As reported in yesterday’s Tennesseean…
Tax Credit Drives Surge in Home Sales
Nashville Area Sees 60% Increase Over Nov. 2008
By G. Chambers Williams III
Buoyed by a rush of buyers taking advantage of what many thought would be an expiring $8000 federal tax credit on first-time home purchases, Nashville-area home sales soared nearly 60 percent in November compared with a year earlier.
"It is a big jump compared with last November, but we were obviously going down pretty fast at that point," said Mike Nichols, president of the Greater Nashville Association of Realtors, referring to the dismal home market of fall 2008. "Still, this is a significant increase, even if it was become everybody was rushing to get their deals closed" to take advantage of federal tax incentives, said Nichols of Zeitlin InTown Realtors.
On Wednesday, the Realtors group reported 1,973 home sales for November, up from 1,243 properties sold in November 2008. Although the federal tax-credit program has now been extended through April – and expanded to allow some existing homeowners to claim credits of $6,500 for new home purchases – buyers and real-estate agents worked to get deals closed in November in the belief that the program was about to end, Nichols said.
November was the second month in a row that home sales rose by high double-digits in the Middle Tennessee area after three years of monthly declines. Sales had risen 23 percent in October, a big gain that real estate professionals also attributed to the first-time federal tax credits.
Median Price Falls
The media sales price for single-family homes declined slightly on the month, to $158,500 from last year’s median of $165,000. That decline was attributed primarily to the federal tax program, which mostly attracts buyers at the lower end of the price scale, Nichols said. He also said most "sellers are more realistic in their pricing."
For condominiums, the median price was $144,400 in November, down from $150,000 last year at this time. For the year as a whole, home sales totals are off 14.3 percent through November, the association said.
Closings totaled 19,571 for the first 11 months of 2009, compared with 22,824 sales in the same period last year. Nichols said the stronger October and November sales rates "are encouraging." "This is the slow time of the year anyway, and we’ll see a natural pickup in the spring when people start moving," he added. Real estate professionals are optimistic about 2010, Nichols said.
"Every month that goes by, consumer confidence gets stronger," he said. "We’re fortunate to be in a pretty sound market and we’re continuing to see the benefits of that."
Credit extended to April
The extended tax-credit program requires that homebuyers have a binding contract in place by the end of April to qualify. Under the expanded program, the $6,500 credit is available for existing homeowners as long as they have lived in their current homes for at least five of the past eight years.
Congress also expanded the maximum-allowable income levels to make more people eligible for the tax credits. They are now available to single people who make less than $125,000 a year and couples who make less than $225,000. The previous limits had been $75,000 for singles and $150,000 for couples.