Home buyers gain bargaining power

Erin and Andy Mathias started looking for a new house around the start of the year on the north side of Seattle because it was convenient to work, shopping, parks and other amenities.

They found a good selection, but at least as much competition for anything decent in their price range, up to $350,000.

"We would see a listing the day it came out, try and see the house either that day or the following day, have our Realtor check into it and there were already multiple offers on the table," Erin Mathias said. "It became a little frustrating after a while."

Although the Seattle-area real estate market has slowed, buyers still don't have the advantage over sellers in such areas as North Seattle, West Seattle, Capitol Hill, Lake Forest Park and East Bellevue.

Market observers attribute the resilience of these markets to less speculative building during the boom from 2004 into 2007, and buyers' increasing desire to live closer to work and commercial centers. But even in stronger areas, buyers have more choices and bargaining power than they did a year ago.

The Mathiases wanted to live near Woodland Park Zoo, where they had rented for about three years. Rick Ybarra, who just closed on a condominium in Wallingford after years of renting in Seattle, focused his search from Capitol Hill north to 85th Street.

In fact, since the start of September, the area from the Ship Canal to the city limits was a definite seller's market, averaging 4.3 months of housing inventory -- meaning it would take that long to sell all the homes in that market at its current sales pace.

Inventory averaged 5.3 months in Seattle as a whole and 6.5 months in all of King County during that time. Most experts consider six months of inventory the balance point between buyers and sellers. Inventory topped nine months in Skyway and Enumclaw, while some suburbs, such as Graham and Gig Harbor, have more than a year's worth of homes on the market.

Inventories remain relatively low in popular urban areas such as North Seattle, in part because they started out lower than in other places. But these urban inventories also have risen more slowly than those elsewhere.

"The urban locations are still quite strong," said Bob Melvey, assistant manager of Windermere Real Estate's Ballard office, whose research shows King County is a buyer's market, Seattle on the buyer's end of a balanced market and North Seattle on the seller's side.Stacey Brower, the John L. Scott Real Estate agent representing the Mathiases, said she sees strong demand for affordable homes in the North End of Seattle, up to 100th Street.

"If it's clean and livable under $400 (thousand), it moves pretty quick," she said.

Buyers say they look for urban areas with a lot going on.

"(We) just really have enjoyed the variety of neighborhoods and the close proximity to restaurants and grocery stories and the post office, and parks and recreation," Erin Mathias said. "It's a pretty central location to where my husband and I work."

Ybarra had his commute in mind also.

"I haven't driven since 1990. I pretty much bus it and walk it everywhere," he said. "There had to be a bus line nearby. There had to be amenities nearby."

Many prospective buyers say they want "walking neighborhoods," Brower said. "They want to be able to get up on Saturday morning and walk to a coffee shop and get a paper, or walk to a restaurant on Friday night."

Melvey also has noticed an increasing interest in walkability over the past five years, he said. "It's really wanting to be walking distance to a sense of community."

Deborah Arends, an agent with RE/MAX Northwest Realtors, said she closed 66 sales in two Ballard ZIP codes in March, up from 60 in March 2007. Inventory has averaged 4.4 months north of the Ship Canal and west of Interstate 5 over the past seven months.

"The commute is not getting any better, so I think people really want to be closer in to the city," Arends said.

		Scott Eklund / P-I
	The entrance to the Belgrove townhome development in Renton.

Buyers also like that Ballard has its own sense of community, she said. "People want to be able to walk to things."

Matthew Gardner, a local land-use economist who works with developers, said it makes sense that urban-neighborhood markets are holding up better than others.

"Those with more substantive fundamental reasons why (prices) went up, i.e. proximity to job centers, are going to be more protected," he said.

While some buyers wait to see how low prices will get in the slow market, Ybarra was confident that prices in his target area would stay strong.

"I picked a good area," he said.

The Mathiases started looking at homes unsure they were ready to buy, but became serious about upsizing from their one-bedroom apartment because they're expecting their first child in October.

"I think if we weren't having a child, we might have waited longer," Erin Mathias said.

They found many townhouses on the market, but didn't like their layouts, small yards and views of other townhouses. Most of the traditional houses they saw needed a lot of work.

They put in an offer below asking price on one house, but lost out to a better offer. And they didn't even bother trying for another house because several bidders already had pushed up the price.

Eventually, their offer was accepted on a Greenwood house on the market for a couple of weeks (another offer came in afterwards, too late to compete with theirs).

"It's just a really solid, well-built home and the floor plan makes sense," Mathias said.

Ybarra, who found ample selection, said his was the sole offer during negotiations over and financing of the unit.

"We initially went in with a lower offer than what they were asking for, then they came back with 'absolutely not,' " he said. "But they did contribute toward the down (payment)."

So what does this all mean?

Some homes still are selling above asking price with multiple offers, without contingencies for financing or inspection. But those with less-ideal prices and conditions are sitting much longer than they would have a year ago, even in popular neighborhoods.

Despite their relative strength, North Seattle neighborhood inventories over the past seven months have doubled, on average, from the same months a year earlier.

"The sellers that are doing well are really working with the buyers," Arends said. "You can't just draw a line in the sand and expect another buyer to come up tomorrow."

WESTERN BELLEVUE HAS SLOWED

The strength of neighborhoods close to jobs and shopping has not extended to the area in and around central and western Bellevue.

Inventory in the area -- from Interstate 405 west to Lake Washington and from Interstate 90 to just north of state Route 520 -- averaged more than 10 months from September through March, up from about 3 months in the same period a year earlier. The East Bellevue area, in contrast, has averaged just 5.8 months of inventory in recent months.

Matthew Gardner, a local land-use economist, was not sure what caused the slowing west of I-405, but noted the median house that sold in that area in March fetched $1.2 million -- just $7,000 below the median on Mercer Island, King County's most expensive area.

Higher interest rates for big loans, particularly since August, have helped slow high-end sales, and $1.2 million is out of the reach of many of those seeking a home in urban areas.

"It can be attributed to pricing," Gardner said.

The Northwest Multiple Listing Service is scheduled to release April housing statistics Monday.