Written by Jim Stewart, VP & Marketing Director, Assist 2 Sell, Springfield
Posted 11/6/2009

Overall sales of homes in the greater Springfield metro area spiked by 30% in October as compared to October, 2008. There were 608 sales of homes in October, 2009 compared to only 468 in October, 2008. The last time more homes were sold in a month of October was in 2006 at the height of the real estate bubble. In this case however, the strength was not due to an overheated housing market. Instead it was primarily due to a large number of first-time home buyers trying to beat a November 30th deadline to qualify for an $8000 federal tax credit. However, on November 6th, President Obama signed a bill into law extending the $8000 credit through April 30th, 2010. The bill also expanded the credit to non-first time buyers who have lived in their current home for at least five of the last eight years. These potential buyers can receive a credit of up to $6,500 if they purchase a new primary residence by April 30th, 2010. New income restrictions and a cap of $800,000 on the price of the home have also been implemented. Contact a real estate professional for more detailed information on the credit.

Inside the Sales Numbers
Continuing on course with the past several months, average selling prices in October dropped to $125,790, a 7.9% drop as compared to October, 2008. Median sales prices (half of home sold for more, half for less) also dropped 7.2% to $113000. Foreclosures also continued to be a force in the market as nearly one out of every five homes sold was a foreclosure. The average sales price for foreclosures was only $87,101, a $38,000 discount to non-foreclosed homes. On the bright side, sales prices were up slightly over September, 2009. Average selling prices in September were only $123,446 and the median home selling price was $110,000.

Sales on homes priced under $100,000 surged the most of all price ranges, rising 50% to 241 units from 160 units October, 2008. 295 homes priced from $100,000 to $200,000 sold compared to 243 last October, a 22.6% increase.

As has been the case for several months, sales of higher priced homes languished. Sales of homes priced from $200,000 to $300,000 climbed 15.9%. That percentage increase is misleading however as it represents an increase of only 7 units. There were 51 homes sold in this price range compared to 44 last October. 706 homes in this price range are currently on the market, about a 14 month supply.

Sales of homes priced over $300,000 fell 14.2% to 18 units sold compared to 21 units sold in October of last year.

Tax Credit Expansion
The expansion of the federal home buyer tax credit to non-first time buyers is intended to acheive what the original first-time buyer credit didn’t: “m­ove-up” buyers purchasing a new home in more expensive categories. The theory on the original credit was that as first time buyers bought homes, the sellers of those homes would then purchase higher priced homes creating a chain reaction in which sales in all price categories would climb. That’s not what happened as most first-time buyers bought cheap foreclosure and pre-foreclosure “short sale” properties where there is no seller able to purchase a higher priced home. As a result sales of homes in the higher priced end of the market have greatly lagged the lower end.

It remains to be seen whether the new credit can achieve what the old credit couldn’t. However, it will be difficult job with unemployment now above 10% (11% is now projected as the peak), a very short life-span to the credit (April 30th, 2010) and strong words from congress indicating there will be no further extension or expansion of the credits. The bottom line seems to be that if you are going to sell a home in 2010, youhad best be doing it early. Spring, the traditional selling season, may be too late.