Home sales fall after tax credits expire

King County home sales fell in August for the second straight month, providing more evidence — if anyone still needs it — that the market has cooled since popular tax credits ended.

The median price, however, rose slightly.

Buyers closed on 1,313 houses last month, 18 percent fewer than August 2009, the Northwest Multiple Listing Service (NWMLS) reported Friday.

It was the second straight monthly year-over-year decline after 13 months of gains. The drop coincided with expiration of federal tax credits, aimed mostly at first-time buyers, that were enacted in 2009 to boost a sagging housing market.

With some exceptions, the last of the sales that qualified for the credits of up to $8,000 closed in May and June. Now the market is sagging again.

August single-family home sales in King County were down 11 percent from July's total, and 30 percent from June's peak.

The month's sales total was the lowest for any summer month in at least five years.

Compared with last August, sales fell most steeply — nearly 34 percent — in Southwest King County, the county's most affordable area.

The priciest area, the Eastside, saw the smallest decline, just 6 percent.

In Snohomish County, single-family home sales were down 16 percent year-over-year, while the median price fell nearly 11 percent to $267,972.

But deals still are getting done: Jason Kadushin and Marianne Graham closed on their first home, a 105-year-old Craftsman in West Seattle's Admiral District, during this slow month.

Their agent, Eileen Hunt of Windermere Real Estate, said Kadushin and Graham are fairly representative of buyers who have remained in the market. "Today's buyer is buying for the long term," she said.

Kadushin and Graham missed out on the tax credit. Even so, the timing was right, Kadushin said: By waiting, they finally found a home that met all their specifications after four years of on-and-off house hunting.

The couple moved to Seattle in 2006, after he finished business school at Yale and took a job with Microsoft Advertising. They looked for a house then, Kadushin said, "but the market was so overheated, we could barely afford to get into a condo."

He had grown up in Manhattan apartments; a condo had no appeal. The couple elected to rent a house in Northeast Seattle's View Ridge neighborhood instead.

They went house hunting again in summer 2008, even making offers on two houses. Each time, others outbid them.

So they moved into another rental in the Green Lake neighborhood, where their first child was born.

While they rented, Kadushin and Graham drew up a laundry list of what they wanted in a house:

• At least four bedrooms — one for them, one for their son, one for another child they're thinking about, one for visiting relatives.

• An office for Graham, who runs an event-planning and floral-design business from home.

• Architectural charm in a walkable neighborhood.

• A big kitchen with room for a garden.

They started looking again about four months ago. North Seattle was their first choice, said Kadushin, 32, but it was too expensive.

"Qualifying for the tax credit would have been nice," said Hunt, their agent, "but it wasn't a deal breaker for them."

Then the couple saw a new listing for the West Seattle house. They made a full-price offer within 24 hours. They move in this weekend.

Financing also played a part in their decision to buy now, Kadushin said. "The interest rates are just too good to walk away from." He said they obtained a 30-year fixed-rate jumbo loan — which usually carries a higher rate than loans for smaller sums — at 4.75 percent. The couple paid $615,000 for their house, according to county records.

The median price of all houses that sold in King County in August was $380,000, up 1.3 percent from the same month last year, according to the NWMLS.

But the increase was due primarily to sales in the city of Seattle, where the median price rose 5 percent, to $420,000.

Prices fell in all other parts of King County. Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said he expects prices will continue to drop in coming months in response to declining demand.

Zillow.com, the Seattle-based online real-estate database and marketplace, said its Home Value Index for King County — which attempts to measure the median value of all houses, not just those that sold — dropped 4.5 percent in July compared with the same month last year.

King County condo sales were down 14 percent in August from August 2009, while the median sales price, $250,000, slipped nearly 1 percent, according to the NWMLS.

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