After a year of blistering home sales that saw appreciation climb to highs not seen since 1999, Charles Swanson can only shake his head.

"House prices are so expensive now that it really does not make sense," said Swanson, a North Seattle homeowner. "I keep saying the bubble is going to burst when there is too much inventory, and prices will get back to realistic. But it never seems to happen."

And it won't any time soon, predicts Lawrence Yun, senior economist with the National Association of Realtors.

"It's my view that Seattle is an underpriced West Coast city," said Yun, pointing out that "people have been saying San Francisco is overpriced for the last 20 years, and it still keeps going up."

A Seattle Times analysis of 2004 single-family home prices shows that the Seattle area certainly is trying to catch up.

The analysis breaks down annual sales by neighborhood on a price-per-square-foot basis, a more accurate gauge of home values than is median neighborhood prices. Some 86 King County areas are included, as are 22 in South Snohomish County. They follow boundaries selected by county assessors.

According to this formula, King County's 2004 appreciation — 9.8 percent — was more than double the year before, and just behind the 10.1 percent posted in 1999.

Neighborhoods in the southern half of Snohomish County showed their strongest appreciation of the decade: 7.7 percent on a price-per-square-foot basis.

"So far this year, it feels like we'll have a continuation," said Joe Spencer, president of John L. Scott Real Estate. "We've all been surprised year after year after year that the market keeps moving forward the way that it has, but our best guess is we could see another 10 percent increase in price appreciation this year."

Spencer says a host of factors make that possible. Among them are low mortgage-interest rates, high buyer demand, and a shortage of for-sale homes caused by two factors.

The first, Spencer says, is state-mandated growth management, which limits the number of houses that can be built.

The second is what he calls the "lockdown effect" that low mortgage rates are having on current owners.

"There are a lot of people who've decided they've got a nice low interest rate and a big house, and they're comfortable living there for 10 years or more," Spencer said.

"That contributes to tight inventory. Until we see a significant change in at least one of these areas, we'll probably continue to see this kind of market."

Here are some highlights of the Times analysis of 2004 detached home sales:

• Of King County's 86 neighborhoods, 53 have median home prices of $300,000 or more. Compare that with just 25 in 2000.

• Five King County neighborhoods have a median price per square foot above $300; last year three did. Madison Park, the most expensive at $367, showed a huge gain from the year before, when it was $308. That means that a 2,000 square-foot house that cost $616,000 in 2003 would have cost $734,000, or 19 percent more, a year later.

• As in years past, the most affordable homes last year were in South King County. It had the only neighborhoods with median prices under $140 a square foot. Just one, Lea Hill, was under $130.

• Slightly more than half of King County neighborhoods enjoyed double-digit per-square-foot appreciation last year. Most were within Seattle, on the Eastside or in North King County.

• For short-term appreciation, Newport Shores/Kennydale was last year's leader. Its one-year per-square-foot appreciation was 31.6 percent. But that was based on only 109 transactions in a small area where waterfront can skew modest sales numbers upward. A more accurate view of appreciation is gained over time.

• The five areas that showed the highest five-year appreciation (in order) were Rainier Valley, South Central West Seattle, South Park/Georgetown, West Kirkland and West Ballard. Some have been "sleeper areas" whose affordability offered entry to first-time buyers, and that has driven prices up. At least one, West Kirkland, has seen significant remodeling of older homes — certainly a factor driving prices up at resale.

• The five areas that registered the lowest five-year appreciation are all on the Eastside or in South King County. East Renton is the lowest, followed by Lake Youngs, Novelty/Ring/Union Hills, Preston/Fall City and Black Diamond/Maple Valley. Some are far from freeways or major job centers. Another factor is new home construction in those areas, which reduces pressure on housing demand.

• Last year, seven (of 86) King County neighborhoods were affordable to buyers with household incomes between $45,000 and $50,000. All were south of downtown Seattle. They were Auburn, South Park/Georgetown, Enumclaw, Twin Lakes, SeaTac, Boulevard/Riverton and Des Moines. Those earning less than $45,000 couldn't have afforded a median-priced single-family house anywhere in King County.

• Some 16 areas last year were affordable only to buyers with household incomes in excess of $100,000. The year before, 11 areas fit that category. Not surprisingly, the communities at the top last year all offer Lake Washington waterfront: West Bellevue and Medina, Madison Park, Mercer Island, Laurelhurst/Windermere, North Capitol Hill/Montlake.

• Compared with King County, South Snohomish County's appreciation was much more "steady as she goes" last year, with no neighborhoods coming close to the top ones in King. Leading the pack was Everett, where price appreciated 14.9 percent a square foot. Everett also was at the top for both three- and five-year appreciation.

• The median price per square foot was $177 or less in all South Snohomish County neighborhoods. In King County, only 38 percent of the areas surveyed have median costs that low.

• South Snohomish County's most expensive neighborhood on a per-square-foot basis — Woodway/South Edmonds — was still less than half as expensive as Madison Park, King County's most expensive.

• As for median sales prices, Everett was the only South Snohomish County area below $200,000 last year. Compare that with 2002, when five neighborhoods were below that threshold.

• The most expensive area in South Snohomish County was Mill Creek at $419,000. That's about the same as North Seattle's Green Lake neighborhood. But there's a big difference: A home in Mill Creek averages about 2,500 square feet, about 1,000 square feet larger than Green Lake's typical house.

Elizabeth Rhodes: erhodes@seattletimes.com. Justin Mayo: jmayo@seattletimes.com