King County, Seattle, and Bellevue Real Estate Blog

I just read a couple articles saying that new homes sales dropped 33% from April to May to the lowest sales pace since 1963. So I'm thinking to myself, yeah, the tax credit expired so this shouldn't come as a big surprise. This obviously isn't good, but the drop was expected. Really, I am more interested in how the next 2-4 months go in terms of price stabilization, and more importantly how the job market fares during that time span.

What the article didn't stipulate was whether it was closed sales or pending sales. Surely they are talking about pending sales which did indeed dip significantly in our area, but did you know that closed sales for King County were up in May compared to April? Yep. Both the median and average prices of homes rose as well.

So anyways, we take this news on the chin but keep our head up. Time will tell what it all means... maybe a portion of the drop can be attributed to less short sale contracts that have a much lower likelihood of ever closing? I won't be surprised if we find out next month that closed sales didn't drop as significantly as pending sales did the month earlier.

I've said it before and I'll say it again, the speed and success of the real estate market turning around is highly dependent on getting Americans back to work. The first time buyer tax credit simply helped try to smooth real estate's inevitable drop back to reality while encouraging consumer confidence. It's done that, but at the end of the day employment is about the biggest factor in whether we pull completely out of the recession.

So to me, today is not that different from yesterday in that the coming months will be very telling of whether real estate prices stay relatively flat as they've been for months now, or whether we see a bit of a double dip. We all expected home sales to dip following the tax credit, what we have to hope is for employment figures to get better.