Scales tip in favor of home buyers
Economists' predictions have come true. Like most of the rest of the nation, the greater Seattle-area housing market has slowed to the point...
Seattle Times business reporter
Economists' predictions have come true. Like most of the rest of the nation, the greater Seattle-area housing market has slowed to the point where buyers have an edge.
June pending sales of detached houses and condominiums in King County were down 9.4 percent compared with a year earlier, the Northwest Multiple Listing Service reported Thursday.
More striking was the number of homes for sale: 12,282 last month in King County, a 53 percent increase year over year. Snohomish County posted a 61 percent increase last month compared with the previous June.
Last year, the Seattle area's home-sales "pace was so strong it was inevitable it would retreat a bit," said Lawrence Yun, senior economist for the National Association of Realtors.
Market conditions caught Mel and JoAnne Christianson by surprise. The couple, both 71, were trying to sell their rural Snohomish County home this spring and replace it with a newer rambler.
Their home sold after three months of aggressive marketing. But when they went hunting for a single-story house with vaulted ceilings near their old home on the outskirts of Snohomish, they found nothing for sale.
Searching farther afield, they were outbid — after offering full price — on the first house that met their criteria. They landed the second one because they widened their search to include Mukilteo and lucked into it shortly after it came on the market.
Yun said the Seattle area is tied with Salt Lake City as the strongest housing market in the nation.
"I'd still characterize the Seattle market as being healthy — one of the few in the country. And in terms of price appreciation, no one else is doing better."
Since January, the median sales price of King County's single-family homes has increased 6.8 percent, while condominiums have appreciated 30.8 percent. The median price of Snohomish County's houses and condos combined is up 3.9 percent.
Median is the halfway point, meaning half the sales are for more, half are for less.
As 2007 began, Yun was forecasting greater Seattle's appreciation rate would top 5 percent, but fall short of 10 percent — a sharp downturn from last year's 16 percent.
Reached last week at his Washington, D.C., office, Yun stuck by that prediction.
"I'm sure the momentum will weaken as we proceed through the year, given the rise in inventory," he said.
The region's strong job market is fueling the housing market, Yun said. At the same time, rising prices are weakening it.
"Affordability is becoming an issue, which is why it's turning slightly negative," he said.
Indeed, affordability has been steadily eroding, according to the Washington Center for Real Estate Research at Washington State University.
The center calculated that King County buyers, in general, had 70 percent of the income needed to buy the median-priced house late last year, and first-time buyers were essentially priced out with only 39 percent having the necessary income to buy.
These numbers were computed in late 2006 when the median price of a single-family King County house was $440,000. By last month it had climbed $30,000, far outstripping wage gains.
The foreclosure fallout from the subprime-mortgage crisis is putting a damper on the home-sales market nationwide, Yun noted. But he said Washington is little affected because the state's mortgage-delinquency rate, 2.31 percent, is less than half the national average.
Still, Yun said, tighter lending standards, enacted since the subprime problems, are affecting home sales everywhere.
While local housing-market activity is cooling compared with last year, mixed experiences such as the Christiansons had are to be expected, said Redmond-based real-estate appraiser Alan Pope.
"Not all markets move at the same rate of speed," Pope said. "What's driving the high-end waterfront of Mercer Island or Madison Park isn't necessarily the same thing driving the first-time-buyer market in Snohomish County."
That's why he stresses, "You can't apply trends to a single home in a single neighborhood." Pope said appraisals are not being adjusted downward as the market cools. Instead, he said, sellers are belatedly lowering their price after realizing they can't push significantly past last year's prices.
But again, that's not everywhere. Some neighborhoods "are so hot it's ridiculous" because of high demand and limited inventory, Pope said.
North Seattle, for example, is clearly a competitive sellers' market because houses are selling quickly, a Windermere analysis of the past seven weeks shows.
Meanwhile, the Eastside has trended toward a balanced market that equally favors buyers and sellers.
Buyers have a clear advantage in Kent and Federal Way where the number of available properties is growing, Windermere found.
"Twenty-four months ago, you could put the sign up, put out a price and you'd still get offers even if you were a little bit robust on your price," said Steve Knoblaugh, an agent for RE/MAX Eastside brokers. "What we're seeing now is homes are selling, but pricing is of greater importance. That's really key."
The strong growth in for-sale homes in some areas is partly the result of psychology, Knoblaugh said.
When buyers perceive they have a lot to choose from, they take their time. The longer it takes to sell homes, the more that accumulate on the market, he said.
Also, Knoblaugh said some homeowners he has talked to have decided to sell this year rather than next because they think the market is going to weaken more, making it harder to get their price later on.
Marketing consultant Denise Lones said buyers and sellers often make decisions based on what they read in the media.
Negative news stories about local events, national disasters or real-estate downturns elsewhere can all spook buyers, she said.
And that can make sales decline.
But the fundamentals behind Seattle's market — particularly its strong job growth and dearth of new housing — mean "our area is going to thrive and grow," Lones predicted.
"If it's going to be any kind of a slowdown, I think it's going to be false slow," she said. "We're in a very desirable place to live."
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