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TESS VIGELAND: Today the government reported that sales of existing homes shot up in July. They jumped more than 7 percent from June and rose more than 5 percent from a year ago. Tax credits and bargains on bank-owned homes have created something of a feeding frenzy in some markets, but prices are still dropping.
For some perspective, we turn to Marketplace’s Steve Henn.
Steve Henn: Jared Franz is an economist who tracks the housing market, professionally and personally.
Jared Franz: I’ve been looking for a house for about a year.
Last fall when he started looking, the market locked up completely. List prices struck Franz as ridiculously inflated, but unless homeowners absolutely had to sell, they refused to negotiate.
Franz: Very stubborn. We haggled and we didn’t buying anything and…
Few people did. But Lawrence Yun, chief economist at the National Association of Realtors, says the big spike in sales this summer means the market’s coming back to life.
Lawrence Yun: The increase was much higher than what I anticipated. We have seen some momentum building.
A lot of that momentum is driven by buyers like Angela Aurelio. She left California and moved to Las Vegas searching for a deal and last week she found one. Three beds, three baths and mountain views for $139,000. Her new house doesn’t even have a phone line yet, so I reached her on her cell.
Angela Aurelio: It just seems very smart to choose this area and to choose this type of situation.
She bought from a bank and got the $8,000 first-time home buyers’ tax credit. Franz says last month at least a third of all sales were driven by government incentives and foreclosures. But something else is happening here too.
Franz: People are much more willing to negotiate and prices are coming down.
Even homeowners who are not in financial trouble are finally coming to grips with the fact that their home may not be worth what they thought it was.
In Washington, I’m Steve Henn for Marketplace.
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