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Originally published Tuesday, July 8, 2008 at 12:00 AM

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King County home sales edge up in June as lower prices lure first-time buyers

King County's June home prices were down compared with June 2007 but show signs of rising more recently.

Seattle Times business reporter

Information

To learn more about recent changes in FHA loans, go to www.hud.gov

Although Puget Sound-area home sales are still far below year-ago volumes, they inched up last month, thanks to buyers like Ian Hoyt.

A first-timer, Hoyt joined 2,549 others who made successful offers on King County homes in June, according to the Northwest Multiple Listing Service.

Last month's sales also continued a depressed price trend, with houses in the county selling for 4.3 percent less than in June 2007, although they are showing signs of rebounding.

But it wasn't just prices that convinced Hoyt, a 20-year-old landscaper, that June was the right time to buy a three-bedroom North Seattle town house. It was the comparison with renting.

"Rents are so high, so I did the math," Hoyt said. "Paying a mortgage is in the same ballpark."

Others, apparently, are doing the math and also trying to beat rising mortgage rates, because some agents report increased sales activity from first-time buyers.

Windermere Real Estate's Tim Lenihan sold homes to three market novices in one week last month. Hoyt was one of them.

Another was a single man whose purchase of a condo conversion included a price concession, new granite countertops and stainless-steel appliances.

The third, a young couple, got the seller to pay their closing costs and put a new roof on the four-bedroom house.

"In the spring, everyone was so scared of what was going on," Lenihan says of first-time buyers.

But changes in the government-sponsored Federal Housing Administration mortgage program — making it easier for first-timers to get loans — plus a softening of sellers' attitudes, have persuaded them to move past uncertainty, Lenihan says.

Those who do are finding plentiful choices, although not as plentiful as they had been.

For example, 29 percent more houses and condos were for sale last month than in the previous June.

In May, there were 47 percent more properties on the market than in May 2007, Multiple Listing Service numbers show.

Last month, the county had a 5.9-month supply of homes for sale. A six-month supply is considered a balanced market, favoring neither buyers nor sellers.

While King County's single-family home prices were down last month compared with a year earlier, they were up almost $10,000 from May, to a median $449,700.

That's the highest they've been dating back to September, when the median was $450,000.

Overall in King County, the median condo price was up from May and the previous June, reaching a median $295,000 last month. (Median is the midpoint, meaning half the properties sold for more; half for less.) But prices on the Eastside dropped sharply.

Agents say that rise still reflects a decrease over sellers' asking prices.

In some cases, that's given rise to a new phenomenon: multiple offers below asking price.

Vija Williams, a John L. Scott associate broker, started seeing them a few months ago. One home she sold drew multiple offers around the $495,000 range. It was listed for $509,000.

"The price ended up settling around $502,000 to $503,000," Williams said. "Over the past six months, I've spoken with plenty of agents who have had multiple offers like this."

Counseling sellers, Williams tells them that ultimately the market sets the price for any house, and "when you're getting multiple offers below listing, you have to listen."

One Ballard seller is dealing with that issue now.

"I definitely expect to get an offer below list," the seller says.

He says he got one offer "that was laughable."

"I understand the buyers' side of things," he said. "It's scary to think you could buy, and the house will lose another 10 percent."

But he thinks many buyers don't realize "the reduced value is already priced into the list price," and sellers aren't asking top dollar from the start.

John L. Scott agent Michael Orbino counsels sellers that even an uptick in mortgage rates could wash out any sticker-price savings.

Mortgage rates have been increasing in recent weeks, although they settled slightly down last week to 6.35 percent for a 30-year fixed-rate loan.

Snohomish, Pierce and Kitsap counties all saw single-family-home prices decline last month compared with the previous June.

Snohomish County house prices were down 9 percent to $347,344. Condo prices slipped 3 percent to $245,975.

Pierce County house prices dropped 6.6 percent to $265,000, while Kitsap County experienced the biggest drop — 12 percent — to $267,450.

First-time buyer Hoyt says he's unconcerned about future price declines. He saved intensively for his first home and got help from his parents.

That and an FHA loan allowed him to buy his 3-year-old town home for slightly more than $300,000.

"The money will come back to me [in appreciation]," Hoyt said. He intends to live in his town home for many years, happy he's not paying rent to live in a place he doesn't own.

Elizabeth Rhodes: erhodes@seattletimes.com

Copyright © 2008 The Seattle Times Company

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