Seattle market slowing

Housing market decline called likely to continue
Rising inventory forces sellers to cut prices

By AUBREY COHEN
P-I REPORTER

The typical house that sold in King County last month fetched nearly 10 percent less than the typical sale in July, according to statistics released Thursday.

Meanwhile, Washington's rate of troubled mortgages rose in the third quarter, but was increasingly better than the country as a whole, which saw record-high foreclosures and a mortgage delinquency rate that was the highest since 1986.

The median price for houses and condos that sold last month was $405,000 in Seattle and $385,990 for all of King County -- down from a year ago and from recent highs this summer, according to the Northwest Multiple Listing Service.

Some of this is from the influence of condominiums, which have been making up more of home sales and generally cost less. But the median single-family Seattle house price dropped 6 percent from August through November, mirroring the decline of nearly 10 percent countywide from July.


November continued a long trend of many more homes on the market than in 2006, with dropping sales.

Geoff Pfander put his Wedgwood house on the market in September for $535,000 and sold it last month for $505,000.

"We never reset our price, but the offer was lowball and we accepted it," he said. "We were so glad to be done, because the market was getting scary."

Andrew Gledhill, an associate economist with Moody's Economy.com, said the Seattle area's housing market has cooled because job growth has slowed a bit, while high prices and tighter credit have made it harder for many people to buy a home and sellers may have finally started giving up on unrealistic asking prices.

"I think you've had people that were trying to sell at certain prices because they thought the market was still hot," he said. "When it catches up, it catches up pretty quickly."

Moody's Economy.com expects Seattle-area prices to drop 6 percent to 7 percent from mid-2007 through next summer, get back to 2007 levels by about 2010 and be up about 10 percent from 2007 levels by 2012.

The homes that are selling now have to be well staged, marketed aggressively and priced below the competition, said Brigitte Pascutoi, the broker at John L. Scott Real Estate's Bellevue North office. Patrick Lashinsky, president and chief executive of Zip Realty, said many sellers haven't adjusted to the slowing market.

"There's still definitely a mind shift that has to take place," he said. "(Seattle) was by far the last market we saw in any part of the country to go through any sort of correction."

Lashinsky is not expecting Seattle prices to fall as dramatically as those in other parts of the country because they never rose as fast, and the area has a strong economy and a limited land supply.

"If you can get a good deal, buy it," he said.

Pascutoi said prices may drop some more, but it is the time to buy, assuming people are not expecting a quick profit.

"If they're buying it now, I think they should expect to stay in it for two to three years," she said.

Brent and Kaela Koepke have been "leisurely" looking at homes for two years.

"We're not in a rush, especially now that the market seems to be flattening out or even going down a little bit," Brent Koepke said while looking through a Ballard townhouse on Sunday.

They said they expect townhouse prices to fall and had planned to hold off on buying for another year, but felt cramped in their condo and just got preapproved for a mortgage.

"The more you look the more you want to buy," Kaela Koepke said.

Rob Cockerill and Michele Meyers bought a Broadview house at list price last month and weren't worried about prices dropping.

"We're thinking it's not going to get any better than this," Cockerill said. "We're San Francisco II up here."

According to numbers the Mortgage Bankers Association released Thursday, Washington delinquencies and foreclosures are continuing to rise but are going up more slowly and remain substantially lower than those of the nation as a whole. Washington ranked 47th among states in delinquencies and 49th in foreclosures in the third quarter. Moody's Economy.com statistics show Seattle's delinquency rate about 24 percent lower than the state's.

Subprime loans -- which generally serve people with poor credit and have been responsible for much of the turmoil in the mortgage industry -- made up 10 percent of Washington mortgages in the third quarter, compared with 13 percent nationwide, according to the mortgage bankers.



P-I reporter Aubrey Cohen can be reached at 206-448-8362 or aubreycohen@seattlepi.com.