You don’t have to be in the market for a house to worry about home prices.
If you’re buying, of course you want to know if prices are still going down or whether they’ll start heading back up.
But if you already own one, you’re worried about what’s happening with your investment. And if you’d like to buy one, you want to know whether you’ll ever be able to and how much you should save.
I’m no expert, but I think we’re getting close to the bottom.
My opinion is based on the numbers, mostly one specific number.
Prices have been falling for quite some time now, usually about 10 percent, maybe more, each month from the same month a year ago. In recent months, the percentages have been dropping. In April, the median price for single-family homes only — excluding condominiums — was $280,000. That’s a drop of only 6.7 percent from the year-ago price.
In King County, prices fell 1.3 percent last month in comparison to April 2009. They’d been dropping by 10 percent a month or so, too. But they bottomed out much sooner than the homes in Snohomish County.
The King County median price, meaning half the homes sold for more and half for less, was $375,000. That’s a difference of $95,000.
The difference in price for the homes in Snohomish and King counties is a number I’ve been following for many years.
The reason is that most of the state’s jobs are in King County, so a large number of people want to live there. And many of those people would also like to own their own home.
What they’ve done in the past is buy one in King County if they can afford it and go elsewhere if they can’t. That’s why I-5 is such a mess. All those people working in King County and living somewhere else have to use I-5 to get to work.
When the economy was doing well, the difference in prices between the two counties was $50,000. In the recession, homes in King County have kept a little more of their value than in Snohomish. The price gap just kept climbing.
Obviously, not every home in King County is $95,000 more expensive than every home in Snohomish County. There’s a lot of flexibility there.
But what the price gap means to me is that as the economy improves, people are going to find homes here a better value than the homes to the south. And they’re going to pay a little less and drive a little more.
A revived interest in homes here will certainly lower the monthly drop in prices. Experts say they’ll stop dropping at some point and then remain stagnant for a while. And I don’t think that it will be too long before prices will start rising again here, partly because of the substantial gap in prices between the two counties.
That’s all predicated on the economy continuing to improve and significant numbers of people being able to find jobs again. Exactly when that will start happening is anybody’s guess.
But if previous recessions are any indication, it will eventually happen.
Mike Benbow: 425-339-3459; benbow@heraldnet.com.
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