From Snoqualmie Valley Record blog

Home prices in King County continued to decline this quarter even as the county saw a 21 percent rise in the number of home sales from last quarter, according to a real estate market report by the Washington Center for Real Estate Research at Washington State University.

The rise in sales, at seasonally-adjusted annual rates, is likely the result of an $8,000 federal tax credit for first-time home buyers, which expires in November, said Glenn Crellin, the center’s director.

The decline in housing prices is due to a surplus of houses for sale and the influx of first-time buyers, who typically are typically looking for less expensive houses, he said.

The median home price in King County for the second quarter was $387,500, a 13.9 percent decline from last year. It is the most expensive county in the state.

Sales prices tend to be driven by urban markets, he said.

First-time buyers seem to be searching for homes that offer a more convenient commute to work, Crellin said.

There is no indication that the jump in sales is a sustainable trend, he cautioned.

“I am concerned that when the tax credit expires in Nov., the sales numbers will plummet again,” he said.

Many of the home purchases have been on distressed properties, which include foreclosed homes, according to the center.

“There are simply too many resale properties on the market,” Crellin said.

More than 50,000 homes were listed at the end of June. While slightly down from last year, that is enough to supply Washington’s house market for over 10 months, according to the center.

The tax credit has not helped builders, who can’t compete with resale properties’ lower cost, Crellin said.

Building permits in King County have dropped by 75 percent from last year.

Bellevue-based Connor Homes let its development land in North Bend go to county auction this fall after it was foreclosed on.