King County median home price for Jan. hits 6-year low
Some observers attributed January's price drop to an increase in the number of sales of distressed properties — bank-repossessed homes and "short sales" for less than a seller owes its lenders.
Seattle Times business reporter
Sales of distressed homes are on the rise in the Seattle area — and they are helping to drive prices down, real-estate professionals say.
House prices in King County in January sank to their lowest level in nearly six years, according to statistics released Thursday by the Northwest Multiple Listing Service.
The median price of single-family homes that sold last month was $356,000, the service said. The last time it was lower was in April 2005.
Brokers and other observers said prices are dropping because distressed properties — foreclosed homes and short sales for less than a seller owes its lenders — make up a growing share of total sales.
A Windermere Real Estate analysis of listing-service data found that distressed sales accounted for 35 percent of all house and condominium sales in King County last month, up from 27 percent a year earlier.
Those sellers often are willing to settle for less.
"It's hard for the regular sales to compete with them," said John Schlanbusch, owner and president of John S Realty in Tacoma, which specializes in sales of bank-owned homes in Pierce and South King counties. "The banks don't have a mortgage balance to consider."
Repossessed homes typically resell for 20 to 40 percent less than comparable non-distressed properties, said Stan Humphries, chief economist with online real-estate marketplace and database Zillow.com.
Banks generally want a quick sale, he said, while a non-distressed homeowner might hold out for six months or a year for a higher price. What's more, he added, in markets like Seattle repossessed homes generally are in poorer condition.
Lenders repossessed more than 6,000 King County homes last year — three times as many as in 2008, according to foreclosure research firm RealtyTrac. August, September and October were the busiest months.
Banks probably are now selling many of the homes they repossessed during those months, Schlanbusch said. Once a home is vacated, it generally takes 90 to 120 days for a resale to close.
While distressed sales still are less common in the city of Seattle than in many suburban areas, "it's definitely a bigger part of the market now," said John McKenna, a broker in Windermere's Capitol Hill office. "It hit Seattle proper later."
He said he represented a buyer who closed last month on a bank-owned condo in Lower Queen Anne, paying $215,000 for a large one-bedroom unit.
The sale price was less than the buyer had offered a year earlier, when the property was marketed as a short sale, McKenna said. And it was much less than $422,000 the previous owner paid for the condo in 2007.
With January's new low, King County's median single-family home price now has fallen 26 percent from its July 2007 peak of $481,000.
The median was $375,000 last January, $382,500 in January 2009. The previous post-bubble low, $359,950, was recorded last November.
Buyers closed on 1,017 houses in the county in January, 6 percent more than in January 2010. It was the first year-over-year increase since June, when popular federal homebuyer tax credits expired.
But it's probably not the start of a trend, professionals said, because the tax credits spurred a surge in sales during the first half of last year that will be difficult to equal in 2011.
Because the credits, adopted in early 2009, originally were to expire that November, sales lagged in the months immediately after that date, Zillow's Humphries said. But they started to recover in February 2010, he added.
The listing service's January report also revealed that:
• Southwest King County saw the biggest year-over-year drop in median single-family home price, 16 percent. On the Eastside the decline was less than 2 percent, while the median price in North King County, a small area with relatively few sales, actually increased more than 10 percent.
• Closed King County condo sales fell 9 percent year-over-year. The median price, $234,500, was down 12 percent from January 2010.
• Sales of single-family homes in Snohomish County were up more than 6 percent from the same month last year. The median price was $254,000 in January, down 9 percent from 12 months earlier.
Eric Pryne: 206-464-2231 or email@example.com