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Originally published October 6, 2007 at 12:00 AM | Page modified October 6, 2007 at 2:03 AM

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Let the buyer rejoice: Home sales, prices fall

Reflecting mortgage-market turmoil and buyer uncertainty, the median selling price of King County houses is now back to where it was last spring.

Seattle Times business reporter

One man's efforts to sell his home

As of Sunday, a former Bothell man who has moved to Hawaii will have lowered his asking price almost $100,000 over four months.

Sunday

$629,950

August

$689,000

Today

$647,750

June 8

$729,900

Reflecting mortgage-market turmoil and buyer uncertainty, the median selling price of King County houses has fallen two months in a row. It's now back to where it was last spring — a sign that prices are softening as the number of for-sale homes continues to build.

Gary Metter didn't need to hear that. To have any hope of selling his Bothell home, he knew he needs to roll back the price.

So, as of Sunday, Metter will have chopped almost 100 grand off the price he set for his four-bedroom home in June. If that doesn't do the trick — and Metter readily concedes it may not — he plans to rent the house.

He's certainly not the only struggling seller, as home-sales numbers released Friday by the Northwest Multiple Listing Service reveal the most depressed market in years, albeit one that's healthier than most of the nation's.

King County's median single-family home price last month was $450,000. That's less than March's $457,500 median and almost $32,000 less than this year's high of $481,750, set in July. (Median is the midpoint: Half the properties sell for more, half for less.)

More striking, however, is the pronounced oversupply of for-sale houses. Every month since May, the year-over-year supply has increased 40 percent or more from the same month in 2006.

Meanwhile, sales are lagging. Offers were accepted last month on 1,541 King County houses — a 32 percent drop from the numbers in September 2006. Likewise, the county's condominium offerings were up (a startling 74.2 percent, including new condos), while pending sales were down 26.7 percent.

Despite this, King County's prices are up over the past year. House prices were up 5.9 percent last month, and condos up 14.8 percent, compared with a year earlier.

Surrounding counties posted the same general results, the bottom line being that in Central Puget Sound the percentage of homes sold, relative to the number for sale, now approximates the sluggish market of 2002. That's when the region was in a recession.

Conditions then were caused by the dot-com crash and subsequent stock-market downturn, which rippled across the economy and slashed jobs.

Today's down market has different dynamics. One factor is house prices that overshot wages, pricing out a significant number of buyers.

Another is the severe turmoil in the mortgage markets, which has locked out buyers with no down payments and spotty credit, and has made it more difficult for those seeking mortgages over the so-called jumbo-loan threshold of $417,000.

The latter issue, in fact, may have played a role in September's median-price rollback by limiting sales of high-end homes. That would have the effect of lowering the median price.

"The turbulence in the mortgage market has definitely had an effect on sales activity," said Lennox Scott, CEO of John L. Scott Real Estate. "We knew it would be this way for August and September, and we're still seeing the major effects here in October."

Windermere agent Paul Stickney says other agents are confirming what he's seeing in North King County: "We've got more buyers waiting to see what the market is going to do than we've had in years."

While they watch, inventory builds. That's happening everywhere, albeit unevenly, throughout King County.

Indeed, for the seven weeks ending Sept. 26, depending on the neighborhood, there were 30, 40, 50 or more weeks' worth of single-family houses for sale, according to Windermere.

It means that if no other houses come on the market, it would take half a year or more to sell current stock.

Behind these numbers are stories like Gary Metter's.

He and his wife, Debbie, decided last spring to sell their home on Northeast 197th Street in the Summit at North Creek neighborhood and return to Hawaii. Real-estate agents "were all recommending numbers in the high $700,000s," Metter said.

Hoping for a quick sale, the couple went lower — to $729,900, for a well-kept home on a cul-de-sac that backs up to a greenbelt and has both a community swimming pool and an elementary school within walking distance.

The Metters, who bought the home for $354,500 in February 2001, hung the for-sale sign on June 8. Nothing happened. A week later, they dropped it to $699,000, and in early August to $689,000.

A further cut dropped it to $647,750, which Stickney, the Metters' real-estate agent, knew was less than other homes in the neighborhood had sold for recently.

"It's a smoking deal at $647,000, but no one's looking at it," Stickney said with a sigh.

The problem, both seller and agent have decided, isn't the four-bedroom, 2 ½-bath, 3,482-square-foot house. It's the market.

There were 98 homes for sale in Metter's general Bothell area earlier this week — and that's just those priced between $600,000 and $700,000. Altogether, 845 homes were available nearby.

"I realized there's way too much inventory, or people are expecting there's way too much inventory," the agent said. So he doesn't blame buyers for taking a wait-and-see approach. Since 2000, home prices have increased far faster than wages.

"Now I think there's some correction to get those two things back in sync," Stickney said.

But that didn't help Debbie and Gary Metter, who have returned to Oahu.

After marketing his home for 17 weeks, Metter has settled on a new plan.

On Sunday, at yet another open house, he'll offer a last-ditch price cut to $629,950 — $99,950 less than June's price.

"I did a lot of research online, and looking at what's been going on, I think there's at least a general feeling by a lot of buyers that prices may be going down over the next year," he said. "With that in mind, I decided to discount the house so much that it would take away the fear."

"The market is slow, so we're going low to get noticed; that's the bottom line," Stickney said.

If his house receives only low-ball offers — or worse, no offers — within 10 days, Metter said, he'll take it off the market and rent it instead.

Then he'll try again to sell it later.

Elizabeth Rhodes: erhodes@seattletimes.com

Copyright © 2007 The Seattle Times Company

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