Real estate market sluggish

McALLEN — A nationwide tax credit for homebuyers didn’t help Hidalgo County home sellers in the past two months.

The number of homes sold dropped by nearly 15 percent in September and October this year compared to last year, said Dick Henry, president of the Greater McAllen Association of Realtors.

The credit — up to $8,000 for first-time home owners — did little to spark sales in Hidalgo County, Henry and other real estate agents said.

“Everybody has their own reason for (not buying,)” Henry said. “When they’re uncertain, they don’t do a whole lot.”

Nationally, homes sales have been on the upswing for months and in October climbed to nearly 36 percent above their bottom of January 2009. Experts attributed the rise to buyers rushing to take advantage of the expiring tax credit for first-time home owners that had been set to run out on Nov. 30.

“If you had to really, really push me to the wall I’d say October’s numbers are probably inflated a little bit because of the tax credit,” said Jim Gaines, a researcher with the Real Estate Center at Texas A&M University. “The market would have been much weaker without it.”

Congress has since extended and broadened the credit to people who have owned their current homes for at least five years. Buyers must purchase their home before April 30 to qualify.

While monthly sales of homes are still below last year’s levels, they’re not near the bottom of November 2008. The number of homes sold that month fell to 103, the lowest level since 2001.

After November, sales generally increased again, ultimately leveling off in March 2009, suggesting the market had found stable footing. That lasted until August, when sales began to fall again and foreclosures surged, Henry said.

Now, while 10 percent of the homes listed for sale have been repossessed by the lender, those homes represent 40 percent of all sales, Henry said.

Consequently, the median price of homes that have been sold fell by $2,600 in October. Henry said the cheap deals for foreclosed homes are having a chilling effect on surrounding properties, driving down overall home values.

Still not everyone has seen a fall in sales. Charles Marina, a Realtor with First American Realty, said sales of his commercial and residential properties have been up. Recently, he sold six undeveloped residential lots to the same buyer.

“I haven’t sold six lots at one time like that probably in a year and a half,” Marina said. “That’s a really good sign that people are starting to buy again and I’m pretty optimistic.”

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Sean Gaffney covers business, the economy and general assignments for The Monitor. He can be reached at (956) 683-4434.