Lake Union Homes

Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, according to the National Association of REALTORS®. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady.

Housing Still Affordable
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.89 percent in May from 5.10 percent in April; the rate was 4.86 percent in May 2009.

The national median existing-home price for all housing types was $179,600 in May, up 2.7 percent from May 2009. Distressed homes slipped to 31 percent of sales last month, compared with 33 percent in April; it was also 33 percent in May 2009.

Inventory Falling
A parallel NAR practitioner survey shows first-time buyers purchased 46 percent of homes in May, down from 49 percent in April. Investors accounted for 14 percent of transactions in May compared with 15 percent in April; the remaining sales were to repeat buyers. All-cash sales were at 25 percent in May, edging down from a 26 percent share in April.

By Region
Existing-home sales in the West rose 4.9 percent to an annual rate of 1.29 million in May and are 15.2 percent higher than May 2009. The median price in the West was $221,300, up 7.4 percent from a year ago.

Economists polled MacroMarkets predict U.S. housing prices will rise by 12% over the next five years, based on the S&P Case-Shiller Index.

MacroMarket’s co-founder Robert Shiller did not participate in the survey but called the 12% forecast “a plausible scenario,” The WSJ reports.

Plausible…but not likely, says Stan Humphries, chief economist at Zillow.com. “12% over next five years is probably a little high.”

For the past year-plus, Zillow has been predicting an “L-shaped recovery” in housing, a forecast Humphries reiterates in the accompanying video.

“We’re predicting a bottom in the third quarter of 2010,” he says. “Once we hit bottom, we are going to see a sustained period…three-to-five years of modest-to-negligible appreciation, and perhaps flat-to-down in ‘real’ terms,” meaning adjusted for inflation.

Median home price: $365,000
Value lost since 2006: 18.1%
Forecast gain through 2011*: 3.2%
Seattle has become a world-class city with a diverse, vibrant economy. As a home to manufacturers, such as Boeing, and software providers, such as Microsoft, the job market has held up better than average, with December’s unemployment rate sitting at 9.1%.

Home prices had a softer landing as well, dropping just 18.1% over the past three years, about half the national average, according to Fiserv, a division of Moody’s Economy.com.

In the next six months prices are expected to grow 1%. After that, the market should gain momentum. By September 2011, the city could see a price gain of 5.5%.

And while that may not sound all that robust for those jaded by the annual double-digit returns recorded during the boom, that performance will be one of the best of any large city during that period.