Home prices drop again, but pending sales turn upward
Local home sales and prices continued to drop in May, but brokers hailed a surge in pending sales as a sign the Seattle area real-estate market is regaining momentum.
Seattle Times business reporter
Home sales and prices continued to drop in May. But brokers hailed a surge in pending sales — mutually accepted offers that haven't yet closed — as a sign the Seattle area real-estate market is regaining momentum.
That statistical bump is misleading, another industry observer countered.
Buyers closed on 1,654 houses in King County last month, 6 percent fewer than in May 2010. The median price, $345,000, was nearly 9 percent lower, according to statistics released Monday by the Northwest Multiple Listing Service.
Most of the buzz in industry circles, however, was about the 39 percent year-over-year jump in pending sales — the first such increase of the year.
Pending condo sales were up even more sharply: 65 percent.
"We're starting to see signs of a market shift," said Matt Deasy, general manager of Windermere Real Estate/East in Bellevue. "I think most buyers believe we're close to the bottom, if we're not already there."
But Tim Ellis, who edits the real-estate blog Seattlebubble.com, said this May's pending-sales numbers look good only because the previous May's totals were so abysmal.
April 30, 2010, was the deadline for prospective buyers to get homes under contract to qualify for federal tax credits of up to $8,000. With that incentive no longer in play, pending single-family home sales in King County plummeted 39 percent between April and May last year.
That was unusual — there's usually an increase between April and May, as there was this year. "When you compare [the pending sales totals] with any other year, what you see is normal seasonal change," Ellis said.
Pending sales have become a less-accurate predictor of future closings in recent years as more contracts — especially short sales and deals contingent on inspection — have fallen through. Last year, for instance, the listing service reported 40 percent more pending house sales than closed sales in King County.
But despite that shortcoming, May's surge in sales in the pipeline still may indicate something is shifting, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.
"I think we have a lot of bargain-seekers now making offers on distressed properties [short sales and bank-repossessed homes]," he said. "They're looking at the magnitude of the price declines. And interest rates are still a great bargain."
Indeed, Ellis — a bearish presence on the Seattle real-estate scene since he started his blog in 2005 — bought his first house last month, a 91-year-old two-bedroom in Everett.
It was a short sale: The sellers sold it for less than they owed their lenders. Ellis paid $224,950 for the house, according to public records, about $140,000 less than it sold for in 2006.
Ellis said he bought not because he thinks prices have hit bottom — he suspects they'll keep falling for a while — but because the time was right for him. He had to move, and continuing to rent would have been at least as expensive as buying.
"What's more important [than timing the market] is buying a house you can afford that you want to live in," he said. "I accept that I may lose money [on paper], but I don't really care. We plan to stay there at least 10 years."
The listing service's figures indicate the year-over-year jump in pending sales in May was greatest in areas with large inventories of distressed properties.
The increase was 66 percent, for instance, in Snohomish County, which according to research firm RealtyTrac has the state's highest foreclosure rate.
In low-priced Southwest King County, where short sales and repossessed homes have accounted for nearly half of all sales this spring, pending sales rose 69 percent.
"Prices and interest rates are at the point where they can't be ignored anymore," said Tony Hettler, broker-owner of the John L. Scott office in Des Moines.
Michael Ford, his counterpart in Federal Way, agreed. "The moon and the stars are lining up here," he said. More buyers are paying cash, he added.
While the rise in pending sales was more modest on the Eastside, King County's priciest area, closed single-family sales in May actually were up 6 percent from the same month last year — bucking the countywide trend — while prices fell just 4 percent, less than half the countywide drop.
Windermere's Deasy attributed that in part to hiring by major Eastside employers. "People will start to see houses sell before they have a chance to act on them," he predicted.
Eastside condo sales also were up from May 2010, climbing 15 percent. Countywide, however, condo sales fell nearly 4 percent, and the median price — $215,000 — was down 14 percent.
In Snohomish County, closed single-family home sales were down 4 percent, the median price — $242,250 — down 13 percent.
Eric Pryne: 206-464-2231 or firstname.lastname@example.org