As Tax Credit Expires, Housing Prices Fall
Friday, August 27, 2010
According to data released by the RI Association of Realtors today, the number of single-family home sales dropped in July, by 34 percent versus July 2009, though the median price rose eight percent to $227,500 last month from $210,000 a year prior. The drop in the number was most likely caused by the expiration of the federal tax credit.
The good news was the number of distressed sales – foreclosures and short sales – down 54 percent from a year ago. The median price of non-distressed sales was $257,250. July marks only the second month of decreased sales in the past 16 months.
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“Now that the tax credit deadline is past, we may see a lull for a few months but the fact remains that interest rates haven’t been this low since record keeping began and the state’s jobless rate is declining. Rhode Island sales have consistently bucked the national trend – first by being the first to enter the housing boom and then the first to enter the recovery. Our data has shown strong signs of steady recovery over several months and we see no reason for a substantial, long term change in that direction,” said Karl Martone, RIAR President.
Similarly, condo sales were down 18 percent in July. Ninety-nine condos sold last month compared to 120 in July 2009. The median price however, rose 35 percent to $230,000 from $170,000. The number of distressed sales for condo’s fell 36 percent and the median price of non-distressed sales was $264,900.
One extreme report, was the sales in the multi-family market showed the largest decline, down 49 percent, the largest drop this year. The median price however, continued to increase, up 27 percent from the year prior, to $127,000. The number of distressed sales dropped 57 percent. The median price of non-distressed sales was $173,750.
(The federal tax credits of $8000 for those who have not owned a home in three or more years, or $6500 for buyers who have owned a home for five consecutive years of the eight years prior to purchase, required signed purchase and sales contracts by April 30, 2010. However, that deadline is extended until April 30, 2011 for certain military personnel.)
