Seattle-area home prices keep falling in February
Seattle-area prices were down 0.8 percent from January and 2.9 percent from a year ago, according to the closely watched Standard & Poor's/Case-Shiller index.
Seattle Times staff and The Associated Press
Home prices in the Seattle metropolitan area fell in February for the seventh straight month, according to the closely watched Standard & Poor's/Case-Shiller index.
The metropolitan area, which includes King, Snohomish and Pierce counties, was one of nine of the 20 cities tracked by Case-Shiller to hit a new post-housing crisis low.
Seattle-area prices were down 0.8 percent from January and 2.9 percent from a year ago. The February numbers, the most recent available, were released Tuesday.
Seattle's month-over-month and year-over-year declines fell in the middle of the pack among the 20 metropolitan areas.
Prices were up compared to a year ago in just five cities: Denver, Detroit, Miami, Minneapolis and Phoenix.
Observers attributed continued declines in most of the country in large part to rising foreclosures, which they said are reducing prices and keeping new-home sales weak.
Foreclosed homes are usually sold at steep discounts, thereby lowering average prices. And by expanding the supply of low-priced previously occupied homes, foreclosures tend to limit demand for new homes.
Some economists expect foreclosures to keep prices under pressure this year, even though they think sales of previously occupied homes will rise.
Banks are stepping up foreclosures in about half the states. The increase comes after state officials settled a dispute in February with five of the biggest mortgage lenders over foreclosure abuses.
"Foreclosures, excess supply and weak demand will drive home prices ... down at least another 5 percent," said Patrick Newport, an economist at IHS Global Insight.
Stan Humphries, chief economist at the real-estate website Zillow, said it's normal in the early stages of a housing recovery for prices to keep sliding even as sales start to tick up.
"This is all part and parcel of the bottoming process," he said.
Yelena Shulyatyeva, an economist at BNP Paribas, said she expects 1 million homes to be foreclosed this year, up from 800,000 in 2011.
Mark Vitner, an economist at Wells Fargo, said there's also a divide between so-called "distressed" home prices and the rest of the market. Distressed homes include foreclosures and "short sales." Short sales occur when lenders allow homes to be sold for less than what's owed on the mortgage.
Home-price indexes that exclude distressed properties suggest that prices are inching up.
For nondistressed properties, "there's really some intense competition out there," Vitner said. "A lot of houses are getting multiple bids."
Humphries estimates that foreclosed homes made up about 20 percent of February sales. That figure has been 15 to 20 percent since late 2008, he said. In a healthy market, it's usually less than 5 percent.
Seattle Times business reporter Eric Pryne contributed to this report.