Double-digit price declines making homes more affordable, attracting first-time buyers

House prices in King County slid again in March, recording the biggest year-over-year drop since the market peaked in summer 2007.

But statistics released Monday by the Northwest Multiple Listing Service also suggest sales activity may be starting to pick up as first-time buyers and investors search out bargains, especially in lower-priced neighborhoods.

"When it's a buyer's market, you buy," said Sheila McGraw, managing broker in the Federal Way office of John L. Scott.

The median price of a single-family King County home that sold last month was $363,850, down 17.3 percent from $439,900 in March 2008. The decline easily exceeded February's 12.8 percent year-over-year drop, the previous record.

The number of closed sales dropped 35.6 percent year over year for single-family homes and 44.9 percent for condos. Median condo sale prices slid 13.1 percent.

But the broker-owned listing service also reported that pending single-family home sales — offers that have been accepted but haven't closed — surged 33 percent from February's total, the biggest monthly jump since the real-estate downturn began.

Sales almost always increase as winter ends. But the monthly bump was only 6 percent between February and March 2008.

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, called the increase "an encouraging sign."

Pending sales generally become closed sales a month or two later.

"First-time homebuyers are expressing more interest in getting into the market now, if they have access to affordable credit," Crellin said.

"Interest rates are the lowest we've seen in several generations. And the improved [federal] tax credit helps."

Not surprisingly, pending sales increased most in areas with the most affordable homes.

In Southwest King County, for instance, where the median single-family-home price has dropped more than 18 percent to $252,000, pending sales in March were up 40 percent from February and more than 21 percent from March 2008.

In Federal Way, pending sales were up 56 percent year over year.

McGraw, the Federal Way broker, said phones are ringing more in her office lately. Her agents are busier.

"There's just a buzz," she said. "When you have a price point that more people can qualify for, that stimulates sales."

New incentives also are starting to have an impact, said Mike Winkler, managing broker in the Kent office of Coldwell Banker Bain. "People are talking a lot about the $8,000 tax credit for first-time buyers," he said.

Short sales and sales of foreclosed homes account for about 30 percent of pending sales in South King County, Winkler added.

They are attracting investors looking for bargains as well as first-time buyers, he said: "They're savvy. They're well-organized, well-read."

Median condo prices in Southeast King County increased 5.7 percent between March 2008 and last month, the listing service said.

But median single-family and condo prices dropped in every other part of the county, usually by double digits.

The median Snohomish County single-family home price was $315,000, down 10.7 percent year over year. Median condo prices in the county actually rose 2.8 percent, to $259,975, higher than King County's median.

But closed sales dropped more than 40 percent from the levels of a year ago.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com