Buyers in the Baltimore metro area hustled to get a home before a federal incentive worth thousands of dollars expired last month, fueling sales and reversing a long slide in prices — if only temporarily.
Home sales rose 35 percent in April compared with a year earlier, one of the biggest increases since Metropolitan Regional Information Systems began tracking the metro area in the late 1990s. The number of contracts signed — pending sales that will close later if all goes well — rose even more strongly, up about 50 percent over a year earlier.
Average sale prices, which have fallen almost every month since the beginning of 2008, inched upward almost 1 percent to about $270,000.
April 30 was the deadline to sign a contract and qualify for the federal tax credit of up to $8,000 for first-time homebuyers and $6,500 for certain repeat buyers. The deals must close by June 30.
Some buyers tried to outbid each other for homes in the final weeks of the credit — pushing up prices. Others pounced on opportunities. John Kantorski, a real estate agent with Cummings & Co. Realtors in Lutherville, represented a seller whose Abingdon home sold the day it hit the market to the first person who saw it.
"Things have been moving a lot faster this year than they did last year at this time," he said.
But now what? That's the question bedeviling home sellers who didn't find a buyer last month — not to mention real estate agents, homebuilders, appraisers and everyone else whose livelihood is tied into the housing market.
Some economists have predicted a housing hangover, much like the immediate slump in auto sales after the Cash for Clunkers federal incentive expired last year. By prompting some people to speed up their home-buying plans, the tax credit gave a short-term boost to sales activity by borrowing from future sales, critics say.
Celia Chen, a housing economist at Moody's Economy.com, doubts the market letdown will be dramatic or long-lived, however.
"I think we'll see a little bit of retrenchment in home sales," said Chen, who predicts the drop will come in the summer after all the tax-credit deals close. "But by the end of the year, I expect home sales will pick up again. … The job market is coming back — having jobs is very important in driving demand for homes."
She thinks home prices haven't stabilized yet but will fall "a bit more" over the next year or so as foreclosures drag down values.
The last-minute rush for the tax credit turned some April sellers into May buyers. Crofton-based homebuilder Caruso Homes sold 10 properties in a nine-day stretch ending last Thursday, which Executive Vice President Christopher Block called "unbelievable." The buyers had just gotten their current homes under contract to other people, and they want a new place quickly.
"All of a sudden now, they're able to sell their houses, and that makes a huge difference," Block said.
Caruso, battered by the housing slump like many homebuilders, filed for bankruptcy protection in 2008. It emerged from Chapter 11 last year. Now, the company is actively looking to buy lots again.
"We've got the financial backing to purchase new land positions," Block said. "There's a real pent-up demand for housing. It hasn't felt that way for a long time."
The April rush across the region might have been frenetic, but it paled next to November, when the first-time homebuyer tax credit was originally set to expire. Sales leapt more than 75 percent that month versus a year earlier. Chen, the economist, said many people decided to buy at that point rather than take a chance on the credit not being extended.
But the April 30 expiration certainly motivated a lot of sellers. More than 6,000 homes were newly listed for sale last month in the Baltimore metro area, more than any time since the spring of 2007 — before the credit crunch and foreclosure crisis turned the housing downturn into a crash.
Buyers, meanwhile, signed contracts for just under 4,000 properties, up strongly from a year earlier but not enough to handle all the new supply.
Several homeowners asked Kantorski, the real estate agent, to get their properties on the market last month in hopes of snagging a buyer trying to beat the credit deadline. Kantorski said he did a lot of deals in April, but the last-minute sellers were not among them.
"I actually had one seller list their home the week before the credit was up, just to see what would happen," he said. "Some people just rolled the dice, took a chance."
Joe Astasauskas, a Baltimore firefighter with a two-bedroom city rowhouse he fixed up as an investment, is no last-minute seller. He's been trying to find a buyer since 2007. He rented it out for a while. And he's dropped the asking price a lot, from $350,000 to $269,900.
He thought the deadline for the homebuyer tax credit "might be a bit of a boost." But no.