$405,000 Median house price in King County

Ann Dickhoff's house purchase typifies a milestone in more ways than one.

Like many other parents of adult children, Dickhoff was afraid her son would be priced out of homeownership in his hometown.

So last month she helped him buy a North Seattle rambler, gulping as she paid $409,000 — or $89,000 more than she shelled out a year earlier for a nicer house half a block away.

In doing so, Dickhoff helped fuel the buyer frenzy that's pushed the median cost of King County single-family homes past $400,000 for the first time.

Still, median prices in some neighborhoods are much higher than that, seriously undercutting affordability and turning the hunt for a moderately priced home into blood sport.

March home-sales numbers were released Thursday by the Northwest Multiple Listing Service. They show the median closed price of King County single-family homes has shot up almost 12 percent in the past year, reaching $405,000 last month (and up from $392,950 in February).

While single-family median costs are lower in Snohomish, Pierce and Kitsap counties, all three posted higher one-year appreciation than their more-populous neighbor. That's an indication that housing demand throughout the central Puget Sound area remains brisk. Median is the point at which half the homes sell for more, half for less.

Dickhoff and her husband, Walton, an administrator for the National Oceanic and Atmospheric Administration, had to pay $320,000 last year to snag a small Greenwood-area bungalow for her mother. "That was our wake-up call," she said, to climbing prices and the possibility that homeownership for her kids was in jeopardy.

Indeed that's a serious possibility for many residents, according to Washington State University's Center for Real Estate Research. Average-wage workers, in particular, are susceptible to the double whammy of rising house prices and rising interest rates.

In the past year, the average interest rate on a 30-year, fixed-rate loan has climbed half a percentage point to 6.5 percent.

The WSU center's latest affordability index reveals that King County buyers earning median wages have just 80 percent of the income needed to afford a median-priced house. First-time buyers have 45 percent.

In January, Ann Dickhoff, a nurse at Swedish Medical Center, began hunting for a house to buy for son Paul, 21, a cheese maker at Pike Place Market, to live in with roommates. A real-estate agent warned her the first one she bid on would sell for more than its $400,000 list price.

So the Dickhoffs bid $416,000 — and added a $30,000 escalator clause in case a bidding war broke out.

It did, and they lost that house to a $450,000 all-cash offer.

That made clear to her that "the market was taking off, and if we were ever going to buy something for the kids to live in, we'd better make a move."

They quickly did, landing for $409,000 a newly refurbished 1950s three-bedroom with a spacious new garage.

Still, if the market weren't so hot, "we wouldn't even have looked at it," Dickhoff confided. The house is on busy Greenwood Avenue North, and the street noise is significant. Plus a newer townhouse development has consumed its entire backyard.

Ironically, as buyers like the Dickhoffs scramble to find a house, the number of King County home sales has been slipping. That usually indicates a cooling market.

That is the case in California and Florida, where sales are slowing down, according to the National Association of Realtors.

But not here, said Jill Jacobi Wood, owner of Windermere Real Estate.

"Sales are down, but listings are down," Wood said, referring to the number of King County homes on the market.

That squeeze tells the tale.

In March 2004, there were 7,156 homes for sale countywide. March 2005's inventory was 5,244 homes. This March recorded a further drop, to 5,100.

At the same time, the local economy is growing and employers are adding jobs, bringing more potential buyers to the area. So the competition for available homes is strong, Wood noted, and prices are reacting accordingly.

King County's median for single-family homes "will stay over $400,000," she predicted. "There are too many good jobs; it's too desirable a place to live for high-income people."

Wood attributes much of the home shortage to move-up buyers perceiving they have nowhere to move up to. So instead they're staying put and remodeling.

Another factor is King County's shortage of buildable land. That's limiting the number of new homes and pushing builders into outlying counties.

All these factors are forcing some King County buyers "further out to get availability and affordability," said Lennox Scott, chairman and CEO of John L. Scott Real Estate. "There just aren't those two things close in."

But as Wood points out, "you can go to Shoreline, you can go to Everett, you can go to Tacoma and you can still buy a home as a first-time homebuyer and get a nice house."

Buyers who stick it out, particularly within central King County, are finding intense competition, multiple offers and no chance to negotiate.

"In the lower price ranges, if you find something that will work for you, generally you need to move quickly," advised Jim Conlan, broker/manager of Century 21 North Homes Realty. That could mean waiving financing and inspection contingencies, which Conlan says some buyers are doing, although he doesn't recommend it.

Still, he doesn't expect buyers to give up because "the ultimate American dream is owning your own place. And people see the longer they wait, the more it costs because properties are continuing to go up in this market," Conlan said.

Elizabeth Rhodes: erhodes@seattletimes.com