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Seattle clings to housing peak, but some wonder if it can last

It's one of the few big U.S. markets that hasn't seen a decline. Yet.

December 31, 2007|Tomas Alex Tizon | Times Staff Writer

SEATTLE — It's the kind of house that a year or two ago would have been snapped up in days: a refurbished rambler in a woodsy residential neighborhood minutes from downtown.

The asking price: $559,000.

But after seven weeks, Kristen and Al Dittmaier have not received a single offer on their Wedgwood home.

"I really believed there would be no problem selling," Kristen Dittmaier said. "But the whole feel of the market has changed. We might have to drop the price."

The Dittmaiers, along with local real estate agents and economists, wonder whether sluggish sales are part of the usual winter slump or a sign that Seattle -- a perennial most-livable-city contender -- is joining the rest of the country in declining home sales.

The question has put many locals on edge.

"Right now there's not that urgency among buyers to pull the trigger," said Renee Menti Ruhl of Windermere Real Estate. Ruhl, agent for the Dittmaiers, said that "the true test will be early next year."

If sales are sluggish during the traditionally hot-selling months of February through April, she said, then people will have a better idea whether Seattle has joined the national trend.

Of 20 major U.S. metropolitan areas, all but three -- Seattle, Portland, Ore., and Charlotte, N.C. -- experienced a decline in real estate values this October compared with last October, according to the Standard & Poor's/Case-Shiller composite price index, released last week.

Home prices have fallen most in the Midwest, Southwest, Florida and California. In Los Angeles, prices fell 8.8%; in New York City, 4.1%.

Seattle prices increased 3.3%, but that was the smallest year-to-year rise for the city in more than a decade. The annual appreciation in Seattle has been slowing for more than a year and a half. Some economists say it's only a matter of time before Seattle joins the national slump. Though the city experienced a year-to-year increase, October prices fell 0.9% from September, the third consecutive monthly decline.

Democratic Gov. Chris Gregoire told residents not to be affected by the gloom. Bad news elsewhere, she said, doesn't have to translate into bad news here.

"There's no real reason for it to slow in our state, but for the fact that people are watching what's going on around the national economy," Gregoire said last week during the unveiling of a budget proposal in Olympia.

Seattle, Portland and Charlotte have bucked the trend partly because each has a relatively healthy local economy, and all three continue to draw newcomers, which keeps demand steady.

Seattle has three ingredients that work together to keep home prices high, according to Seattle-area real estate blogger Larry Cragun: "lakes, mountains and liberals."

The lakes and mountains don't need explaining. The liberals, Cragun said, have created such an anti-development atmosphere that available land for building homes is extremely limited.

"When you only have a certain amount of land to build on, the value of that land tends to run up," said Cragun, who has been in the local real estate and mortgage business for three decades and blogs at RealEstateUndressed.com. But Seattle has "experienced the worst of it" already, he said, and will rebound early in the new year.

As for the Dittmaiers, they continue to hold their front door open to prospective buyers.

The holidays have been rough. In addition to the usual hustle and bustle, the Dittmaiers and their two young children have been busy packing their belongings. They have already purchased a new house nearby.

The family has been moving to the new place little by little. But the transfer won't be complete, Kristen Dittmaier said, until their old house sells. Not to mention that the couple soon will be forced to make two mortgage payments if the Wedgwood house remains unsold.

Dittmaier said she had not seen the latest home-price report in the newspaper. And it's just as well. "I don't need to read a report to know houses are not selling as quickly as they used to."

--

tomas.alex.tizon@latimes.com

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