Without the data I have now, I hypothesized that the number of home sales had likely increased due to the $8000 homebuyer tax credit. This was not a hard guess to make as home sales around the country rebounded once the tax credit went into effect. What I didn't know was at what price the homes were selling for.
I was able to get a summary of all real estate sold in the 15228 zip code for FY 2008-2009 and for FY 2009-2010 until May of 2010.
Here is the data:
| Fiscal Year Home Sales Through May | ||
| Month | FY 2008-2009 | FY 2009-2010 |
| July | 35 | 31 |
| Aug | 23 | 31 |
| Sept | 21 | 18 |
| Oct | 12 | 27 |
| Nov | 8 | 18 |
| Dec | 14 | 23 |
| Jan | 10 | 13 |
| Feb | 9 | 9 |
| Mar | 8 | 14 |
| Apr | 19 | 19 |
| May | 21 | 25 |
| Total | 180 | 228 |
As you can see, starting in October 2010, home sales for every month in fiscal year 2009-2010 equaled or outpaced home sales in fiscal year 2008-2009. The Home Buyer Tax Credit I believe went into effect starting in January 2009 and expired April 30, 2010.
The above data is interesting in that it shows that the number of homes sold in Mt Lebanon during this period increased by 26.7%. That's quite the jump.
The other side of the coin to this is that the transfer tax is not based on just the number of homes sold but also on the price of the home. For instance, despite the increase in the number of sales, if the average sales price had fallen substantially, then we would not have seen the increase in transfer tax receipts. Luckily, I have the average sale price data for the same time period below:
| Average Sold Price Through May | ||
| Month | FY 2008-2009 | FY 2009-2010 |
| July | $ 245 | $ 233 |
| Aug | $ 204 | $ 248 |
| Sept | $ 279 | $ 261 |
| Oct | $ 196 | $ 188 |
| Nov | $ 186 | $ 226 |
| Dec | $ 166 | $ 238 |
| Jan | $ 216 | $ 224 |
| Feb | $ 220 | $ 160 |
| Mar | $ 252 | $ 258 |
| Apr | $ 214 | $ 268 |
| May | $ 234 | $ 232 |
| Average | $ 219 | $ 231 |
As you can see above, not only did the number of homes sold increase by 26.7% but the average price of the home sold increased by 5.5%. What I find interesting is that the increase in the average price was just above the $8,000 stimulus.
There are a lot of conflicting conclusions I can draw from the above information. Or maybe a better way to say it is that the above data begs a lot of questions. Did home prices actually go up in Mt. Lebanon during this time period? If so, was it short lived due to the stimulus money? Was it simply the effect of more expensive homes being listed on the market than the year before?
There is another set of data that can help answer that last question. Below is a chart showing the average list price of a home for each of the fiscal years:
| Average Active Price Through May | ||
| Month | FY 2008-2009 | FY 2009-2010 |
| July | $ 268 | $ 345 |
| Aug | $ 267 | $ 337 |
| Sept | $ 268 | $ 341 |
| Oct | $ 277 | $ 310 |
| Nov | $ 292 | $ 327 |
| Dec | $ 294 | $ 342 |
| Jan | $ 290 | $ 358 |
| Feb | $ 287 | $ 341 |
| Mar | $ 331 | $ 336 |
| Apr | $ 339 | $ 339 |
| May | $ 356 | $ 350 |
| Average | $ 297 | $ 339 |
As you can see, the average list price of the homes on the market increased by a whopping 14.1%. So, we had more expensive homes on the market and more sales of said homes.
So what does this mean for the 2010-2011 budget that we just passed? I would expect our transfer tax receipts to drop substantially from 2010-2011. The FY 2009-2010 increase was due mostly to a number of higher priced homes on the market and higher sales volume driven by the home buyers tax credit.
As is the case with most stimulus, what the tax credit did was move demand forward. I have heard from more than one Realtor that the real estate market is extremely quiet for this time of year (and that is not just in Mt Lebanon). Those people that had planned to perhaps wait an extra year to buy a home in 2011 simply accelerated their purchase to gain the $8000 tax credit to help them buy a home in early 2010. As with the "Cash for Clunkers" program, we will see demand for home purchases decline substantially once the stimulus is removed. How long it lasts is anyone's guess.
If anyone has any additional insight to the information presented above, I'd love to hear it. If enough people email me, I would be happy to provide an update or a different perspective.
Thanks for reading.
James
