Tax credits fuel King County home sales in April
Sales of single-family homes in King County in April were up 64 percent from a year ago. But some fear a drop-off now that federal tax credits have expired.
Seattle Times business reporter;
First-time buyers Shawn and Carey Olson Findley helped make April one of the busiest months for home sales in King County since the real-estate bubble popped nearly three years ago.
They closed April 14 on a two-bedroom house in West Seattle with a big deck and a terraced backyard. It was one of 1,642 single-family homes that changed hands last month, a 64 percent increase from April 2009, the Northwest Multiple Listing Service said Wednesday.
The service also reported more pending house sales — offers that were accepted but haven't yet closed — in April than in any month since June 2006.
Like many April buyers, the Findleys, both 27, were motivated at least in part by expiring federal tax credits, in their case an $8,000 tax break for first-timers. Buyers had to have homes under contract by April 30 to qualify.
"If we hadn't bought [by the deadline], I would have been kicking myself," Carey said.
But with the tax credits that juiced the market no longer available, some real-estate observers question whether this spring's momentum can be maintained.
"We've been borrowing demand from future months," said Stan Humphries, chief economist at Zillow.com, the Seattle-based real-estate database and marketplace.
Others argue the credits have given the market a lasting boost.
Even without them, low interest rates and lower prices still give buyers a big advantage, Lennox Scott, chairman and CEO of John L. Scott Real Estate, said in a recent blog post.
The Obama administration pushed the tax credits through Congress last year to jolt a moribund housing market back to life. There's ample evidence, both statistical and anecdotal, that the tactic worked.
Buyers closed on 749 houses in Snohomish County last month, a 67 percent increase from April 2009, the broker-owned listing service said. In King County, condo sales were up a whopping 91 percent year over year.
Michael Doyle, associate broker at Windermere Real Estate's Green Lake office, said he sold five condos or town houses during the last week of April, at least three to buyers hoping to claim the tax credits.
It was the busiest week of his six-year career, Doyle said. Two of the homes drew multiple offers.
John L. Scott agent Georgia Schoonover, who represented the Findleys, said her goal at the start of the year was to close 10 sales by the end of April. She hit that total in mid-February.
The sales surge was "100 percent" attributable to the tax credits, she said: Prospective buyers, many under 30, began house-hunting in earnest shortly after Congress extended the credits late last fall.
Schoonover and the Findleys started looking for a house last October, two months after the couple married. Shawn, who manages a downtown Bellevue restaurant, figures they visited more than 100 homes.
"There was more competition that you would think," he said.
They focused their search on West Seattle after concluding they couldn't afford anything they wanted in the Seward Park-Columbia City area, where they had been renting.
In early March, the Findleys made what they thought was a competitive offer on one West Seattle house, only to be outbid when four more offers arrived the next day.
"Everybody told us this was a buyer's market," said Carey, a speech and language pathologist with the Highline School District. "It wasn't."
They bought their new house for $399,490 and moved in less than three weeks ago. They're still unpacking boxes.
They say that, while they probably would have bought sometime soon even without the tax credit, it provided a powerful incentive to not wait.
"It certainly speeded up the process," Shawn said.
Stories like the Findleys' bode ill for sales later this year, said Humphries, the Zillow economist. He expects the number of closed sales will start dropping in July or August — usually peak months — after all the transactions that qualify for the tax credits have worked their way through the pipeline.
They must close by June 30. And if recent months are any indication, a significant number of pending sales could fall through.
Another red flag, according to Humphries: Sales aren't keeping pace with growing inventory. Owners who wanted to sell over the past three years, but couldn't, finally are listing their homes, he said.
That could depress prices, which have remained fairly stable in King County for more than a year.
The median price of houses sold in King County in April was $375,000, down 1.3 percent from April 2009, according to the listing service. But prices rose year-over-year in Seattle and North King County and on the Eastside.
Doyle, the Windermere agent, speculates that, with the tax credits gone, buyers might press sellers to cut prices to make up the difference. But sales volumes should stay strong for a while, he added: "We'll continue to ride the wave into the summer."
Schoonover, the Findleys' agent, isn't so sure. Last Sunday — two days after the tax credits expired — she hosted an open house. No one came. She texted two other agents holding open houses, who also reported slow days.
"I don't know whether it was just a temporary lull," she said, "or a sign of things to come."
Eric Pryne: 206-464-2231 or firstname.lastname@example.org