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.

Seattle holds up in imploding national market

Realtors told the housing boom is over.

By Elizabeth Rhodes, Seattle Times Real Estate Reporter

LAS VEGAS -- The National Association of Realtors' annual convention started with a bang -- literally -- Tuesday morning when the nearby Frontier hotel imploded, sending up a huge plume of dust and making the ground shake.

It was a decent metaphor for the current state of the real-estate industry. The boom is over and the dust is now settling, Lawrence Yun, the group's chief economist, told the thousands of real-estate professionals meeting here.

This is the first year since the Great Depression to register a nationwide decline in median home prices, Yun said. His latest numbers put the drop at 1.7 percent. "We're in a time of fear," he said.

For 2008, Yun is predicting prices nationally will be flat, as buyers react to gloomy housing-industry news by sitting this one out.

But, as Yun said repeatedly, real estate is intensely local. National trends mean about as much to buyers and sellers in any one city as a national weather forecast would mean to them.

That's why things will be bad in some areas, such as Ohio, which has experienced significant job losses, and good in others.

Yun suggested Seattle will continue as one of the bright lights, which it's been this year. Median year-over-year home prices have risen every month save October, when they were down slightly.


But Seattle's strength may go beyond the usual reasons: a strong local economy and good job growth propelling housing demand.

Yun suggested that Seattle may be joining such cities as New York and San Francisco as "superstar cities" whose desirability attracts affluent newcomers who bring the buying power to continue pumping up housing prices.

In Washington, the group issued its ninth-straight downwardly revised monthly forecast, saying nationally existing home sales will fall 12.7 percent this year to 5.66 million, down from 6.48 million last year and the lowest level since 2002.

The group forecast sales will rise slightly next year to 5.69 million, but that is down from last month's prediction of 6.12 million.

Yun's forecast shows existing home sales bottoming out in the current quarter, then rebounding by mid-2008.

However, many other economists are far less optimistic. They predict weak sales, sinking new home construction and falling prices through next year and emphasize that those problems could worsen if the economy sinks into a recession.

The Realtors group said the median price for U.S. existing homes -- the point at which half sold for more and half for less -- will sink to $218,200 this year and remain basically flat next year at $218,300. In October, the median price for single-family homes in King County was $443,950. In Snohomish County last month, the median was $374,334.

If median prices on the national level fall this year, it will be the first price decline in the nearly 40 years that the trade group has tracked median prices.

Other ways to measure national housing prices, such as the Case-Shiller index, have already shown price declines.

Oprah Show guest: Seattle real estate is booming

Oprah Winfrey guest Suze Orman, famous financial advisor, author and television personality, was asked to give a couple who was deeply in debt some financial advice. She called Seattle the hottest real estate market in the country. "Suze told [the couple] they must sell their California home and move to Seattle, Washington," Oprah's website explains. "With a booming housing market and high-tech industry, Suze says Seattle is particularly well suited to both Felice and Phil's strengths--Phil is a computer contractor and Felice was once a mortgage broker."

Read more about Felice and what else Suze says. Maybe we'll see Phil and Felice on the ferry next year!



Felice, you don't look happy!