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Originally published June 4, 2010 at 12:36 PM | Page modified June 5, 2010 at 8:31 AM

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Home sales balloon in May thanks to federal tax credits

The median price of a single-family King County home sold in May was $379,000, up 1 percent from May 2009. It was the second such increase in the last three months.

Seattle Times business reporter

King County home sales, still riding the wave from recently expired federal tax credits, hit a post-bubble high in May.

But statistics released Friday by the Northwest Multiple Listing Service also suggest that wave has crested.

Buyers closed on 1,766 houses in the county last month, the largest number since August 2007, when the real-estate boom was just starting to go bust. Many May sales consummated contracts signed before April 30, the deadline for buyers to qualify for tax credits of up to $8,000.

But, with the credits no longer a factor, the number of new contracts signed in May plummeted. Pending sales — mutually accepted offers that haven't yet closed — were 39 percent below April's total, and 20 percent below the number recorded last May.

It was the first year-over-year decline since March 2009, and a signal that closed sales also could drop once the tax-credit-inspired deals work their way through the pipeline this month.

"The credit's gone," said Dahni Malgarini-Logar, associate broker at the Remax real-estate office in Renton. "We're back to reality."

Despite its loss, she and many other real-estate professionals say they remain optimistic about sales. Interest rates remain low, they say, and sellers are pricing homes more realistically.

The tax credits got prospective buyers looking, said Laverne McIntyre, broker at Coldwell Banker Danforth's Northgate office, and those who didn't buy before the deadline are still in the market.

But others say those influences won't be enough to counteract the credits' demise.

"Get ready for the worst July closed sales on record," Tim Ellis wrote on his Seattlebubble.com real-estate blog Friday.

With the tax credits gone, home sales now hinge to a great extent on the economy and job growth, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. "We need the private sector to start hiring people long term," he said.

Crellin said he wasn't surprised by May's surge in closed sales or the drop in pending deals. The expiration of the tax credits motivated many buyers to sign contracts in March and April that closed last month.

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Congress approved the first of the tax credits, for first-time buyers, in 2009 to kick-start a stagnant market.

The median price of a single-family home that sold in King County in May was $379,000, up 1 percent from a year ago, the listing service said. It was the second year-over-year price increase in the past three months after more than two years of declines.

But McIntyre said prices may drop as the year progresses. More bargain-basement foreclosed homes are coming onto the market, she said, pushing other sellers to reduce prices as well.

Foreclosed homes and "short sales" — sales for less than the seller owes on the home — are flooding South King County and are up significantly from a year ago said Joe Brannon, another Renton Remax agent.

Resales of foreclosed homes accounted for nearly 13 percent of all King County single-family home sales in April, up slightly from a year earlier, real-estate database and marketplace Zillow.com said Friday.

Zillow's Home Value Index for King County — which attempts to measure the value of all houses, not just those that recently sold — was down 3.7 percent year over year.

The Northwest Multiple Listing Service reported that closed condo sales in King County in May were up 53 percent from the same month last year, while pending sales fell 32 percent. The median sale price was $250,000, down 7.6 percent from May 2009.

Single-family home sales in Snohomish County followed the same pattern: Closed sales up 25 percent, pending sales down 30 percent, the median sale price — $279,950 — down 9.7 percent.

Eric Pryne: 206-464-2231

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