Grand Forks, ND, area home sales surge

Home sales in the Grand Forks area has surged the last two months, reflecting real estate national trends as first-time homeowners flock to a tax credit program that was set to expire this month.

Since the start of September, home sales grew 39.2 percent compared with the same period a year ago, according to data from the local Board of Realtors. Average prices rose 2 percent.

John Colter, the board’s administrative executive, said September was the best single month in more than a decade and he credits the tax credit for the spike in sales.

Area homebuyers have flocked to the Grand Forks’ first-time homebuyer program, according to Alicia Saure, who administers the program at the Office of Urban Development. The number of families who received assistance with down payments and debt load nearly at this point is nearly doubled what it was in the same period a year ago.

Nationally, home sales in October grew 19.2 percent compared to the same month a year ago, according to the National Association of Realtors. The Midwest had the biggest October increase of 26.2 percent.

At the current sales pace, there is only a 6.8-month supply of homes on the market nationally, and in some areas there are bidding wars. The same time a year ago, there was a 9.7-month supply.

The tax credit offered first-time homebuyers as much as $8,000 and was originally set to expire Nov. 30. Congress extended the program earlier this month and broadened its reach. People who have owned their homes for at least five years can now claim a tax credit of as much as $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

BIG BOOST

In Grand Forks and East Grand Forks, Realtors reported selling 167 homes since September at an average price of $166,000. During the same period a year ago, they reported selling 120 at an average price of $163,000.

The surge helped bolster the year’s sales, which suffered during the bad weather and flooding in the spring, Colter said. Since the start of the year, Realtors have sold 592 homes at an average price of $160,000.

Had it not been for the recent surge, they would’ve only sold 545. That’s much lower than the 583 sold in the same period a year ago. The average price at that time was $161,000.

MORE AID

Clearly, the incentives have driven many who might not have thought of buying homes to do so.

Saure said her office has seen a lot of interest in the $8,000 tax credit and in the city’s incentives as well.

Some don’t qualify, she said, because their income is too high relative to the value of the home they’re looking to buy. But so far, the city has helped 61 families with $720,000 in aid, which comes in the form of help with down payment, closing costs and up to a $10,000 loan that would be forgiven if the homeowners own the home for more than 10 years.

In the same period last year, Saure said, the city helped 31 families with $425,000 in aid. The relatively lower amount of aid per family, she said, is because those coming for help have higher income than before, so they do not qualify for as much aid.

Reflective of the relatively stable average price reported by area Realtors, she said her clients have not had a lot of trouble finding homes they can afford, mostly in the north end of the city.

THE FUTURE

Nationally, the enthusiasm for the tax credits is much the same.

“The incentives really did get people to go out and buy,” said Wells Fargo economist Adam York. “The question is: What does the trend look like when the credit is over with?”

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new April deadline means “we’re going to see some good activity coming out of the spring,” said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.

But the government support can’t last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen demand.

“When we do kick those crutches out from under the housing market, will it be able to stand on its own?” said Mark Fleming, chief economist with real estate information company First American CoreLogic. “It’s really hard to tell.”

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