna Dipo was upbeat and cheerful Monday over news that sales of existing homes in October were up 23 percent year-over-year -- evidence that low mortgage rates and tax credit incentives brought buyers back into Salt Lake County real estate offices after months of little activity.
Although those economic crutches won't be around forever, 'it's awesome,' she said of numbers that show 1,054 contracts on homes were closed countywide during the month, compared with 855 a year earlier.
'Buyers are trying to get off the fence,' said the co-owner of Distinctive Properties in Draper. And, with Congress extending the federal tax credit through April 30, 'there still is a supply of short-sell and foreclosed properties out there' to encourage them to jump. Short-sell properties are those with beleaguered owners unable to keep up payments on homes and have asked their lenders to sell them for less than what is owed.
Salt Lake County's percentage increase in sales matches what happened nationally during October, compared with a year ago when the market was in a recession-driven cellar. Across the U.S., 6.1 million units sold last month -- 23.5 percent above the 4.94 million sold in October 2008. That rambunctious level of activity is at the highest pace since February 2007, when it hit 6.55 million.
The reason?
Buyers were scrambling to close deals so they could take advantage of an $8,000 federal tax incentive for first-time buyers that, during October, was expected to end Nov. 30, according to Dave Anderton, spokesman for the Salt Lake Board of Realtors.
Earlier this month, Congress broadened the tax credit's reach, firing the imagination and hopes of Realtor/broker Ryan Kirkham that the sales surge will continue through November and beyond.
'It will be interesting to see what November ends up being like,' said Kirkham, who also serves as president of the Salt Lake Board.
'I was pleasantly surprised' by the numbers for October, which included a 9 percent median sales price decline, to $205,000. 'But when you look at the price decrease, coupled with lower mortgage rates and a tax incentive, it was just too much for people to ignore.'
Some local buyers also were able to take advantage of state tax credit grants for newly constructed homes, all of which have been claimed.
But support from the federal government can't last forever. The Associated Press reported Monday the Federal Reserve probably will curtail its effort to push down mortgage rates next year. If rates then rise too high, that 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.'
Home sales probably will drop over the winter as buyers hibernate for a few months without the looming federal tax credit deadline.
But the new deadline means 'we're going to see some good activity coming out of the spring,' Pat Lashinsky, CEO for the online real estate brokerage ZipRealty Inc., told The AP.
For his part, Realtor Kirkham hopes potential buyers don't wait.
'If it's true that numbers have picked up and sales have started to increase, prices will inch up a little bit,' he said. 'To risk waiting for prices to drop another percent will not be worth anything' if interest rates start to inch up, as well.
To illustrate, he offered this scenario:
The payment on a $300,000, 30-year mortgage with a 4.825 percent rate would be $1,578 a month. If that rate goes up to 6.5 percent -- a probable scenario if the economy improves, Kirkham said -- the payment jumps more than $300, to $1,896.
'It's not a matter of if, it's a matter of when,' he said of price and interest-rate spikes.
The Associated Press contributed to this story.
