TAX NEWS - June 2010

Federal tax credit spurred Northeast Ohio homebuying in May

The federal homebuyer tax credits buoyed the Northeast Ohio residential market in May, but to a lesser extent last month than in April.

That is the message of just-completed statistics from the Northern Ohio Residential Multiple Listings Service in Independence.

The number of sold listings climbed 37% to 3,517 for the month of May of this year compared to 2,550 in May 2009, a big decline from the 62% increase to 3,412 sold listings in April 2010 from 2,109 in April 2009. The $8,000 tax credit for a qualifying first-time homebuyer and as much as $6,500 for move-up homebuyers ended April 30. Buyers have until June 30 to close deals they put under contract by April 30, but Congress is considering extending the closing deadline until Sept. 30.

David Sharkey, a Progressive Urban Real Estate brokerage vice president in Cleveland, said, "There was definitely a hangover after May 1. It was really just this week that I have seen 'normal' deals (without the credit) coming through."

He expects sales to fall off in July, but added, "We've gone through a period of so much stimulus from the federal government, I don't think anyone has a handle on what the real market is anymore."

By the numbers, federal intervention continued to bring back the real estate magic on a year-to-date basis through the end of May.

On a year-to-date basis through May, sold listings are up 55% to 13,919 this year from 8,974 in the like period of 2009, NORMLS reported. Total dollar volume for the region climbed 90% to $1.6 billion through May this year from $845 million through May 2009.

The average sale price in the region climbed 20% to $123,846 in May from $102,910 in May 2009.

Ali McAdams, the broker-owner of Lake Realty in Rocky River, said the "halo effect" of the tax credit helped the residential market but she thinks the market is also finding its footing, albeit less steadily than in the past.

"People are getting used to the idea (their house) is not worth what it was anymore," Ms. McAdams said. "We're selling at prices that are 30% off what they used to be. We are at pre-bubble, 2003 prices. Homeowners who have held their price and not sold for two or three years are now getting it" that values have declined.

"If you're selling in the $200,000 and under range, there's still action," she said. "Young families are out again. If you're a buyer, this is paradise."

The statistics cover single-family, condominium, land and commercial properties in Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, Summit and eight other adjoining Ohio counties.

Condominium listings showed the biggest sales gains in May, increasing 65% to 285 this May from 173 last May. Sold listings for single-family homes increased 39% to 3,006 homes this May from 2,171 in May 2009.