Local home values hang on as sales decline

Thurston County home sales are down, building activity has tapered off and more people have fallen behind on mortgage payments, according to newly compiled data for the first half of the year.

The data raise new questions about the vitality of the county's real-estate market, but South Sound real-estate experts say the county still has job growth, low unemployment and population growth to stimulate home sales. The housing market also has slowed since 2006, which was a record year for home sales, yet Thurston County homes continue to hold their values.

In May, for example, the median price of a Thurston County single-family residence and condominium was $264,000, nearly unchanged from the $265,475 median price recorded last year, according to the Northwest Multiple Listing Service.

By comparison, home values fell more steeply in nearly every Western Washington county in May, including King and Pierce. Kitsap County home values fell more than 14 percent in the same year-over-year period, Northwest MLS data show.

Housing market

Through the first six months of this year, Thurston County home sales have fallen more than 20 percent compared with the same period last year, from 2,068 units to 1,579.

Although the Thurston County real-estate market is considered a buyer's market, there still is some apprehension among buyers because of the national economy, Northwest MLS area services manager Jerry Wilkins said.

Real-estate agent Phil Sharp says that homes listed near the median price are selling much more quickly than those listed above it.

"Houses definitely have to be priced lower to move it," added agent Catherine Haag, who has worked in the South Sound real-estate business for 15 years.

She said one Olympia homeowner she has worked with is resigned to losing money, having lowered the home-sale price below what her client paid for the home.

Haag also has been trying to sell acreage in rural Thurston County for about seven months.

Prospective buyers, on the other hand, have plenty to choose from, she said.

In May, more than 2,000 homes were listed for sale in the county, according to Northwest MLS data.

Lisa Brand, who lives in south Thurston County, said she searched for a house for more than a year until she came across a rarity: a two-story, 1,800-square-foot house built in 1899. It cost her $133,000.

"I consider it a blessing," she said.

During her search, she noticed that many houses were sitting on the market unsold.

And although she now has a 40-minute commute to work in Olympia, higher gasoline prices don't concern her, she said.

"I didn't give it a second thought because it was so nice to have my own place," Brand said.

Construction

New-home construction in the county also has tapered off because of the slower pace of home sales.

In Lacey, the site of so much new construction in recent years, the number of single-family building permits issued through May fell 58 percent compared with the same period last year, according to the Lacey Community Development Department. Permit numbers also fell in Olympia, Tumwater, Yelm and unincorporated areas of the county, data show.

Erin Shannon, a spokeswoman for the Building Industry Association of Washington, said builders in 31 counties statewide, including Thurston, cut back on the number of projects. Eight counties do not report data to the association, she said.

Through April of this year, single-family and multifamily building permits fell 36 percent to 8,814 compared with 13,789 for the same period last year, she said.

Shannon said builders are reluctant to build when home sales are down. Lenders, too, have been reluctant to fund speculative home projects, she noted.

Tumwater Development Services director Roger Gellenbeck said he thinks the city is on pace to issue about 100 single-family permits this year, although that could change because of anxiety about the economy, he said.

"From what my permit technicians tell me, we're having a good year," Gellenbeck said.

Foreclosures

Thurston County doesn't have a serious foreclosure problem when compared with real-estate markets in California and Florida, but more people have fallen behind on their mortgage payments this year than last year.

Foreclosure notices, also known as notices of trustee sales, have increased 56 percent to 459 filings in the first six months of 2008, compared with 294 in the same period a year ago, according to the Thurston County Auditor's Office.

The notice informs the homeowner of missed mortgage payments and that a date has been set for the house to be sold at auction.

People always have fallen behind on mortgage payments, but in the past, they had an easier time refinancing their way out of default, Madrona Mortgage co-owner Ron Hanson said.

When the housing market was red-hot and interest rates were low, creative mortgages, such as those that require no income verification, helped less-than-qualified buyers qualify for a home, Hanson said. Lending standards tightened last year, and Hanson said he now can offer about half the mortgage products he used to.

"The bail-out options are not there for some of these homeowners," Hanson said.

Some homeowners just walk away from their homes, said Sharp, who offers a foreclosure tour in Thurston County from 1 p.m. to 4 p.m. every Saturday and Sunday. As home values have slipped, some owners find themselves with a mortgage worth more than the value of their house, Sharp said.

"There are a percentage who throw up their hands and say, 'let's move into an apartment,' " he said.

Rolf Boone covers business for The Olympian. He can be reached at 360-754-5403 or rboone@theolympian.com.