The real estate market in Issaquah, in many ways an indicator of consumer confidence and the economic realities of area residents, is showing some signs of recovery.

The general trend appears to be that median home prices are down and sales are up, reflecting a nation-wide pattern that is seeing house and property prices return to a more affordable level following the heady times of the summer of 2007.

According to figures released by the Northwest Multiple Listing Service this month, the median price of homes sold on the Eastside south of Interstate 90 in June fell to $498,530, from $525,000 in the same month last year.

This fall in prices led to an increase in closed and pending sales in the same area, to 223 from 184 in June of 2008.

East of Lake Sammamish, however, the trend is not so clear.

While following the same pattern of falling house prices, from a median of $569,000 in June of last year to $472,000 this year, more affordable properties has not resulted in as marked an increase in sales.

Pending sales were up on year to year figures, almost 9 percent to 212.

But closed house sales were down more than 12 percent, to 148.

“It’s encouraging to see that pending sales are at their highest since the credit bubble burst nearly two years ago,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “While the median home price is down about 9.5 percent from a year ago, median prices have flattened over the past seven to nine months. This is an indication that the $8,000 tax credit is working and the market has reactivated itself in the more affordable and mid price ranges.”

Local real estate specialist Kimberly Lester, of The Lester Group, said that the market was doing better than many had expected, and that homes were selling and buyers were buying in all price ranges.

According to Lester, 101 homes were sold in Issaquah in the past six months, with sales ranging from $200,000 to $3 million, and an average of $566,986.

In Sammamish, 77 homes were sold in the past six months, at prices between $320,000 and $2,837,500, and an average of $616,734.

“There is a ten month supply of homes in Issaquah, and just over an 11 month supply of homes in Sammamish,” Lester said. “What does this mean? Well, the experts would still call this a buyers market – but not by much.”

Lester said talking with buyers and sellers recently she got the sense that most were still a little apprehensive, but also “cautiously optimistic.”

“Just a few months ago I had people selling their homes and moving into rental properties, because they felt that prices were going to fall even further,” she said. “That’s what people want to know – when are we going to hit the bottom of the market? I think the fall will start to level off now.”

Lester said that she didn’t expect to see a general rise in house prices this year, but predicted they would start to go up in 2010.

“I think we will see some serious increases perhaps the year after that,” she said. “So this is a great time to buy. Particularly if you have equity – this is a good market.”

Lester added that sellers were now more realistic about what their homes were worth.

“When their house was worth $600,000 two years ago, it is gut wrenching when you tell them that their house will be listed at $480,000,” she said. “That hurts, no doubt. However, for some people this can actually work to their advantage. If this homeowner wants to move up in housing, they can actually buy a better home now than they could have previously. Let’s say that in the summer of 2007 they were in love with a house that was listed for $1.25 million but couldn’t afford it, today, assuming the 20 price decrease we are seeing, the house would be for sale for 1million. The house they are in now lost about $120,000 in value, but the house they want to try to buy now for a million came down in value $250,000. A house they couldn’t afford then, they may be able to afford now. In many ways it’s a fabulous time to move up, or move away to an area harder hit than ours.”

The median residential sale price in King County for June was $363,116, down from $400,000 in the same month last year.