Local home prices slide
The median price of homes sold in King County declined last month compared with a year ago - the first year-over-year decline since the nationwide recession in the early 1990s.
As supply outpaced demand, the median price of all homes - single-family houses and condos - dropped 1 percent to $387,500 from $391,300 a year ago, according to the Northwest Multiple Listing Service report for October, released Tuesday. Median means half sold for more, half sold for less.
The number of single-family houses and condos on the market in King County jumped 44 percent to 14,240 compared with last year. For each of the past six months, the supply has been at least 40 percent higher than a year ago.
Joe Spencer, president of John L. Scott and director of the Northwest MLS, said the housing market is in the adjustment period of a typical real-estate cycle, which usually means a six- to seven-year boom followed by a two- to three-year downturn.
The last time the Puget Sound area entered a similar price dip was in the early 1990s, followed by a slight pause in the market after the Sept. 11 attacks.
“I really believe based on historical numbers that 2008 will be the low point in the market here, depending on what area you’re looking at, and then we’ll start that slow climb back up,” Spencer said.
“King County entered the down market late, and we do believe it will come back out,” he said.
The switch to a buyer’s market, with prices dropping, has caught some sellers by surprise.
In the last month and a half, Debbie and Carl Sweetland have bought a home and tried to sell one.
Their 2,000-square-foot home in West Seattle has been on the market 46 days and they’ve lowered the price $50,000, to $539,000.
By comparison, the Sweetlands bought their new house for $610,000 within a day of it going on the market. They closed in no time on the 3,400-square-foot home, which is near their old one.
“I knew the market had slowed down some,” said Debbie Sweetland, 35. “But I thought we’d have an offer by now.”
In Snohomish County, the number of homes listed for sale increased even more than in King County, rising nearly 52 percent over last year, to 6,857 in October.
But home prices continue to increase there, with the median rising 5.8 percent to $352,874.
Until now, the Puget Sound real-estate market has been strong, especially compared with the rest of the country.
The loss of thousands of manufacturing jobs hit the Midwest and the meltdown of the subprime-mortgage market hit particularly hard in states like California, Nevada and Florida.
Locally, the housing market in Pierce County has been the weakest.
The median price of a Pierce County condo in October dropped 7.5 percent compared with a year ago, to $203,950. In September, the median price dropped 4.4 percent to $215,000.
Single-family home prices dropped 0.25 percent year-over-year to $274,336 in October, after dropping 1.5 percent year-over-year in September.
Experts say Pierce County’s lower affluence and less-expensive real estate than in King and Snohomish counties made residents there a target for subprime loans, which were heavily marketed to people with poor credit, few assets and lower incomes.
As the loans’ interest rates started adjusting upward earlier this year, the buyers started losing their homes in foreclosure.
According to an analysis of loan data by The Wall Street Journal, 31 percent of all mortgages originated in the Tacoma market in 2006 were the high-rate loans.
That compares with 21.5 percent in Seattle-Bellevue-Everett and 24.3 percent statewide.
Nationally, 29 percent of all home loans fell into that category.
Tacoma-area foreclosures rose 36 percent to 209 in the third quarter, according to DataQuick Information Systems of La Jolla, Calif. That compares with 154 in the second quarter.
Some would-be buyers are hesitating because of mortgage fears and also because they’re expecting better deals around the corner.
No one knows that better than Rafael Sanchez, an industrial engineer for Boeing in Everett who is looking for a house in Marysville.
Sanchez, 25, started searching in July after he moved to Washington from Puerto Rico.
Since then, he’s watched home prices fall and sellers making sweeter move-in offers.
He thought he would have to wait at least a year before he could afford a home, but now he’s expecting to buy one sooner.
Still, because of the fallout in the subprime-mortgage market nationwide, he’s making sure he knows what he’s getting into.
“I’ve been doing a lot of research,” Sanchez said. “Being a first-time homebuyer, it also adds a little bit of worry to the whole event.”
O.B. Jacobi, general manager of five Windermere Real Estate offices in Seattle, says, “I think the buyer sentiment out there, from what I can tell, is if they’re not getting exactly what they want, then they’re walking.”
Meanwhile, many sellers are cutting their asking prices and considering taking their homes off the market until conditions shift.
The Sweetlands have twice lowered the price on their home and are thinking about taking it off the market to rent out, or also putting their new home up for sale as well to see which one goes first.
“I think by January we’re going to really be biting our fingernails and figuring we better make a decision,” Debbie Sweetland said.
“Hopefully it’s going to sell before then.”