A surge of homebuyers looking to take advantage of the soon-to-expire $8,000 federal tax credit boosted home sales in the third quarter in and around Lexington.
The Lexington-Bluegrass Association of Realtors reported that sales of single-family homes rose 11.5 percent in Lexington in September compared to the same month last year. In the 14-county area, including Fayette, covered by LBAR members, sales of single-family homes rose 6.7 percent.
Of the 310 single-family homes sold in Lexington in September, 122, or 39.4 percent, were to first-time homebuyers, said LBAR president Gale Fulton. When you add in condos and town homes, the number of first-time homebuyers increased to 137, she said.
And there are more people in the group who probably were seeking the tax credit. The credit also is available to people who have not owned a home in three years. The number of those people was not available.
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Fulton said she also expects buyers seeking the tax credit to boost sales numbers in October and November. The deadline to close deals under the program is Nov. 30.
"Buyers need to buy now because underwriting is taking longer because of the vast numbers of people across America taking advantage of the $8,000 tax credit," she said. "We recommend that a buyer check with their lender immediately to get pre-approved and to ask their lender what their projected deadline is."
A push is on in the U.S. Senate to extend and expand the program. A proposal would extend the program through June 30, remove the first-time homebuyer requirement and raise the eligibility income limit to $150,000 for individuals or $300,000 for couples. That's double the current phase-out limits.
"It would open the market to other buyers beyond just first-time homebuyers," Fulton said of the proposal, which she endorses.
The third-quarter results were a boost for an industry that has seen tough times throughout the recession.
September is the first month this year that single-family home sales in the region exceeded figures for the same month in 2007, a year when the real-estate market had not yet entered the throes of the recession.
Compared to 2008, results have been mixed throughout the year. Sales of single-family homes declined 0.7 percent in the region in August but were up 6.2 percent in July compared to the same month last year.
In Lexington, sales of single-family homes were up 1.8 percent in August and 8.4 percent in July, LBAR reported.
One negative consequence of the rush of first-time homebuyers has been a decline in the median sales price of homes in the area.
The median sales price of single-family homes in Lexington dropped 11.5 percent in September, to $150,000 from $169,500 a year ago.
"That is the price range that a lot of first-time homebuyers qualify for or are comfortable with for their payments," Fulton said.
Data from the Fayette County property valuation administrator shows the median price per square foot is about the same.
Fayette PVA David O'Neill said the cost is a little more than $101 per square foot, down 1 percent from a year ago.
"People are just buying smaller houses," he said. "It would appear to me that there are good opportunities for home purchases, and consumer confidence is returning."
O'Neill said overall sales data from his office, which would include homes sold by owners instead of just Realtors, suggest a slightly worse performance year-over-year in July and August.
"Overall sales of single-family residences were down," he said. "It does appear to me that they're up in September."
The burgeoning strength is being seen in more than just the market for first-time buyers, said homebuilder Jimmy Nash, who specializes in homes priced at $350,000 and higher.
"We're seeing strength across the board," he said, noting that his company has begun to build houses on spec. Spec homes are those built without a contract in place for a buyer to purchase it.
"This is the first time in two years that we've gone out and started some spec because the inventories are so low and the cost of money is so low," Nash said.
LBAR said the inventory of homes was down in the region, with 6,238 for sale in September, a drop of 5.4 percent.
"Interest rates are very low; there is a good selection of homes on the market and there is no reason not to be able find the home of your choice," Fulton said.