Clark County home sales plummeted in July, sparked by the end of a federal tax credit that ended in June, according to a housing report released Thursday.
Realtors say the 48 percent drop in sales from June to July has ushered in a new standoff between buyers and sellers, which are often banks holding defaulted mortgage loans. To minimize losses, the banks want the homes to fetch the highest price possible. But potential buyers — battered by falling investment portfolios, wage freezes and high unemployment — are still holding out for rock-bottom prices.
The face-off intensified just after the June 30 cutoff date for 2010 home buyers’ tax credits of up to $8,000, said Tracie DeMars, a Vancouver-based Realtor with Re/Max Equity Group Inc.
“People (potential buyers) are saying they are just going to wait now,” she said.
Evidence that sales have stalled appeared in the July “benchmarks” home sales report, which tracked just 333 Clark County homes sold for the month, down 48 percent from 640 in June and down 44 percent from 596 home sales in July 2009. Last month also was the first month this year that sales were lower than in the same month a year ago.
In June, home sales surged 17.6 percent to 640 houses sold in Clark County. In May, 583 home sales represented a 42.2 percent increase over the same month one year earlier.
DeMars and other local Realtors said the surge in May and June home sales were undoubtedly connected to the tax breaks — an $8,000 tax credit for first-time buyers and a $6,500 tax credit for move-up buyers selling a primary residence.
“You had to have the offer written by April 30 and close by June 30,” DeMars said.
Opportunities to receive the tax credit are limited now. In July, lawmakers extended the tax-credit’s closing date to Sept. 30. However, buyers still needed to have a contract in place by April 30.
DeMars said booming spring home sales also reflected the real estate community’s last-minute efforts to close on hundreds of home sales before the end of June.
“We knew sales would drop as soon as that rebate was done,” DeMars said.
Home sales are now expected to suffer over the next several months, similar to the initial slump in automobile sales at the end of the federal government’s $3 billion “cash-for-clunkers” program last September.
Rebates of up to $4,500 were issued during the 2009 auto sales incentive, which produced a huge spike in nationwide vehicle sales in July and August 2009. At the end of the program, auto sales plunged 35 percent, remaining low for several months. Auto sales have since trended higher in July of this year.
For Clark County, the “new normal” home sales trend should produce monthly sales totals that average between 300 and 400 units sold, said Terry Wollam, also an agent with Re/Max Equity Group.
“It is my expectation we’ll have an uptick in sales and values over the next two years,” Wollam said.
He added that the end of the tax-credit stimulus was bound to have a negative effect on sales.
“The stimulation was there, but we in the real estate industry paid for it in July,” he said.
Meanwhile, home values held steady in July. The median price — half sold for more, half for less — was $212,369 for all homes sold in July, benchmarks reported. The median represented a 1.2 percent drop from the same month in 2009 and a decline of 2 percent from June.
DeMars said she does not expect home values to go much lower, as sellers market a glut of short-sale listings and bank-owned foreclosures.
The distressed properties, in some instances, launch bidding wars among buyers who are intrigued by initial low prices.
“If the bank lets it go to auction, sometimes they get more, if they get multiple offers,” DeMars said.
On the other hand, DeMars said, more than half of the houses for sale in Clark County are listed as short sales, in which homeowners negotiate with the lender to sell the home for less than is owed.
In July, Clark County’s rate of foreclosure was the fourth-highest among Washington’s 39 counties. However, the rate fell by 20.5 percent in July, according to RealtyTrac, which tracked 500 county houses in some stage of foreclosure last month.
Cami Joner: 360-735-4532 or firstname.lastname@example.org.