Friday, October 16, 2009

Tax credit, low interest rates spur home sales

Tax credit, low interest rates spur home sales
Carolyn Said, Chronicle Staff Writer
Friday, October 16, 2009

(10-15) 12:13 PDT SAN FRANCISCO -- A home-buyer tax credit and low interest rates helped spur a modest increase in Bay Area home sales in September, according to a real estate report released Thursday.

At the same time, the median price edged up, with fewer bargain-priced foreclosures to drag it down and more high-end home sales to buoy it.

A total of 7,879 new and resale houses and condos changed hands in the nine-county Bay Area last month, up 8.4 percent from September 2008, according to MDA DataQuick, a San Diego real estate research firm. Existing-home sales stood at 5,705, up 4.7 percent from last year.

The median price paid for an existing single-family home was $380,000 last month, down 5 percent from $400,000 in September 2008 and a notch above $375,000 in August.

Although home sales usually drop after the summer, the new and resale total was up 4.8 percent compared with August. Real estate experts said first-time buyers' eagerness to take advantage of an $8,000 tax credit due to expire Nov. 30 fueled some of the increase.

"That's caused a last-minute frenzied panic-buying mode in people's minds," said Doug Sager, a Realtor with ZipRealty in the East Bay.

The real estate industry would like nothing more than to see the tax credit continue. On Thursday, the Senate floated a proposal to expand the tax credit to all buyers, not just first-timers, and to extend it until June 30.

While the market shows some signs of stability, another foreclosure deluge could easily swamp it, experts said. Revisions to option adjustable-rate mortgages and growing delinquencies as unemployment spreads could unleash new rounds of bank repossessions.

"What will be key is how many more foreclosures we see and the timing of when they hit the market," said Andrew LePage, a DataQuick analyst. "We're still climbing our way out of a deep recession."

He and others said the market continues to diverge depending on prices. Low-end homes - most of them foreclosures - spur multiple offers from investors and first-time buyers, and sell for more than the asking price.

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