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Originally published August 6, 2012 at 12:29 PM | Page modified August 7, 2012 at 10:12 PM

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King County home prices up 7 percent from last year

King County home prices rose 7.2 percent in July compared with one year ago, extending their streak of such gains to four straight months, according to statistics released Monday by the Northwest Multiple Listing Service.

Seattle Times business reporter

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King County home prices rose 7.2 percent in July compared with one year ago, extending their streak of such gains to four straight months, according to statistics released Monday by the Northwest Multiple Listing Service.

There were signs that June's fast pace of price increases had abated, though.

The median price of single-family homes sold in July was $375,250, a 1 percent drop from June. And the year-over-year increase of $25,250, or 7.2 percent, was smaller than June's 10.1 percent jump.

The number of closed home sales last month in King County was 26 percent higher than last year and the highest since August 2007, yet it remained practically flat from June, after five months of solid increases.

"We had a crazy spring and it seems like things have settled down," said blogger Tim Ellis of Seattlebubble.com.

Another recurring theme is the dramatic drop in the number of homes for sale. Home listings have been sliding for a full year; in July the number of home listed for sale was down 38 percent year-over-year.

With more would-be buyers than sellers, the buyers are starting to become frustrated, said Ellis and Seattle real-estate economist Matthew Gardner.

Gardner said the major reason for the low number of listings is that people are underwater on their mortgages — they owe more than their homes are worth — and have to stay in their homes.

He said the levels of inventory are the lowest they have been since early 2006.

People want to move, Gardner said, but can't afford to pay the bank to leave and are waiting to get above water before they sell their homes.

Gardner said distressed home listings — bank-owned properties and short sales — are down 60 percent from last year. This also contributes to the small number of listings and brings up home prices.

Median prices are up 19 percent this year, but nearly 22 percent below where they were at in July 2007, the all-time high for King County.

If and when more distressed homes are introduced into the market, price growth will slow, Gardner said.

At the moment, though, the analysts said, buyers are looking for homes that owners can't sell.

"The market won't be fun for buyers for a while," Ellis said.

Ellis expects the housing market to level out as the year continues, with a more normal number of listings next spring.

Condo listings in King County are even lower than home listings, dropping more than 52 percent year-over-year last month.

Prices for condos are slightly up compared with last year.

In adjacent counties the story on homes was much the same.

In Snohomish County, median home prices grew 13 percent year-over-year, and closed sales grew 24 percent.

But, like King County, home listings dropped 47 percent.

It was more of the same in Pierce County, with home listings down nearly 31 percent, closed sales up just 2.5 percent and the median home price down 2 percent.

Looking forward, Ellis and Gardner agree that listings will likely increase as prices go up.

But Gardner said it's tough to determine when sales of distressed housing will pick up again.

Jason Wall, general manager of Lake & Co. Real Estate, near Green Lake, said he has seen buyers more excited about the market now than they have been for several years.

"It feels like that, at least locally, the tide has turned," Wall said. "The feeling of confidence has returned to Seattle."

Sales could even be higher, he said, but lack of inventory is holding the market back.

"The big story is the same as it has been all year," said Ellis. "There's just not that much out there."

Connor Radnovich: 206-464-2718 or cradnovich@seattletimes.com

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