First-time homebuyers continue to drive the real estate market to the benefit of trade-up or repeat buyers. As discussed earlier, this increased activity appears to be a direct response to the $8,000 first-time buyer tax credit. In April, first-time buyers accounted for 40% of all home sales and the trend is expected to spur more activity in the coming months. According the Lawrence Yun, NAR chief economist, “Since first-time buyers must finalize their purchase by November 30, 2009, to get the credit, we expect greater activity in the months aheead, and that should spark more sales by repeat buyers.”
A recent change this month allows qualified first-time home buyers to use the tax credit to help pay closing costs on FHA loans, to buy down the interest rate or make a larger down payment.
Existing home sales rose for the third straight month, building on gains in the previous two months. More repeat home buyers are entering the market indicating rising confidence in the market conditions. Home prices edged up 0.2% over the previous month, adding increasing signs for market stabilization. In spite of this, home prices are still lower than the same time a year ago. Foreclosures and short sales, which accounted for 45% of April sales, continue to skew the median price downword, as these properties are sold at a larger discount in comparison to traditional sales. Distressed sales, however, are helping the makret trim off considerable stock of unsold homes in areas with large inventory overhangs. There are currently on 183 foreclosures on the market in Fairfax County, down considerable from previous months.
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