Tax credit spurs big surge in Western Washington home sales

KIRKLAND, WA, November 5, 2009. Credit the tax credit and its impending expiration deadline for a surge in home sales last month. Members of Northwest Multiple Listing Service reported a 63 percent jump in pending sales during October compared to the same month a year ago, a gain many brokers attribute to a tax credit that is set to expire at midnight on Nov. 30.

Every county except Okanogan reported double-digit gains in pending sales (mutual acceptance of an offer). Collectively, NWMLS brokers notched 7,235 pending sales during October. A year ago, they reported 4,445 pending transactions.

"As anticipated, October saw a surge in home sales thanks to the federal tax credit. The hope of the real estate industry is that the credit will be extended until there is more equilibrium within the economy and the housing market can stand on its own two feet," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

The new figures from Northwest MLS show continued signs of some stability in the market and improving consumer confidence. Inventory is at its lowest level since December 2008, and the year-over-year price decline, at 7.2 percent area-wide, is the smallest drop since June 2008.

Brokers added 9,344 new listings of single family homes and condominiums to inventory during October, the fewest number since December 2008 when the area was experiencing record snow accumulations. At month end, there were 38,159 active listings in the NWMLS database, a drop of 17.4 percent from the same month a year ago. At that time, the inventory included 46,189 residences.

For the four-county Puget Sound area (King, Snohomish, Pierce and Kitsap), inventory has shrunk 20 percent since twelve months ago. The selection of single family homes (excluding condominiums) in the four-county area is down 22 percent.

Despite a smaller selection than a year ago, there are plenty of choices across the price spectrum. The inventory includes two dozen listings priced under $30,000 and a dozen properties with asking prices of $10 million or more.

The median price on the 5,512 homes and condos that sold and closed during October throughout the NWMLS market area was $269,995, about 7.2 percent less than the year-ago figure of $291,000.

Prices vary widely across the MLS counties, both in dollar amounts and changes measured by percentages. The lowest median selling price, at $136,000 for single family homes and condos (combined) is found in Grays Harbor County. At the other end of the spectrum is San Juan County, where the median sales price for last month's completed sales was $454,250.

A comparison of price changes measured by percentages shows a range from a decline of nearly 17 percent in Jefferson County to a gain of 15 percent in San Juan County.

The median sales price in King County for last month's completed transactions was $349,950, down about 2.4 percent from twelve months ago when the median price was $358,500. For single family homes, the median price on last month's closed sales in King County was $377,500.

Northwest MLS directors who commented on October activity support extension of the tax credit that allows first-time home buyers who purchase a principal residence between Jan. 1, 2009 and Dec. 1, 2009 a credit of up to $8,000.

"I believe the $8,000 homebuyer credit set off a great chain reaction. The first-time homebuyer creates a move-up buyer," explained MLS director Meribeth Hutchings, the broker/owner of Windermere Real Estate/Lake Stevens. "The tax credit was the engine that started driving the market again," she remarked, adding, "It was a great October; hopefully the tax credit extension will be approved and the market will stay strong through the winter."

NWMLS director Kathy Estey, managing broker at John L. Scott's Bellevue office, cites a combination of factors for boosting activity, including the tax credit, stabilizing prices for entry level homes and diminished inventory. "Sales are not just fueled by the first-time buyer stimulus," she said, noting it prompted procrastinators to jump into the market and others to bail out of short sales that had not yet been accepted by lenders, opting instead to purchase homes that are not in the "distressed" categories.

"The fourth quarter is one of the best times for buyers, so we expect the positive activity to continue," Estey remarked, noting sales in her office were up again in October, "a month when we expect to see a slight decline."

Estey credits soft prices for contributing to the uptick in sales for homes priced at a million dollars or more. Her office participated in 10 sales priced at over a million dollars last month, calling that volume a "great improvement" from earlier in the year. In King County, 86 homes and condos fetched prices of $1 million or more, up from the year-ago total of 62 such transactions, according to NWMLS data.

"The compression of prices has created great values in that price range, the stock market has replaced much of what was previously lost, and there is reasonable financing for jumbo loans (20 percent or more down and good credit required)," Estey observed, while voicing hope for an extension of the tax credit. Noting the lending and escrow process takes at least 25-45 days, she said "The window has probably closed for buyers hoping to get in on the [current] tax credit."

Some builders are offering to pay the stimulus dollars to buyers who will miss the opportunity because the homes will not be completed by the expiration date of the existing tax credit, according to Estey.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties in western and central Washington.

Statistical Summary by Counties: Market Activity Summary - October 2009

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

“Information and statistics compiled and reported by the Northwest Multiple Listing Service.”