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Originally published December 7, 2007 at 12:00 AM | Page modified December 7, 2007 at 9:50 AM

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Home prices slip to '06 level

The Seattle-area housing market is in a pronounced slump, with fewer houses selling, inventories climbing and prices returning to year-ago...

Seattle Times business reporter

The Seattle-area housing market is in a pronounced slump, with fewer houses selling, inventories climbing and prices returning to year-ago levels.

While it's typical for monthly house prices to fluctuate, King County's median price has fallen four months in a row.

What's more, last month's median price for detached houses, $435,000, is back where it was the previous November, according to numbers released Thursday by the Northwest Multiple Listing Service.

The number of King County houses sold has declined every month since March, when compared with the same month a year earlier. Since August those dips have consistently surpassed 25 percent. Last month, for example, roughly 26 percent fewer homes sold than during the previous November.

Meanwhile, the number of houses for sale in King County last month was about 40 percent higher year-over-year, a percentage realized almost every month since May.

Home sales are highly seasonal, and that's one reason for last month's sluggish sales.

However D'Ann Jackson, managing broker of John L. Scott Real Estate's Mercer Island office, senses this year is different.

"I feel we're in that typical holiday market we've seen in past years — it just hasn't been in the past couple of years," Jackson said.

And from his desk in the downtown branch of U.S. Bank, loan officer Tom Ward said he's definitely sensing buyer reluctance.

"Some people are sitting back," Ward said. "They think if this thing clears, they'll start [looking] again."

He thinks potential buyers are delaying decisions because of sharply falling house prices in other parts of the country and the subprime-mortgage mess, which has caused concerns about the availability of loans.

"It's negative news, and they pick that up," Ward said. "The true story is things are tighter, but they're reasonable. If someone wants 100 percent financing, they'd better have good credit."

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Buyers who need a jumbo loan — that's one over the $417,000 limit for conventional loans — are sometimes taking a conventional first mortgage and a short-term second loan, Ward said. Availability and savings are the reasons.

Jumbo loans have been harder to find and generally have a higher interest rate than conventional mortgages.

Conventional rates remain favorable. Last week, the average rates for 30-year and 15-year fixed-rate loans dropped to their lowest point since autumn 2005, according to mortgage-money provider Freddie Mac.

The rate for 30-year loans stood at 5.96 percent; for 15-year loans it was 5.65 percent.

While sales are down, Jackson said, some opportunistic buyers are coming forward, even during the holidays.

"From a buyer's standpoint, they have more selection than they've had in past years," she said, adding "buyers aren't making quick decisions like they were when you could put a sign in the yard and it would sell."

Besides more houses to look at, buyers are also in a better bargaining position when they do make an offer.

"You see more buyers asking for price concessions, and they're getting them," added Rich Lucas, an agent in the Auburn office of Keller Williams Realty.

Alternately, some sellers are paying the buyers' closing costs — this after paying to get their homes in tiptop shape.

"It's a competition out there, and sellers need to prepare their houses to win the competition in their price range," Lucas said.

The overall picture for King County condominiums, which made up 30 percent of last month's countywide sales, was mixed in November.

Their prices have fluctuated in recent months. However, compared with the previous November, condos' median price was up 4.1 percent, to $284,450, but sales were off and the number on the market was up 68 percent. Some of that may reflect an increase in the number of new condos entering the market.

Sales patterns in surrounding counties were much the same, although median house prices have actually declined year over year in both Kitsap and Pierce counties. They were down 3.4 percent and 6.7 percent, respectively, reflecting more conservative seller pricing.

Snohomish County's median house price was up 0.7 percent — essentially unchanged.

Elizabeth Rhodes: erhodes@seattletimes.com

Copyright © 2007 The Seattle Times Company

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