Seattle-area home sales increase, but a decline might be in offing

Seattle-area home sales rose in November for the sixth straight month, the Northwest Multiple Listing Service said Thursday.

Will there be a seventh?

With the boost from the federal first-time homebuyers' tax credit likely to wane, at least for the next few months, some observers say sales volumes could start sliding again this winter.

"We could be looking at a second dip in housing," said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. "I hope I'm wrong."

Closed sales of King County houses in November were up 81 percent over last November's anemic total, the listing service reported.

Condo sales rose 63 percent year-over-year in King County; house sales in Snohomish County rose a whopping 120 percent.

But many of those November buyers were first-timers who signed sales agreements earlier in the fall to ensure they could close by Nov. 30, then the deadline to qualify for the $8,000 federal tax credit.

While Congress later extended the deadline to June 30, "I suspect the number of first-time buyers is going to be down substantially" at least for the next few months, Crellin said.

Before the extension, the real-estate industry did an effective job of persuading buyers they needed to act quickly, he added. And first-timers who wouldn't have bought without the credit accounted for 30 percent of all sales during the third quarter, he said.

In addition to extending the first-time buyers' credit, Congress last month also approved a new $6,500 tax credit for many buyers who already own homes. Real-estate brokers and agents expressed hope that those incentives, coupled with low interest rates and lower home prices, could persuade more people to buy, even during the usually slow winter months.

Casey Holme, a Windermere Real Estate agent in Seattle's Wedgwood neighborhood, said he has three or four clients who had decided to hold off before the new tax incentives were approved.

Now they're looking again. "It certainly opens the door," he said of the credits.

But Tim Ellis, editor of the Seattle Bubble real-estate blog, said he expects sales will experience more than the usual seasonal drop in December, January and February before rising again in the spring as the new deadlines near.

For now, "the urgency from the tax credit has gone," he said.

Pending house sales in King County — offers that were accepted in November but haven't yet closed — slipped 31 percent from October's total, another likely sign of the tax credit's diminished influence.

But November's pending sales still were up 36 percent from November 2008, when international and regional economic turmoil wreaked havoc with real estate.

Prices this November remained lower than a year ago, however. The median price of a single-family home that closed in King County last month was $370,000, down 6.3 percent. The median condo price, $252,600, was down 7.9 percent.

If sales are to continue their surge through the winter, it may be because of buyers like Jeff Hume, a client of Holme's.

Hume closed on his first house, a $384,000 two-bedroom in Wedgwood, the week before Thanksgiving. "It's a nice bonus," he said of the first-time buyers' tax credit — but it isn't the reason he bought.

In fact, Hume said, he'd pretty much concluded by mid-October that he wasn't going to find the right house in time to meet the Nov. 30 deadline. "Then it just so happened I found this house."

Hume, 32, a financial analyst for brokerage D.A. Davidson, said he started looking for a place to buy last spring not because of the tax credit, but because "the timing was right for me, buying into a weak market."

He liked the low interest rates, he said, and the long-standing federal mortgage-interest tax deduction: "I tend to think long-term."

There are plenty of buyers like Hume, Crellin said — but there are plenty of others who could hold off, thinking prices will drop still more.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com