David Sundquist

The Seattle Times report on June 2009 residential real estate sales in the Seattle metro area showed that sales volume was up and the average price decreased. The $8000 tax credit offered to new home buyers is driving the market. The amount of short sales and REO properties on the market is depressing prices.

Home sales climb in June in King County; median price drops from year ago to $395,000

Home sales increase attributed in part to the new $8,000 tax credit for first-time homebuyers.

By Eric Pryne

Seattle Times business reporter

Single-family home sales in King County in June surged to their highest level in nearly two years, according to statistics released today by the Northwest Multiple Listing Service.

A total of 1,655 houses closed last month, up 4 percent from the same month in 2008. It was the first year-over-year increase in closed sales since the local housing market peaked in July 2007, and the largest number of closings in the county since October 2007.

"The positive movement in our real estate market year-over-year is really very encouraging," Ron Sparks, managing vice president of brokerage Coldwell Banker Bain, said in a prepared statement.

He and other real-estate agents attributed the increase in part to the new $8,000 tax credit for first-time homebuyers. One broker said they account for about 40 percent of the market now.

Condo sales in King County continued to lag, with closings last month 18 percent below the June 2008 number.

The median price of a single-family house sold in the county in June was $395,000, down 12 percent year-over-year. Real-estate professionals noted the median price is up slightly since January - but it increased between January and June of last year as well.

The median condo price was $249,000, down 16 percent from last June.

Pending sales of King County single-family homes - offers that have been accepted by sellers, but haven't yet closed - were up nearly 25 percent year-over-year, the third consecutive monthly increase.

But, until June, closed sales had continued to trail last year's numbers, prompting some to wonder if the pending-sales increase was illusory. Agents attributed much of the disparity between and closed sales to "short sales" - offers sellers accept for less than they owe on the property - that are notoriously slow to close, and often don't close at all.

In Snohomish County, pending sales of single-family homes in June were up 37 percent year-over-year, and closed sales were nearly even. The median selling price was $307,000, down nearly 12 percent from June 2008.

As reported by the Northwest Multiple Listing Association, sales of residential real estate were up in May 2009, with pending sales increasing at a double digit pace. Prices are starting to stabiize.

Because of lower prices, lower interest rates and the buyer assistance David is offering, there has never been a better time to buy in the Seattle metropolitan area. However, location is more important than ever. Go to my website and register and you will be notified as soon as the right property comes on the market. This is the best listing search available.

Here is the complete article as reported by the NWMLS:

Inventory shrinking, sales rising, prices stabilizing in some Northwest MLS areas

KIRKLAND, WA, June 4, 2009 - Waiting longer to buy a home is not likely to pay off, according to Northwest Multiple Listing Service director Kathy Estey after reviewing reports summarizing May activity. Estey pointed to shrinking inventory (about 20 percent fewer listings than a year ago), double-digit increases in the number of pending sales (up 17.7 percent from a year ago), solid open house activity, and signs of stabilizing prices (eight of the 19 counties in the report show price gains since January) as indicators of an improving market.

Northwest MLS brokers notched 7,160 pending sales during May. That total out-gained the year-ago tally by 1,075 transactions (up 17.7 percent) and improved on April's total by 242 sales for a 3.5 percent increase. For the four-county Puget Sound area, pending sales jumped 21.5 percent from a year ago, rising from 4,526 to 5,498 transactions.

Buyers had fewer choices during May than at this time a year ago. At month-end, member-brokers reported 41,318 active listings throughout the NWMLS service area. A year ago, there were 51,817 active listings. Current inventory includes 11,278 single family homes and condos that brokers added during May. For the same month a year ago, brokers added 14,176 new listings to inventory.

Estey, the managing broker at the Bellevue Downtown office of John L. Scott Real Estate, said affordable homes inventory is down to the levels of a normal market and reaching for a sellers' market. "Multiple offers are common in the under $400,000 range when the home is priced well, shows nicely and is marketed professionally," she remarked. "Buyers who are waiting for prices to come down more have missed the bottom," Estey believes.

Close in markets are the most active, with rural areas still lagging, but Estey says there is now some activity where little to none had existed in the first quarter. She believes prices have adjusted and completed new construction is still a very attractive purchase. "Builder inventory is being absorbed and there are fewer incentives. In January builders were giving away the farm, by March it was only half the farm and now they may just give away a chicken or two in order to make the deal."

Prices are showing signs of stabilizing, according to NWMLS data. Prices area-wide are down around 10 percent from twelve months ago, but a comparison to January shows price gains in eight of the 19 counties in the NWMLS report. System-wide, prices for single family homes and condominiums that closed last month are up about 2.6 percent since January. (See chart, page5.)

In King County, prices dipped about 12 percent from twelve months ago and have declined about 3.5 percent since January, but a closer look shows considerable variation within sub-areas. Prices in southeast King County fell 20 percent from a year ago, but since January are down only about 2.8 percent in north King County.

Condominium activity remains slow. Pending sales are down about 15 percent from a year ago. The median sales price of $240,000 is about 7.7 percent lower than a year ago. Condos in King County sold for a median price of $270,450 last month, which compares to the year-ago price of $287,925, a drop of about 6 percent).

Demand for high-priced homes is also tepid. According to Estey, there are "amazing opportunities for buyers with good credit scores and 25 percent down payment in the $900,000- plus marketplace."

"What we're currently seeing is real estate's version of Back to the Future," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. He believes the combination of historically low interest rates, adjusted lower prices, and the $8,000 tax credit has created advantageous conditions for buyers that haven't been seen in decades. He noted sales in the four-county area continue to see double digit increases. "The more affordable markets are seeing a major boost which is leading to higher sales in the mid-priced markets and causing some increases in activity in the upper end," Scott remarked.

While cheered by the more vigorous activity, brokers note short sales and foreclosures continue to be a drag on the market. Such properties, often sold at deep discounts, may take extraordinary time to close once there has been mutual acceptance of an offer. (Note to editors: see explanatory note, p. .5)

NWMLS director Meribeth Hutchings, broker/owner of Windermere Real Estate/Lake Stevens Inc., said her office represents the buyer of a short sale that has been pending since October. The buyers who hope to purchase the home in Mukilteo have been very patient, but are becoming less so and are ready to move from the small apartment where they have been living with two large dogs. "Every time we think we are getting close, the lender changes what they want," Hutchings stated.

Another NWMLS director, Pat Grimm, reported similar experiences with a short sale. "We just closed one in Montlake on May 28 -- after the parties to the transaction reached mutual acceptance on Feb. 10, said Grimm, the owner/broker at Windermere Real Estate/Capitol Hill. (NWMLS defines a short sale as a transaction that does not produce sufficient funds to cover the existing monetary encumbrances against the property, closing costs, real estate commissions, and other financial requirements of closing.)

Tacoma broker Dick Beeson of Windermere/Commencement Associates said he has several agents deeply involved in handling short sales since Pierce County is so hard hit. He estimates around 25 percent of all properties for sale are either bank owned or short sale, and one of every three pending sales is one or the other.

"Short sales play a big role in what many buyers are looking for," according to Beeson, who also noted these buyers often fail to realize the extraordinary length of time it takes to close a sale - generally twice as long as a conventional sale. "Many get discouraged after 60 or 90 days and withdraw from a sale, never having received notice form the underlying lender what they are willing to take for the property. Many properties end up going to foreclosure because of the inefficiency of the banks in providing answers to offers," Beeson commented.

The recent uptick in pending sales, both locally and nationally, is a hopeful sign that we're putting the worst of the market behind us, suggests Ron Sparks, managing vice president at Coldwell Banker Bain.

"As you would expect in a recovering market, not all neighborhoods are uniformly performing, and for home sellers particularly, there are plenty of challenges that remain." However, he observed, "In many neighborhoods where just a few years ago broad affordability had all but vanished, lower prices, flexible terms and very low interest rates are pushing inventory absorption for single family homes to levels not seen since 2007."

Sparks said multiple offers for the best listed properties are occurring everywhere, including Pierce and Snohomish counties. "Improving sales in one neighborhood helps dwindle inventory, and can push motivated buyers to search for homes in other neighborhoods. This process typically occurs before prices start to stabilize," he explained.

Has that stabilization begun? "As my old Magic 8-Ball used to tell me: signs point to yes," according to Sparks, who noted eight counties served by the NWMLS have seen price increases since January. "The sales volume in my Bellevue office is now roughly 10 times what it was in February, with expanded sales in almost every price category. Overall inventory levels have dropped substantially as well. Does this mean the optimal time for home buyers to take full advantage of favorable market conditions has passed? I'd probably defer that to the Magic 8 ball also..."Ask again later."

Recent fluctuations in mortgage rates have brokers and buyers alike wondering if rates will escalate as inflation worries return.

"While rates now are wonderfully low, waiting has cost buyers. Loans recently available for 4.75% are now 5.25%," according to broker Kathy Estey. On a $400,000 loan, that means the monthly payment rises from around $2,128 to about $2,253 - and increase of nearly $125. She believes it would be wise to act now for the best selection in the affordable homes. "Who knows if we will see rates of 5% or below again anytime soon," she wonders.

Commenting on a recent report from the National Association of Realtors showing a third consecutive month of improving pending sales, Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. "Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market," he said. "Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers."

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes approximately 28,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties in western and central Washington.

Statistical Summary by Counties: Market Activity Summary - May 2009 (updated June 5)

May 2009 Single Family Homes + Condos	LISTINGS	PENDING SALES	CLOSED SALES
New Listings	Total Active	# Pending Sales	# Closings	Average Price	Median Price
King	4310	13537	2801	1618	$423,875	$351,500
Snohomish	1759	5656	1160	666	$325,502	$299,950
Pierce	1632	6088	1196	643	$252,431	$225,000
Kitsap	531	2005	341	219	$292,797	$240,000
Mason	182	812	73	56	$189,062	$161,405
Skagit	258	1369	140	78	$251,548	$207,250
Grays Harbor	180	840	75	63	$139,161	$114,000
Lewis	152	722	78	40	$159,230	$138,150
Cowlitz	113	657	82	55	$194,685	$177,900
Grant	145	724	73	36	$166,956	$148,450
Thurston	521	1722	406	214	$273,164	$247,000
San Juan	64	499	14	4	$464,750	$410,000
Island	253	1136	107	86	$299,378	$248,500
Kittitas	152	612	48	38	$250,716	$170,000
Jefferson	84	562	34	12	$298,000	$294,500
Okanogan	86	386	27	17	$159,435	$140,000
Whatcom	496	2024	311	179	$269,633	$250,000
Clark	106	408	64	57	$229,296	$206,900
Pacific	60	404	39	13	$157,333	$175,000
Others	194	1155	91	60	$218,748	$214,000
MLS TOTAL	11,278	41,318	7,160	4,154	$329,680	$280,000

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498

2009 Median Prices, Closed Sales (SFH + Condo combined)

	Jan	Feb	Mar	Apr	May	Change since Jan
King	$364,137	$348,000	$335,000	$350,000	$351,500	-3.47%
Snohomish	$295,000	$301,750	$304,950	$290,000	$299,950	1.68%
Pierce	$235,000	$239,950	$228,375	$225,000	$225,000	-4.26%
Kitsap	$234,200	$225,000	$246,495	$240,000	$240,000	2.48%
Mason	$170,900	$147,075	$130,000	$137,550	$161,405	-5.56%
Skagit	$246,950	$252,500	$240,000	$225,000	$207,250	-16.08%
Grays Harbor	$155,855	$131,200	$142,250	$150,000	$114,000	-26.86%
Lewis	$158,250	$162,000	$166,000	$174,950	$138,150	-12.70%
Cowlitz	$161,500	$151,250	$180,000	$179,000	$177,900	10.15%
Grant	$152,557	$166,539	$145,125	$144,000	$148,450	-2.69%
Thurston	$239,950	$259,000	$240,000	$232,600	$247,000	2.94%
San Juan	$573,500	$520,000	$1,162,500	$226,000	$410,000	-28.51%
Island	$243,803	$247,000	$248,500	$244,450	$248,500	1.93%
Kittitas	$230,000	$210,000	$206,675	$196,000	$170,000	-26.09%
Jefferson	$227,500	$325,000	$238,730	$213,750	$294,500	29.45%
Okanogan	$139,000	$137,450	$110,000	$149,000	$140,000	0.72%
Whatcom	$245,000	$246,218	$257,000	$259,450	$250,000	2.04%
Clark	$221,000	$236,375	$248,750	$202,500	$206,900	-6.38%
Pacific	$182,000	$122,500	$147,000	$135,000	$175,000	-3.85%
Others	$183,500	$193,371	$186,500	$224,500	$214,000	16.62%
Total	$273,000	$278,000	$270,000	$270,000	$280,000	2.56%

In An Unprecedented Move To Spur Housing Sales Congress Allow First Time Buyers To Take Tax Credit For Their Downpayment And Closing Costs.

Unless it gets extended, this opportunity expires on 12/01/2009. I have not seen an offer like this before. This is an excellent time to buy real estate in the Seattle metropolitan area. If you want to be notified of all the best buys in the Seattle metropollitan area, go to my website www.seattle2edmonds.com

Check out my other buyer bonuses at www.davidsundquist.com Here are some details of the expanded tax credit.

Get your $8,000 HUD tax credit now
HUD tweaked stimulus tax incentive so first-time home buyers get instant assistance with down payment and closing costs.
By Les Christie, CNNMoney.com staff writer
Last Updated: May 29, 2009: 3:22 PM ET

NEW YORK (CNNMoney.com) -- First-time homebuyers will now have access to quick cash to help them with their down payments.

On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.

"We believe this is a real win for everyone," said HUD secretary Shaun Donovan in a speech before the National Association of Homebuilders (NAHB). "Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn't collect the $8,000 credit until tax time, rather than at closing time -- when it's needed.

The delay created an obstacle to reigniting the housing market because most first-time buyers -- the ones who would buy much of the available inventory -- have only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.

The mechanics of the new program, according to NAHB economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS.

The initiative also authorized similar programs already offered in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee, Washington and other states. To quickly infuse cash into their housing markets, the housing finance authorities in these states created bridge loans to allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds.

The first state to launch such a plan was Missouri, which rolled out its Missouri Housing Development Commission Tax Credit Advance Loan program on January 14 -- a month before Congress approved the stimulus package. Since then, Missouri has approved applications by more than 360 borrowers and closed on 166 of them.

Lamar Cherry and his wife, Chrishanna, used the program to augment their down payment when they bought their home in Kansas City.

The couple purchased a four-bedroom, three-bath split-level home for $150,000, putting about 6% down. Much of that $9,000 came from the loan program, which they tapped so they wouldn't have to drain their reserves.

"We had money saved up that we were going to use for the down payment," said Cherry. "Now we can use some of that to buy some things we need for the house."

At closing, the Cherrys, like all buyers in the program, signed for their first mortgage, plus a second mortgage issued by the state. The second note is good for 6% of the price of the home, up to $6,750; there is a $350 set-up fee, but no interest is charged if the debt is repaid by June 2010.

In Missouri, borrowers can only access $6,750 of the $8,000 credit for down payments. "We wanted them to have a cushion below that $8,000 in case other tax liabilities show up," said Greg Spurgeon, the single-family homeownership administrator for the Missouri Housing Development Commission.

If borrowers don't pay off the note, it becomes a 10-year fixed-rate mortgage with an interest rate one-half percentage point above that of their first mortgages. For example, borrowers paying 6% on their first mortgages would be charged 6.5% on the second.

So far, Spurgeon said, a significant proportion of participating homebuyers have repaid their loans. He expects most of the others to do the same before the deadline.

Cherry has claimed the federal tax credit on his 2008 taxes, but he hasn't gotten his refund yet. He definitely intends to repay the loan before the 2010 deadline because, he said, not doing so would add about $75 a month to his house payments. To top of page
First Published: May 29, 2009: 2:37 PM ET

http://money.cnn.com/2009/05/29/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009052915

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