Seattle Home Sales Slow as Prices Rise

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.)