Charting the market: Incentives spur April purchases

Spring is always the busiest time for Washington-area home sales, and this has been the busiest spring we’ve seen in several years.

During the spring market, March sometimes emerges with the highest sales, but in some years April and May take that title.

This year, April beat March by a wide margin, and I don’t think May has a chance.

Nearly 12,000 existing homes were sold last month in the Washington region - an increase of 26 percent over last year. Sales were up 5 percent in Virginia and rose an amazing 52 percent in Maryland.

• PDF: Charting the market

April was a very unusual month, however, and we’ll almost certainly see lower sales in the months that follow.

February’s snowstorms postponed some buyer and seller activity, moving it to March and April instead. We also have seen a lot of buyers motivated by three big financial incentives: prices, interest rates and tax credits.

All the foreclosures on the market have helped to pull down home prices in recent years, making homes much more affordable than they were just a few years ago. And the low mortgage interest rates have helped buyers, too.

We also saw a lot of home shoppers scrambling to get a contract on a home before the federal tax credits expired April 30. I suspect many of them were move-up buyers with their own homes to sell, because we saw a surge in home listings last month.

Those additional listings are one of the hurdles we will face in the summer and fall. More listings could really slow down the market if buyer activity decreases now that the tax credit is gone.

Buyers won’t disappear right away, given that interest rates are still low and home prices are stable. When sales do slow down, however, we could see a rise in the unsold inventory that would make the rest of 2010 a very different market than we saw during the first four months of the year.

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