After a 2-month lull, home prices take off

After stalling for two months, home prices in King and Snohomish counties perked up last month, disappointing potential buyers who thought slowing price appreciation had presented an opportunity.

Brian and Jennifer Rutherford are experiencing King County's strengthening real-estate market firsthand as they shop for a Bellevue home in the $500,000 range.

They initially planned to take their time to find the right house, said Brian, who does business development for a software company. Brian and Jennifer, a nurse, own a condominium in West Seattle.

"We were just hoping things would cool off. It might have cooled off from its highest point, but not too far," he said. "Now we're making more of an effort to step up our looking."

Home-sales data released Thursday by the Northwest Multiple List Service for March prove his point.

King County's median single-family home price rose 6 percent to a record $454,950 last month. Snohomish County's single-family home price, which also hesitated, moved up 7.4 percent, reaching a median $382,500 in March.

In Kitsap County, the median single-family house price was up 2.2 percent to $291,250.

Only Pierce County bucked the trend, with the median single-family house price declining 2.4 percent to $280,000 last month.

Median means half the properties sell for more, half for less.

Thursday's news that Microsoft is leasing 1.3 million square feet of Bellevue office space, enough to house 4,000 employees, is a near guarantee that Brian Rutherford is correct about home-buying prospects.

More workers in Bellevue may create more competition from other buyers in the Rutherfords' target neighborhoods.

Mortgage rates also have remained near historic lows, making it possible for more people to buy a home.

Still, Rutherford remains philosophic.

"It is what it is. That's the region we live in," he said.

If the Rutherfords decide to sell their West Seattle condo, they will enjoy the upside of a healthy market.

"I've been here for 41 years, so I've seen slow markets, and this is not a slow market," said Rich Bianchi, owner/broker of the Keller Williams Realty office in West Seattle.

Rather, he senses "the market is active, but not quite as active as last year," and that has confused buyers who thought prices would fall. They haven't.

"I think some people thought they'd wait until after the first of the year to get a bargain," Bianchi said.

"That didn't happen."

Indeed, West Seattle homes priced at less than $500,000 are drawing multiple offers — the same dynamic the Rutherfords have found in Bellevue.

They already have lost a bidding war on a $480,000 Bellevue house. Seven offers pushed the price to $535,000.

Builders are adding to the mix.

Windermere agent Daniel Toth's West Seattle listing for a 1928 brick Tudor — original period detailing plus a new kitchen for $499,950 — recently was snapped up by a builder. He plans to construct two additional homes in its back yard.

Lennox Scott, chairman of John L. Scott Real Estate, said a shortage of affordably priced homes will keep the local market strong.

He defines affordable as a house priced below the median for its area.

In Auburn, for example, that means less than $325,000. In Seattle's Queen Anne and Magnolia neighborhoods, it's less than $682,000.

"We still have job growth, population growth and low interest rates," Scott said, mentioning three factors that propel housing demand.

"People want to live closer to job centers because of traffic," he said. "That's dictating where inventories are lower."

Seattle-area interest rates stand at 6.22 percent for a 30-year, fixed-rate mortgage, according to HSH, a mortgage-information provider.

While agents and brokers talk about the lack of lower-priced homes, MLS statistics show that the total number of properties for sale has increased significantly over a year ago.

For example, King County buyers had 5,100 homes to choose from in March 2006. They had 6,762 last month, a 32.6 percent increase.

Year-over-year inventory increased 44 percent to 49 percent in Snohomish, Pierce and Kitsap counties.

At the same time, the number of house and condominium sales transacted last month was down 8 percent in King County and almost 18 percent in Snohomish County, compared with a year earlier, the MLS reported.

King County's detached houses have appreciated 12.3 percent in the past year, on a par with the county's condominium appreciation. King County's median condo price was $281,000 last month.

Snohomish County's house prices in the past year were up 16 percent.

But the county's condo appreciation was even stronger: 25.7 percent; and the median is now $238,796.

House prices were up 7.6 percent in Pierce County and 8.7 percent in Kitsap County for the past year. Those two counties have relatively few condominiums.

Elizabeth Rhodes: erhodes@seattletimes.com

Information in this article, originally published April 7, was corrected April 17. A graphic accompanying a previous version of this story did not reflect the most current sale prices. The correct home-price activity chart has been attached.