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Seattle Home Sales Slow as Prices Rise

DQNews.com

Seattle region homes sold at the slowest pace in 15 years during May as bargain shoppers found a much lower supply of deeply discounted foreclosures than they would have in many other Western markets. Given the smaller impact from distressed homes, the region's price measures continued to hold up relatively well: The overall median sale price rose slightly from April and fell a relatively mild 11% below a year ago and 16% from the area's 2007 peak, a real estate information service reported.

A total of 3,142 new and resale houses and condos closed escrow in May in the Seattle-Tacoma-Bellevue metropolitan statistical area encompassing King, Snohomish and Pierce counties. Last month's sales rose 13.5% from April but dropped 21.7% from a year earlier, according to MDA DataQuick. The San Diego firm tracks real estate trends nationally via public property records.

Last month's sales total was the lowest for any May since at least 1994, when DataQuick's complete Seattle-area statistics begin. Sales have fallen on a year-over-year basis for 36 consecutive months. New-home sales were at a record low for a May.

Foreclosures are playing a much larger role in Seattle's housing market than they did a year ago. But they're well below the levels seen in many other Western markets, where steeper price declines - especially on foreclosed properties - have boosted affordability and spurred robust sales. In May, 19.2% of the Seattle-area homes that resold had been foreclosed on in the prior 12 months, up from 5.9% a year ago but down from a peak of 21.8% in February 2009. In Las Vegas, Phoenix and much of California, such foreclosure resales made up half or more of all resale activity in May.

The median price paid for all new and resale houses and condos combined in May was $308,000, up 1% from $305,000 in April but down 10.7% from a year earlier. Last month's median was the highest for any month since last December, when it was $318,000, but was 15.7% lower than the Seattle area's peak $365,200 median in June 2007.

The median has fallen on a year-over-year basis for 16 straight months.

The median's modest increase in May from April is likely the result of a lower concentration of foreclosure resales in May, combined with a mild rise in the portion of sales occurring above $300,000. That's consistent with the expected seasonal increase in the number of traditional homebuyers - including move-up buyers - who are looking not just for a bargain but for the right house in the right neighborhood, and who want to move before school starts in late summer.

The median paid for resale single-family detached houses was $307,000 last month, down 13.5% from a year ago and down 22.2% from the $394,500 peak in June 2007.

Another price measure for resale single-family detached houses, the median price paid per square foot, rose a tad from April, when it was $167, to $169 in May. That was the highest since it was $179 last December but was still down 23% from May 2008 and down 29.7% from the peak $240 median paid per square foot in July 2007. The price per square foot has fallen on a year-over-year basis for 19 consecutive months.

The declines in the Seattle area's median are well below those seen in many other major U.S. markets, especially in the West. For example, Seattle's 10.7% year-over-year drop in its median price paid for all homes combined in May compares with a 32.7% drop in Southern California, a 43.7% decline in Las Vegas and a 38.4% decrease in Phoenix.

Last month about 36.7% of all Seattle-area buyers used government-insured FHA loans, a popular choice among first-time buyers. Absentee buyers, including many investors, made up 13.7% of all purchases - a relatively low%age in the West and a reflection of the smaller role that low-cost foreclosures play in Seattle. In addition to investors, absentee buyers include any others whom public records show will have their property tax bills go to an address other than the one for the home they just purchased.

Across the West, year-over-year declines in the median sale price - the point where half of the homes sold for more and half for less - have sometimes overstated the extent to which the value of the typical home has fallen. It's because the median is being tugged lower not just by price depreciation but by shifts in the types of homes selling. For example, more of today's sales involve foreclosures, which tend to sell at a discount and be concentrated in more affordable areas. Also, the August 2007 credit crunch made larger "jumbo" mortgages more expensive and harder to obtain, which has led to sluggish sales - in some cases the lowest in many years - in higher-priced neighborhoods. (A dropoff in high-end sales can pull down the median.)