Local housing market keeps slowing

At the beginning of the year, local housing experts predicted the Puget Sound area's super-heated real-estate market would slow. What they couldn't predict was exactly when or how much.

It's now, and the drop-off has been marked.

September's median sales prices for houses and condominiums revealed 9.4 percent annual appreciation for the region — the first single-digit increase in two years, according to the Northwest Multiple Listing Service, which released its September housing activity report Friday.

And, after rising for seven consecutive months, King County's median single-family home price hasn't risen since June. In fact it declined $10,000 from August to September, to $425,000. Month-to-month declines are not unusual — it happened four times in 2005 — but four months without an increase is a signal of a trend.

Plus, inventory is building and homes are selling more slowly.

Indeed, compared with the previous September, the number of houses and condominiums for sale last month increased 42 percent in the 17 Washington counties in which the MLS tracks sales.

Meanwhile, the number of pending sales — those signed but not closed — declined almost 19 percent compared with a year earlier.

"This doesn't mean that a 'bubble' has burst and property values are declining," said Redmond appraiser Alan Pope. "It means we're moving to a more-normal market where buyers have more choices. If buyers have more choices, they're less likely to pay in excess of the list price to obtain a property."

Bill Riss, Coldwell Banker Bain's CEO, said we are starting to see signs of a slower market. A real-estate veteran who has been through many housing cycles, Riss says he's not upset by the cooling because "there's nothing to push it dramatically down."

"All the mechanics are in place to have a steady market," he said.

Those mechanics include strong local job growth, which feeds housing demand, and moderating mortgage rates.

On Thursday, mortgage backer Freddie Mac reported 30-year fixed-rate loans stand at 6.3 percent nationally — a seven-month low.

Still, homeowners are being increasingly squeezed by high housing costs and stagnant wages, according to a Census Bureau report out this week, and Riss thinks Puget Sound residents are reacting to those conditions.

"They're saying, 'Wait a minute — this is getting out of my comfort zone, and unless we have to buy or sell, let's just sit it out,' " Riss said.

King County houses and condominiums combined have appreciated 8.6 percent in the past year, below the regional average.

In the central Puget Sound region, Pierce County reported the highest annual price increase — 12.9 percent — followed by Snohomish County's 10.4 percent. Kitsap County's annual appreciation came in at less than 1 percent.

Fewer sales and more homes to choose from are causing many more sellers to reduce prices, real-estate agents say.

"There's no doubt about it," said Chris Pauling, president of Prudential Northwest Realty. "There's more competition, and [sellers] are having to be more realistic in their expectations."

Pauling says the slowdown is a relief for buyers.

"We have more inventory than we've had in the past, so buyers can pursue the home that meets their needs without having to make a decision based on fear that someone else is going to get their house," Pauling said. "They can actually make a thoughtful decision."

Compared with a year earlier, September buyers had 32 percent more properties to choose from in King County — some 9,890 properties compared with 7,496 in September 2005.

Snohomish buyers had 27.6 percent more, and Pierce County buyers had 54 percent more.

Seattle agents say attractive, well-priced homes in sought-after areas are still drawing multiple offers. But sellers can no longer count on that.

"Six months ago, nearly all homes here were receiving multiple offers," said Al Johnson, assistant manager of Windermere's Mount Baker office. "Now it's closer to one-third to half."

Elizabeth Rhodes: erhodes@seattletimes.com