Fueled by low interest rates, the first-time homebuyer tax credit and the return of buyer confidence, the Quad-City real estate market hit a turnaround in April, local real estate experts said.
Although the area’s pending home sales were down last month, both the average sales price and the median price rose. According to statistics from the Quad-City Area Realtor Association, the median sales price in April was $113,000, up 15 percent from $98,000 a year earlier. The average price rose 9 percent to $131,392 in April from $118,947 last year. But pending sales were down 10 percent in April, from 368 units in 2008 to 331 units this year.
“That tells us the upper-priced homes started to sell again in April,” said Caroline Ruhl, president of Ruhl & Ruhl Realtors.
Her company saw a 32 percent increase in pending sales in April compared to a year ago. “What we’re seeing is multiple offers again and that hasn’t been happening this winter.”
In fact, she said it has been a tough six months.
In the first quarter, the association reported 632 residential sale closings in the Quad-Cities — down from 776 closing for the same period in 2008.
Ruhl attributed part of the rebound to “six months of pent-up demand.”
“A lot of buyers sat on the sidelines from October to March. They were paralyzed with fear for about six months,” she said, adding that buyer confidence is going back up nationally.
“Now we’re selling listings faster than we’re getting listings,’’ Ruhl said. “We actually need listings.”
The real estate association reports that the Quad-City area currently has 1,602 residential listings — a combination of existing homes, new construction and condominiums. That compares with 1,741 residential listings a year ago.
Sue Clark-Nissen, the association’s new chief executive officer, said the new first-time buyer federal tax credit of $8,000 is stimulating the market.
“I had one agent tell me that four out of the last five properties he sold went to first-time homebuyers,’’ she said.
As first-time buyers enter the market, “it encourages others to put their homes on the market,” she said, and then those existing homeowners begin moving up to the higher value homes.
“By getting the first-time buyer in the market, it is definitely encouraging the entire economy,’’ she said.
Kris Ratigan, the marketing director for Mel Foster Co., agreed that first-time buyers have definitely become more visible in the market. In particular, she said the federal tax credit is appealing to potential buyers shopping in the $90,000 to $140,000 range.
Ruhl said as of mid-May, 34 percent of her buyers this year have been first-time buyers. That compares to 29 percent a year ago.
Ratigan expects even more new buyers to enter the market once the federal tax credit is expanded. The U.S. Department of Housing and Urban Development, or HUD, has announced that homebuyers now will be able to use the first-time homebuyer credit to help cover downpayment and closing costs. But HUD has yet to release the rules on implementing the credit.
Roni Pianca, Ruhl & Ruhl’s vice president of relocation, has seen a shift in the relocation market that is boosting sales of homes in the higher-price range. As executives with the area’s major employees are transferred in, she said they are buying existing homes as opposed to building new homes as many had done in the past. She attributed it partially to the caution in the national housing market in that, newcomers may be leaving a down market to move here.
In addition, Ruhl said the new home inventory is smaller than it has been in the past.
“Builders have been skittish about building spec homes,’’ she said, but the Quad-Cities is enjoying a “balanced market.”
“It’s a sellers market if there is less than three months of inventory, a buyer’s market if there is more than six months of inventory. We’re in a balanced market and that is good.”
The area has about 5.1 months of inventory with all residential properties combined. “If you take out the new construction, we have about 4.3 months of inventory,” Ruhl said.
Ratigan said the influx of first-time buyers is creating a need for more homes in the $100,000 range.
The economy and uncertainty in the job market has caused many potential home sellers to take a wait-and-see attitude, Ratigan said. “We need those homes; there’s still more buyers than inventory.”
In addition, an increased number of investors have been attracted to the housing market this year, Ruhl said, adding that 14 percent of her customers have been investors compared to last year’s 8 percent.
“Since the stock market got scary, a lot of investors have switched to buying single-family homes and multi-family,” she said.
The strength of the market’s appreciation ranking has pulled them in, she added. According to data from HUD’s Office of Federal Housing Enterprise Oversight, which ranks metropolitan statistical areas by appreciation, the Quad-Cities is ranked 61st among the nation’s 294 metro areas. Last year, the Quad-Cities ranked 117th.
Quad-City home prices rose just under 1 percent in the past year and are up 17.57 percent over the past five years. For example, a $100,000 home now is valued at $100,085. Over the past five years, it has gained $17,500 in value. Nationally, average values are down 8.24 percent for the year, but up 12.99 percent for the past five years.
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