A common lament of new Seattle homebuyers is: "If only I'd bought 15 years ago when houses were still affordable."

Well, cheer up. The surprising truth is that houses in this region are more affordable now than 15 years ago - in many neighborhoods, much more affordable.

For example, a family with King County's median annual household income of $65,000 and a 20 percent down payment could easily have bought a mid-priced $220,000 home in Seattle's Mount Baker neighborhood last year. That wasn't so in 1984. Back then, the typical house sold for what may sound cheap today - $80,000 - but the median household income was 30 percent short of what was needed to make the monthly mortgage payment. (Median means half of households had less income, half more.)

It's much the same story throughout north and south King County as well as in city neighborhoods such as Ballard, Greenwood, Lake City, Northgate, Maple Leaf, Beacon Hill and West Seattle. Gee-whiz accounts of two-bedroom bungalows selling for $300,000 aside, in the past two years houses have been as affordable as they've been in a long time.

Even in trendy Seattle neighborhoods such as Madison Park, Laurelhurst and Capitol Hill, where buyers enter bidding wars against Microsoft millionaires and other members of the nouveau dot.com riche, until last year houses were about as affordable as they've been in 15 years. That was even true on Queen Anne Hill, where prices have risen an astounding 60 percent in the past three years.

So the new homebuyer's lament really should be: "If only I'd bought two years ago." That's because houses in King County were more affordable in 1998 than at any time in recent history.

What's going on? How can houses with today's price tags be considered affordable?

The answer is that the combination of interest rates, household incomes and home prices worked in concert to make housing less affordable in the 1980s and increasingly affordable in the 1990s.

Rates slide; prices rise

In 1984, interest rates hovered around 14 percent, killing the market, especially for first-time buyers. But as rates eased, giving buyers lower monthly mortgage payments, housing prices went berserk. During the Boeing boom of 1989 to 1990, the median-priced house in King County appreciated 50 percent.

There hasn't been so dramatic a spike since.

Income is another key part of the story. During the past nine years, household incomes have risen faster than home prices in all but 1994 and 1999, according to estimates by the states' Office of Financial Management. During the same time, interest rates on 30-year mortgages fell from double digits to below 7 percent in 1998. The net effect was much more affordable housing.

The Seattle Times analyzed county assessor's data on 83 neighborhoods in King County and found that last year a household with median income could afford a median-priced home in 49 of them.

Our analysis used methodology similar to that used by Washington State University's Center for Real Estate Research. We assumed buyers put 20 percent down and could afford to spend one quarter of their monthly gross income on a mortgage. For buyers willing and able to stretch - spending 35 percent or more of their income on a mortgage - the picture was even rosier.

The most affordable areas last year were Georgetown and South Park, near Boeing Field, where a family making King County's median household income - $65,000 a year - had nearly twice the income needed to buy the typical $130,000 home. The region's least-affordable neighborhood was Mercer Island, where a typical home last year sold for $560,000 and buying it required an annual household income of $150,000.

The Snohomish County story is different. The median household income there is a substantially lower $52,000 a year, which means places such as Edmonds, Martha Lake and Mill Creek were unaffordable for the typical family. However, parts of Everett and Lynnwood were within easy reach. Two notable exceptions were Bothell and Maltby. For commuters making King County incomes, most of southern Snohomish County was affordable.

Don't misunderstand. No one is calling Puget Sound houses cheap. The National Association of Realtors reports that only seven of the nation's largest 124 metropolitan areas have higher real-estate prices: San Francisco, Honolulu, Orange County, Calif., Boston, San Diego, greater Los Angeles and greater New York. But that's balanced by the fact that our metropolitan area's per-capita incomes are also among the highest in the country - $33,500 in 1997.

"I would characterize affordability in the greater Seattle area as being a challenge but probably not the insurmountable obstacle that we sometimes think that the prices of homes might imply," said Glenn Crellin, director of the WSU Center for Real Estate Research. "The Seattle area has relatively high incomes, which allows it to sustain high housing prices."

Good news for first-time buyers

Real-estate agents who've been in the business a long time remember that the market was dreadful for buyers in the late 1970s and throughout the 1980s. Mike Gain, a real-estate broker who started in 1976, said that not counting the fact that prices in a few neighborhoods have gotten out of control lately, "Affordability is honestly as good as I've ever seen it."

That's true even for first-time buyers, who can struggle to find a decent, affordable home. Seattle Times analysis shows that a typical first-time buyer can afford a starter home - priced at 85 percent of the median - in only 19 of 83 King County neighborhoods. Not a single one is north of downtown or on the Eastside. But that's a stark improvement from 1984, when only one area - the heavily industrialized Georgetown/South Park area - was affordable.

That analysis assumes that because first-time buyers are usually younger, they are making only 70 percent of median income. It also assumes that they are putting down 10 percent. It's the same methodology used by WSU and the National Association of Realtors.

The most affordable neighborhoods are clustered in south King County. First-time buyers may have to grapple with the fact that they can't afford homes in the same neighborhoods where they grew up.

"They don't think that their parents started in a two-bedroom little shack, but we did," said Gain. "You don't start living where you ultimately want to be. To try to buy your first home in a prime neighborhood is pretty tough for a lot of people."

Kurt Vold, a 35-year-old manager of City Market grocery, found out just how tough when he went shopping for his first home in 1997. Living on a single income, he was looking for a house for about $140,000.

"I got to see a whole bunch of crap," he said. "I was real disappointed in what I could afford."

They all seemed to have bizarre floor plans, Vold said. Or they were on the corner of a busy intersection. Or they were in such bad shape that it would take another $50,000 to fix them up. But Vold eventually found a perfect, two-bedroom home near Jackson Park Golf Course. It has about 900 square feet.

"My parents live in Spokane. They have a house that's four times the size and it costs less. But I don't want to live in Spokane," Vold said.

The killer for many first-time buyers is saving up for the down payment.

"I know lots of professional people with reasonable incomes who are having trouble buying a house," said Rose Curran at the King County Office of Regional Policy and Planning.

It takes a typical first-time home buyer more than four years to save for a starter home, according to analysis by Curran's office. That's based on saving $17,400 for a 10 percent down payment.

"First-time home buyers have a very difficult time joining the party," said WSU's Crellin.

Still, mid-priced houses sold in Federal Way, Covington, SeaTac, south Beacon Hill, Rainier Beach, Auburn, Rainier Valley, Des Moines and parts of West Seattle, among other neighborhoods, were affordable last year for households earning at least $45,500.

David and Julie Wicklund weren't willing to make such a long commute, however. Last year, they moved from Minneapolis so David could take a job as a resident at University of Washington Medical Center and Julie could work for the state Health Department. They were taken aback when they began checking prices on the Internet. And when they got here, they were disappointed by the selection.

But they were tired of renting and felt pressure to buy quickly. So after only one day of shopping, they made an offer and bought a 12-year-old, 1,300 square-foot "skinny" house in Ballard for $214,000. They admit to lowering their standards to do so.

"I never would have even walked into this house in Minnesota," said Julie.

The house had been a rental property and was in need of a lot of minor fix-ups. David did most of the work himself, and the Wicklunds are now happy with the house.

Buyers are finding creative ways to afford the down payment. The Wicklunds put down only 5 percent, part of which was a gift from Julie's grandmother. Vold financed his home through a Federal Housing Administration (FHA) loan, putting down 5 percent and getting a bit of help from his parents.

A household making $30,000 and paying 5 percent down could afford an $87,400 house, based on the affordability index and today's interest rates. Only about 400 homes in King County - or 1 percent - sold for that or less last year.

However, someone willing to spend 40 percent of their income on a mortgage could afford a $140,000 house. Ten percent of all single-family home sales in King County last year were for that amount or less.

For those earning less than $30,000, the choices become bleak. A study done by King County concluded that there are no single-family homes within reach of the 52,000 households making less than $16,000 a year; there are virtually no apartments either. The county's survey found only about 400 apartments renting for less than $400 a month.

Seattle Habitat for Humanity builds and sells homes for families meeting low-income requirements. For a family of four, that's $15,600 to $31,300. The nonprofit organization has about 80 applications for the 10 or so houses it builds each year. Most buyers are recent immigrants. All are renters.

"They often have just found cheap, lousy rental units or are in apartments that are way smaller than the family should be living in. It may be a one bedroom for a family of seven," said Linda Murtfeldt, the organization's executive director.

So for those who get turned down, the situation is dire.

"If you are somebody who can't afford a home and you want one, that's a crisis," said Jean Carpenter, a housing expert and adviser to King County Executive Ron Sims.

But Cal Scott, executive director of Washington Community Housing Network, bristles at words such as "crisis." As he sees it, the problem is that too many people don't realize how affordable housing is.

"Twenty-five percent of the population in the Greater Puget Sound area could own a home but don't know it."

Interest rates have risen in recent months, making it more difficult to afford a home. But the notion that it's too late to buy an affordable home seems dubious.

"We've heard that in every good market," Gain said. "The bottom line there is: You wait, you lose."

David Heath can be reached at dheath@seattletimes.com.