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Originally published Tuesday, November 9, 2010 at 9:02 PM

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Seattle-area home prices decline, Zillow says

Home values in the Seattle metropolitan area have fallen more than 10 percent over the past year, one of the steeper declines in the country...

Seattle Times business reporter

Home values in the Seattle metropolitan area have fallen more than 10 percent over the past year, one of the steeper declines in the country, according to Zillow.com

But a spokeswoman for the online real-estate database and marketplace said that's most likely because the region is just catching up with the rest of the nation.

Home values in the metropolitan area — which includes King, Snohomish and Pierce counties — didn't start dropping until a year after the rest of country, said Katie Curnutte, "so it stands to reason it would be later before Seattle reaches its equilibrium."

Zillow calculated the median value of houses and condos in the region in September was $273,500, down 4.3 percent from June and 10.6 percent from September 2009. Nationally, the declines were 1.2 percent and 4.3 percent, respectively.

Zillow's estimates for the Seattle area differ markedly from statistics provided by the Northwest Multiple Listing Service. That organization has reported that the median price of homes sold in September actually rose 0.3 percent from the same month in 2009 in King County, while falling 0.6 percent in Pierce County and 7.3 percent in Snohomish County.

But Zillow, unlike the listing service, attempts to measure the value of all homes, sold and unsold.

The Seattle-based company said this region's year-over-year decline ranked 16th among 145 metropolitan areas included in its report. Big cities that experienced steeper drops included Miami, Atlanta, Phoenix, Orlando and Detroit.

Seattle-area home values now are 28 percent below their June 2007 peak, Zillow said — a bigger decline than the 25 percent that values have dropped nationally since their June 2006 apex.

But Curnutte cautioned against reading too much into that. The national numbers include cities that experienced little or no increase in home values before the real-estate bubble burst, she said, as well as Sun Belt cities where values have fallen more than 50 percent.

Zillow also said that:

• About 22 percent of the homes sold in the Seattle metro area in September sold for less than the last time they changed hands; that's up from 16 percent a year earlier.

• 1.5 of every 1,000 homeowners in the three counties lost their homes to foreclosure in September, compared with 1.2 of every 1,000 nationally.

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• Foreclosure re-sales — mostly by banks that had repossessed homes — accounted for one-sixth of all sales in the region in September. Nationally, the figure was one in five.

• Nearly 28 percent of all owners of Seattle-area single-family homes with mortgages were "underwater" in September — they owed more to lenders than the houses are worth.

The national figure was about 23 percent. But it topped 80 percent in Las Vegas and 68 percent in Phoenix.

Stan Humphries, Zillow's chief economist, said in a prepared statement that those underwater owners are "essentially trapped in their current homes and are prevented from selling and buying a new home.

"This has profound implications for future demand and will be a millstone around the neck of the housing market."

A closer look at Zillow's numbers indicates homes in the city of Seattle are faring better than the rest of King County, and King County is holding up better than Snohomish and Pierce counties.

Seattle's home-value index, for instance, was down just 5.5 percent year-over-year, while King County as a whole was down 8.2 percent and Snohomish County was down 12.7 percent.

Bellevue slipped 5.6 percent from September 2009.

About 17 percent of homes sold in Seattle in September sold for a loss, compared with more than 40 percent in Snoqualmie and Maple Valley.

Foreclosure resales accounted for about 6 percent of all September sales in Seattle and Bellevue, compared with 32 percent in Everett, 33 percent in Spanaway and 46 percent in Parkland, south of Tacoma.

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

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