Real Estate Briefs – May 2008

Home prices drop nearly 7%

Home prices dropped nearly 7 percent in Snohomish County in March, the biggest fall so far in the area’s slipping market, according to the Northwest Multiple Listing Service.

The combined median price for single-family homes and condominiums in March fell to $335,000, down from $359,950 a year ago.

The March market was similar to that of previous months, with a strong increase in home listings and drops in pending sales and completed sales. Also similar to previous months, the condo market was different from the market for single-family homes.

Condo prices increased nearly 6 percent in Snohomish County, despite the fact that there were more than double the number of condos on the market this year than a year ago. Buyers in March had 1,317 condos to look at, a 106.8 increase from a year ago, when there were 637 condos on the market.

Single-family homes dropped 7.78 percent in price in March to a median of $352,725.

Prices increased slightly in King County, rising by 1.38 percent in March.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said the market was a good one for first-time buyers, with home values holding and much less competition for homes.

Continued low interest rates combined with government-backed loans are providing first-time buyers with more options for reliable mortgage products, he said.

Apartments in high demand

Demand for apartments across Snohomish County hasn’t slacked, with more than 95 percent of units in most areas occupied as of this spring.

Gone are generous incentives and stalled rents. Instead, rents are going up in many places. The average rent in the region stretching from Snohomish to Pierce counties rose nearly 8 percent, to $952, during the past year, according to Dupre + Scott Apartment Advisors.

Why are more people renting? Continued low unemployment and higher barriers to first-time home buyers with questionable credit, thanks to the mortgage industry meltdown.

Not only are jobs plentiful in the region, but people keep moving here as well, said Mike Scott, co-owner of Dupre + Scott, which tracks the rental market. Despite that, construction of new apartments has been at its lowest ebb since 2005, as developers focused until recently on building more condominiums and single-family homes.

In the early part of the decade, vacancy rates locally topped 10 percent for many properties. That has changed dramatically. The countywide vacancy rate for apartments stood at 4.8 percent as of March, Dupre + Scott reported.

North and east of Everett, it’s an even tighter market for renters. In the area stretching from Marysville to Monroe, only 1.5 percent of units were vacant last month, Scott said.

Foreclosure rate down in county

While foreclosures are rising in many areas of the country, the number of Snohomish County homeowners in jeopardy of losing their homes actually went down in March, according to RealtyTrac Inc.

In March, foreclosure filings were issued for 228 properties across the county. That translates a foreclosure rate of one out of every 1,187 households. That was down 3 percent from February and was 8 percent lower than the rate a year ago.

Statewide, however, foreclosures were up in March about 121 percent from a year ago, with a majority of that increase since February.

With the increase, RealtyTrac estimated 1 out of every 705 households in the state was in foreclosure. That ranked 16th nationally.

“There are areas where foreclosures certainly are spiking. I don’t see Washington as one of those, at least not yet,” said Daren Blomquist, a RealtyTrac spokesman.

The report from RealtyTrac showed one out of every 538 U.S. households received a foreclosure filing in March.

“The March numbers show that overall foreclosure activity so far this year continues to run nearly 60 percent above the levels we saw last year,” said James Saccacio, RealtyTrac’s chief executive officer, in a summary of the new statistics.

For the 15th straight month, Nevada led all states in foreclosure rates. In March, one out of every 139 households in that state received a foreclosure notice — nearly four times the national average. California, Florida and Arizona saw the next highest rates.

In those states, home values have tumbled significantly. That hasn’t been the case in the Puget Sound area, however.

“The home price appreciation in the Seattle area has been pretty steady. It’s held up pretty well,” said Blomquist.

Vacancy rates down for office, industrial space

The amount of vacant office space leased in Snohomish County improved during the first quarter, officials said.

And that’s reason enough for optimism after two years of mostly flat or slightly worsening vacancy rates.

Cushman &Wakefield reported that just under 19 percent of the county’s office space stood vacant during this first quarter, down from more than 20 percent in 2007’s final quarter.

About 68,000 square feet of space has been leased this quarter, with the Cobalt Group’s new branch office in Lynnwood accounting for 40,000 square feet alone. That’s not a tremendous amount leased, but it’s enough to push down the rate by a percentage point or so.

The last time the county’s office vacancy rate dropped below 19 percent was the first half of last year.

The countywide average annual cost for first-class office space has slipped under $25 per foot, compared with more than $38 in downtown Seattle and Bellevue.

That cost disparity helps to make office space in Snoho­mish County more attractive for companies that don’t need to be located right in Seattle, said Gary Bullington, a director at Cushman &Wakefield.

Cushman &Wakefield estimated the vacancy rate for industrial space, used for manufacturing and warehouse uses, has fallen to just more than 6 percent in Snohomish County, the lowest level in more than four years.