County home sales rise 44 percent

The number of homes sold in the county last month shot up 44 percent from that period a year ago, an increase fueled by dropping prices and the federal government's $8,000, first-time homebuyer tax credit.

Homebuyers snapped up 502 homes in the county last month, up from 348 in October 2008, according to the latest report from Metropolitan Regional Information Systems Inc. These figures also include homes sold in Annapolis.

Meanwhile, the median sale price for area homes sold last month was $285,000, a 10.9 percent drop from that month a year ago. The median is the midpoint at which all homes are sold.

The combination of falling prices and rising sales means people are out and buying. It also means that the local home market is normalizing after years of skyrocketing sales and values.

Daraius Irani, director of applied economics for the Regional Economic Studies Institute at Towson University, said the rapid increase in sales can be attributed to the $8,000 first-time homebuyer credit that is being extended through June.

Decreasing prices also are a reflection of a large mix of foreclosed homes now sitting on the market, he said.

"Once foreclosures begin to stabilize and decrease, we'll hit the bottom in terms of prices," Irani said. "It seems there is some renewed optimism. If we're not at the bottom, we are very close to the bottom."

County home prices continued to fall below the $300,000 mark this year. In September, the median sale price for a home sold that month was $290,000, down 9.3 percent from that month last year.

Carrie Mock, a Realtor with Long & Foster's Eastport office, said sales are rising because prices are coming down. Mock said she sold "an adorable home in the Historic District" that was originally priced at $599,000, reduced to $538,000 and sold for $518,000.

She said buyers are biting when they see home prices down about 18 percent from 2005 prices.

"The key is price it right," Mock said. "If you can't accept what the price is, you've got to come up with plan B or C."

George Matthews, owner of A-1 Mortgage in Annapolis, expects the tax credits to fuel demand.

Buyers are now eligible for the $8,000 first-time homebuyer tax credit through June. Another $6,500 tax credit is available for home buyers who have lived in their home for five years out of the last eight years.

"This will continue that momentum in the spring for those entry-level homes and hopefully will create some greater activity in those more expensive homes," Matthews said.