Home sale prices in '05 set King County record

Low interest rates stoked the fires of King County's real estate market to make 2005 the highest year on record for home sale prices, according to figures released Tuesday by the Northwest Multiple Listing Service.

In King County, the median price of a single family home sold in 2005 was $374,000, a 15.4 percent increase over 2004's price. The median price means that half the homes sold were above that price, and half below.

While buyers fell over themselves to beat out other hopeful homeowners in 2005 -- creating multiple-offer situations that escalated prices to record highs -- some real estate experts think 2006 will let a little steam out of price increases.

In King County, the number of homes sold rose in 2005 only 1.9 percent to 31,939 -- perhaps an indication of sticker shock as well as a limited supply.

"In the past, the market has absorbed home price increases with household income growth," said J. Lennox Scott, chairman and chief executive of John L. Scott. "Well, we had household income growth in 2005, but appreciation rates were higher than that, therefore we needed the low interest rates."

Scott believes that the number of homes sold will slow even more in 2006, perhaps slightly decreasing, but he said he thinks prices will continue to increase, if at a slower pace.

Trying to estimate the price at which consumers will begin to take a "wait and see" attitude toward buying a home is something of a guessing game in Western Washington.

In 2005, even King County's price increases were outpaced by those of Snohomish, Pierce and Kitsap counties, though none of those three counties' median home sale prices broke $300,000 in the year-end tallies. In all four of the counties, the typical house sold for slightly more than its listed price.

Only 12.5 percent of the 67,237 single-family homes sold in 2005 in those four counties went for less than $200,000; Kitsap's prices jumped the fastest, rising 20.8 percent to $250,000 from $206,900 in 2004.

The number of Kitsap County homes sold, though, fell slightly to 4,520 from 4,615 in 2004 -- indicating the buyers are feeling some sticker shock.

The median price of a condo in Kitsap County, however, fell 24.4 percent to $150,000 from $198,500 in 2004 because a large number of cheaper condos came onto the market in 2005.

"A lot of the sellers that we deal with are unrealistic, so we're seeing a lot of listings come onto the market overpriced," said Ryan Thompson, a John L. Scott Realtor in Seattle.

"There were a lot of multiple offers in the summer and fall when buyers had a 'devil may care' attitude, but there is more fear on their part now."

The result is that sellers are beginning to recalibrate prices after their homes sit without selling.

The number of days the average home stayed on the market in 2005 is not available because the Northwest Multiple Listing Service is devising a different way to measure that figure that it says will be more precise.

In Seattle, the median price of a single-family home climbed 13.1 percent to $390,150 in 2005, compared with $345,000 in 2004, according to an analysis of the listing service's figures by Sonja Riveland for Windermere Services Co. (The Northwest Multiple Listing Service combines single-family home and condo sales in its Seattle figures.)

Thompson of John L. Scott predicts that the largest price increases of 2006 will be in West Seattle and the Central District.

While the percentage growth of Seattle's home sale prices lagged slightly behind that of King County overall, Riveland found that the percentage increase in condo prices in Seattle was even slower -- rising 9.2 percent to $260,000 in 2005, from $238,000 in 2004.

Still, the luxury condo market in Seattle took off in 2005 -- Belltown had the highest number of $500,000-plus condos sold at 129 units, trailed by Central Seattle/Madison Park/Capitol Hill with 119 units, and Kirkland with 85 units sold.

"We're seeing an average of about $500 per square foot in Belltown, but I don't think it can continue," said Thompson, who with his partner, Tiffany Thompson, sold a penthouse condo for $3.6 million in the "Cristalla" development. (Editor's Note: The original version of this story misidentified Ms. Thompson.)

"Developers have followed the curve and are starting new developments because condos are so hot ... but I don't see how demand can continue like this."

Thompson credits investors for some of the heat in the downtown condo market, noting that "even some agents do this on the side."

The increase in the median price of condos sold was not broken out in the figures published Tuesday, but Riveland's analysis found that the median price of a condo sold in King County rose 7 percent to $214,000 in 2005 from $200,000 in 2004.

Meanwhile, in Snohomish County the median price of a single-family home jumped 18.8 percent in 2005 to reach $297,000, up from $250,000 in 2004. The number of homes sold rose 8.8 percent to 14,749. The median price of a condo was $187,095, up 8.1 percent from $173,000 in 2004.

In Pierce County, the median price of a single-family home rose 20 percent to $239,950, from $199,900 in 2004. The number of homes sold rose 11.7 percent to 16,029. The median price of a condo was $186,475, an increase of 9.7 percent from $170,000 the previous year.

Throughout the 17 counties and fringe areas measured by the listing service in 2005, nearly 103,000 single-family homes and condos were sold for a combined $33.7 billion. Fifteen percent of those sales were condos, though in King County that figure rose to 24.4 percent.

Though the number of pending sales -- a good indication of buyers' attitude to the market -- fell in December, Scott expects that February and March will bring a resurgence in the market.

"Even though the number of sales may reduce slightly in 2006, we'll still have positive appreciation rates just because of the shortage of supply and with demand continuing from the Seattle cycle's job growth," Scott said.

P-I reporter Kristen Millares Bolt can be reached at 206-448-8142 or kristenbolt@seattlepi.com.

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