Median home price in King County drops in February, dragged down by repos

Home prices plummeted to new post-boom lows in February, dragged down by a continuing surge in lower-priced "short sales" and bank resales of repossessed homes.

The median price of King County houses that sold last month was $334,000, according to statistics released Thursday by the Northwest Multiple Listing Service — down from $356,000 the previous month and $373,010 in February a year ago.

The last time the median single-family price was lower was in March 2005. It now has fallen 31 percent from its July 2007 peak.

Brokers said the median price has dropped because "distressed" properties — bank-owned homes and short sales for less than the owner owes lenders — now account for a larger share of total sales.

They made up 37 percent of all King County house sales in February, according to an analysis by Windermere Real Estate, up from 30 percent in the same month last year.

When distressed homes are excluded, the median price of all other King County houses sold in February was much higher — $390,000, according to Windermere's analysis.

But distressed sales are driving much of the market, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, and that won't end anytime soon.

"It's going to be a problem for us to deal with for the rest of this year, and perhaps a little beyond," he said.

Distressed-property sales are surging partly because many lenders — who have the final say on both foreclosure resales and short sales — are processing them more efficiently, in some cases easing their requirements or accepting lower prices, Crellin said.

Richard Eastern, CEO of Washington Property Solutions, a Bellevue-based firm that specializes in short sales, agreed. "They don't want to hold 'em," he said.

He told of one short sale, an Everett condo, that had been listed for a little over $100,000 for months with no activity.

The lender contacted the seller and authorized him to whack the asking price to $60,000. After two weeks, when the condo still hadn't attracted any offers, the bank authorized an additional $10,000 cut. The condo finally sold.

More than twice as many short sales closed in King County in February as in the same month last year, according to Seattle Short Sales, another firm that specializes in the transactions.

While more distressed properties are selling, the pipeline doesn't appear to be drying up.

King County's inventory of bank-owned homes — those that have been repossessed, but haven't yet been resold — is increasing, according to ForeclosureRadar, a California firm that tracks foreclosure activity.

It was 80 percent larger in January, the most recent month for which statistics are available, than in January 2010, the company said.

Standard & Poor's estimated in another recent report that, based on recent sales rates, it will take nearly five years to clear all the "shadow inventory" — homes that are in foreclosure, or are about to be — in King, Snohomish and Pierce counties.

The percentage of King County single-family home sales that fit the "distressed" category in February varied widely by area, according to Windermere's analysis.

Short sales and resales of repossessed homes accounted for 56 percent of all sales in Southeast King County and 54 percent in Southwest King County, the most affordable areas.

But they represented just 31 percent of all sales on the Eastside, and just 26 percent in Seattle.

Brokers said distressed-home listings remain rare in some neighborhoods, such as West Bellevue and Mercer Island, and have had little impact on those submarkets.

"It's not unusual for [non-distressed] sellers in neighborhoods close to the city to get multiple offers," OB Jacobi, Windermere's president, said in a prepared statement.

Buyers closed on 1,003 single-family homes in King County last month, nearly identical to the number sold in January and in February 2010.

February's median condo sale price in King County, $237,500, was down 5 percent from the same month last year. The number of closed sales dropped about 7 percent year over year.

In Snohomish County, single-family home sales were down 13 percent from February 2010. The median price, $242,000, fell nearly 14 percent.

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