Tax credit stimulates home buying while prices sink

Prices in neighborhoods such as Issaquah Highlands have been dropping through 2009.

Prices in neighborhoods such as Issaquah Highlands have been dropping through 2009.

Real estate activity in Issaquah and Sammamish appears to be buoyed by the $8,000 homebuyers federal credit, now exteneded through April 2010.

According to real estate information clearinghouse Northwest Multiple Listing Service (NWMLS), a year-over-year comparison of closed home purchases shows October 2009 was a big improvement over 2008. There were 90 properties sold in Issaquah and South Bellevue (NWMLS area 500) — a 67 percent increase — and 157 properties sold in Issaquah Highlands and Sammamish (MLS area 540), 27 percent higher than last year.

At a time of year that traditionally sees a drop-off in activity, realtors across the state pointed to the first-time buyer tax credit, originally set to expire at the end of November. The number of pending and closed sales have rebounded to late 2007 levels as the recession began to take hold nationally.

“The tax credit was the engine that started driving the market again” said MLS director Meribeth Hutchings, the broker/owner of Windermere Real Estate/Lake Stevens. “I believe the $8,000 homebuyer credit set off a great chain reaction. The first-time homebuyer creates a move-up buyer.”

The “chain reaction” hasn’t stopped prices from falling, however.

Single family home sales in Issaquah/South Bellevue shows declines of 5.87 percent to a median sold price of $505,000. In the Issaquah Highlands/Sammamish, a smaller decline of 2.53 percent dropped the median price there to $482,500. The price declines continue a trend since 2007, when the same types of homes were valued over 20 percent higher.

Condos prices saw a larger drop, with prices in Issaquah/South Bellevue dropping 20.23 percent to a median sold price of $225,000 and down 16.67 percent in Issaquah Highlands/Sammamish to a median sold price of $249,990.

Local real estate agents Larry and Kathleen Cragun, writing on their blog Issaquah Undressed, performed their own analysis of Issaquah homes, claiming the market was a “buyer’s market” with over six months of inventory.


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