Metrostudy: 'Tax credit hangover' is over
You never know for sure if the first upturn in home sales after a stretch of decreases is a blip or a trend until you can look back with 20-20 hindsight, but a homebuilding market research firm is ready to call December the start of a new era.
"The fact that sales are positive on a year over year basis, and that contracts continue to trend higher in many submarkets, indicates that the 'Tax Credit Hangover' is done," writes Kenneth Wenhold, Mid-Atlantic regional director for Metrostudy -- referring, of course, to the federal homebuyer tax credit that phased out last summer.
And here's something you don't see every month: The Baltimore suburbs saw a bigger turnaround than the Washington metro area. (The Baltimore area was worsening from a seller's perspective in the fall, so we have farther to go.) Sales rose eight percent in the local suburbs Metrostudy focuses on -- Anne Arundel County, Baltimore County, Cecil County, Harford County and Howard County -- while, for instance, falling 3 percent in Northern Virginia and 12 percent in D.C.
Here are a few more of Wenhold's Baltimore-area market musings:
Unfortunately listings are up 10%, muting the effect of the additional activity. However the months of supply declined by 0.6 months to 10.0 months, representing the first significant decline in inventories in nearly a year. Harford, Baltimore and Howard lead the pack in gaining inventory, while Baltimore and Harford account for the majority of increased sales. Prices are negative, though the various submarkets seem to be fluctuating between single digit gains and losses on alternative months. New contracts are now positive or flat in nearly every submarket, with Harford seeing the largest increase, most likely due to immigration of workers affected by the BRAC initiative.
This is the slow time of year for sales and new listings, as Wenhold notes, so a key test of market momentum will come in the spring. Who will emerge in greater numbers, new would-be buyers or new would-be sellers?
While you're chewing over that, check out this new chart put together by RealEstate Business Intelligence, Metropolitan Regional Information Systems' stats arm. It shows the last two years of pending sales in the Baltimore metro area -- city and surrounding counties -- compared with the trend in home prices for sales that closed.
RBI's take on December was in the "on the one hand ... on the other hand" vein. For instance: "Seasonal holiday slowdown is evident by decline in December pending sales but decline was less than normal." (That's December vs. November, not year-over-year.)
Also: "Buyers and sellers signed 9.7% more purchase contracts in December 2010 than they did in December 2009. However, the increase in pending sales (to 1,643 from 1,498) over this period was largely due to a two week lull in activity in December 2009 as consumers waited between the first, and then second, expanded federal tax credit home purchase programs."
The tax credit might be gone, and maybe even the sales hangover it caused, but it'll still be throwing a wrench into comparisons for a while yet, apparently.
What's your take on the hangover? Done or no?