Local home prices dive with distressed sales

A growing number of distressed home sales, coupled with stringent “jumbo” financing requirements, pushed Puget Sound property prices lower than expected in October, according to the latest figures released by the Northwest Multiple Listing Service.

King County reported one of the sharpest declines of any area when compared to October of 2010. The median price on last month’s completed transactions in the county was $287,500, which compares to a year-ago figure of $350,000 (down about 17.9 percent). For single-family homes (excluding condominiums), median prices slipped 14.7 percent, dropping from $375,000 a year ago to last month’s figure of $320,000.

“What is holding back the housing market has little to do with houses,” said Frank Wilson, Northwest MLS director, pointing to uncertainty in the stock market and volatile global economies, along with a more complicated, prolonged transaction process.

DataQuick, a San Diego-based real estate research firm, reported that half of the Seattle region’s September home sales were distressed properties. While the company’s October distressed figures are not in, the number was expected to rise.

Since distressed properties typically sell for less than market value, a large percentage can significantly reduce average sale prices.

Prices for last month’s closed sales of single-family homes and condominiums (combined) in the NWMLS’s 21 counties fell 10.9 percent from a year ago, dropping from $255,932 to $228,000. Activity was up, however, as pending sales (mutually accepted offers) increased nearly 21 percent from a year ago, rising from 5,653 transactions to 6,817.

OB Jacobi, president of Windermere Real Estate, said he expected an October drop because of new loan requirements.

“As of October 1, buyers in need of a mortgage above $506,000 must now qualify for a jumbo loan which is more restrictive and comes at a higher cost than conventional financing,” Jacobi said.