- The Washington Times - Friday, November 20, 2009

Washington-area buyers continued to be active in October, encouraged by low interest rates and the federal tax credit for first-time homebuyers.

Sales of existing homes reached 8,368 last month - a few more sales than we saw in September. This autumn was unusual because we typically see a steady decline in home sales after May. Every year, buyers become less and less active as summer turns into fall and winter.

Yet, take a look today’s fever chart. Sales have been level since the summer and aren’t much lower than they were in the spring.

Buyers are staying in the game this year, motivated by the low interest rates and the tax credit I already mentioned. They also seem to be responding to the relatively low prices of homes today. Although prices have risen a little bit this year in some jurisdictions, they remain 10 to 45 percent lower than they were several years ago.

The danger we face is that the strong sales of recent months are only a shift in buyer demand that we would have seen next year. Extending the tax credit for homebuyers might encourage further sales, but that extension eventually will expire.

Charting the market: Metrowide resales

Mortgage interest rates are incredibly low right now, making low-priced homes even more affordable for buyers. However, a sharp rise in rates could really dampen next year’s sales.

Still, things are looking good at the moment. Last month’s sales were good enough to push sales totals to 83,236 for the first 10 months of the year. That’s 23 percent higher than the same period last year and makes this year the best-selling year for resales since 2005. Of course, that year was huge - with more than 108,000 homes sold by the end of October 2005.

Contact Chris Sicks by e-mail (csicks@gmail.com).


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