Data pointing to rising home sales

Homebuyers - many staring down a deadline to get the $8,000 tax credit for first-time purchasers - signed about 30 percent more contracts in the Baltimore metro area last month than they did a year ago.

That's by far the biggest increase all year, according to numbers released Friday by Metropolitan Regional Information Systems Inc., a Rockville company that runs the region's multiple-listing service. It's also the most contracts signed in the month of September - 2,662 - since 2006.

These pending deals don't count as home sales until they close. And as it stands now, they must close by the end of next month if the buyers are hoping to qualify for the first-time buyer credit. More Congressional leaders are talking about extending the deadline, but that hasn't happened yet.

"We definitely have noticed a significant increase in activity in the last five weeks in buyers trying to meet the deadline," said Chris Cooke, who heads a team of real estate agents at ReMax Sails in Baltimore. "I think it's buyers that have been holding out for the best deal possible, and now there's some pressure on them to follow through and do something before the end of the year. Nobody knows if [Congress is] going to extend that credit."

Home sales - the deals that actually settled last month - were up about 10 percent in the Baltimore metro area vs. a year ago. It was the fourth straight month in which sales increased year over year, a turnaround after the sharp drop-off in buying that began in late 2005 as the housing boom began to go bust.

Prices continued their descent. The average price of a home sold in the area last month was just under $275,000, a 7 percent decrease from a year earlier, MRIS said.

Buyers still on the hunt will find it a tall order to decide on a property, get a contract accepted and settle in the remaining 52 days - counting today - before the credit is due to expire. Daniel V. Iampieri, director of career development with Weichert, Realtors-Caton Properties in Ellicott City, said it can easily take 60 days just to get from contract to settlement for buyers using loans insured by the Federal Housing Administration. Most first-time buyers are opting for FHA mortgages.

Complex deals take longer to settle. "Short sales," in which lenders agree to forgive the difference between what the seller owes and what the property is worth, sometimes drag on for months as the buyer and seller wait to see if the bank will approve the contract.

Somia Aslam, 26, is scheduled to close on a short-sale townhouse in Columbia next week - to her relief.

"I'm a first-time homebuyer, so I was trying to hurry up and find a house before the November deadline," said Aslam, an IT developer who signed the contract in June.

Aslam and her husband, who worked with agent Samina Chowdhury of the Pat Hiban Real Estate Group, are buying the four-bedroom home for $325,000. They won't have to go anywhere once the property is theirs. After they signed the contract, they moved in as renters.

"It was perfect," Aslam said of the situation.

More than 1.4 million taxpayers have gotten the credit so far, the Internal Revenue Service said last month. As the clock ticks down, there have been calls by the real estate industry and some politicians to extend or even expand it. Sen. Benjamin L. Cardin, a Maryland Democrat who last month said the credit's impact has been "profound," is co-sponsoring a bill to keep it going for six more months. Sen. Johnny Isakson, a Georgia Republican, wants to extend it for a year, increase the credit to $15,000 and allow all buyers to partake.

It has touched off debate about whether the credit is an important stimulus for the broader economy or an expensive mistake. Ted Gayer, co-director of the economic studies program at the Brookings Institution, argued in a research piece Friday that the credit is too expensive and ill-targeted to boot.

"Even if the tax credit spurs house sales, many of these transactions will just shift renters into buyers, which does not address our excess inventory of houses," he wrote.

In the Baltimore area, the pick-up in buying has primarily benefited people selling homes in lower price ranges. Sales of homes under $250,000 rose 25 percent last month from a year ago. Sales above that amount fell 5 percent.

Keith L. Cross, manager of Cornerstone Real Estate in Baltimore, said he's seeing activity focused in the under-$200,000 range in particular. The pickup has been noticeable in the past month, he said.

"I think a lot of that has to do with the fact that people think the first-time homebuyer credit is going to end," he said.

But that hasn't yet translated into increasing sales in the city. Settled deals there fell 13 percent from a year ago, though contracts - potential future sales - were up. Sales rose elsewhere in the region, from a 26 percent increase in Harford County to a 2 percent increase in Howard County.

Average sale prices fell 14 percent in Anne Arundel County, 10 percent in both Baltimore and Howard counties, 5 percent in Carroll County and 4 percent in both Baltimore City and Harford County.