The King County housing slump made six geographic areas affordable for those earning the county's median household income of $68,821 in 2008. When the market was sizzling in 2007, only Auburn was considered affordable, a Seattle Times analysis showed.
Demi Troncoso commuted to Seattle from a Tacoma rental for nearly three years before buying a home in Auburn’s Lakeland Hills subdivision last October.
“I was waiting until the bubble burst,” said Troncoso, a safety consultant for the state Department of Labor and Industries. “I wanted to catch it before things started normalizing again.”
The newly built, four-bedroom home was bank-owned, and at the height of the real-estate market fetched a price of $410,000. Troncoso paid $330,000.
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For middle-class folks such as Troncoso, the burst in the regional housing bubble means more homes and neighborhoods are within their financial reach.
King County’s median household income in 2008 was $68,832, according to estimates by the state’s Office of Financial Management. At that income level, buyers had easy accessibility to six geographic areas whose median home prices were between $248,450 and $290,500, a Seattle Times home-price analysis showed. Median means half are more, and half are less. But in 2007, when the market was sizzling, only one area — Auburn, where the median price was $266,750 that year — was considered affordable. And in 2005, median wage earners could afford to buy in 14 neighborhoods, including Seattle’s Georgetown/Delridge area.
“It was unsustainably unaffordable in 2006 and 2007, and it has come back to where it’s looking more normal now,” said Todd Sinai, an associate professor of real estate at the University of Pennsylvania’s Wharton School. “These pendulums tend to swing from one side to pretty far over to the other side. The pendulum should swing to the side of increasingly affordable in the next year or so.”
But the lower home prices are offset by a struggling economy, Sinai said. The state’s unemployment rate climbed to 9.1 percent in April, with at least 317,890 people looking for work. As a result, many would-be buyers are taking pay cuts, or are afraid their jobs could be axed next.
Meantime, lenders have clamped down on their mortgage requirements.
“That begs the question: ‘Affordable to whom?’ ” Sinai said. “Housing is affordable if you can attain credit, but that’s not always easy.”
In 2008, all of the King County neighborhoods with affordable median prices were south of Seattle.
Auburn topped the list, with a median home price of $248,450, followed by North Burien, Des Moines/West Kent, Algona/Pacific, Enumclaw and Twin Lakes.
“All of those areas, except for Enumclaw, have always kind of been lower (in price),” said Laura Papritz, an agent with John L. Scott Real Estate’s Kent North office. “But because everything moved up, you were out of that first-time homebuyer’s price range. Now that everything has self-corrected, you’re seeing some of those areas drop down.”
South King County has been deluged with foreclosures and short sales, which have driven home prices down even further, said Loren Ellingson, an agent with Redfin.
In Auburn alone, prices have declined nearly 25 percent since the summer of 2007, according to the online brokerage.
“My investment home has nearly lost its entire equity due to the comparables of bank-owned properties and short-sale listings selling for well below what the sellers originally bought the home for,” Ellingson said. “I do feel, though, that a buyer can take advantage of these drops in home prices and get a screaming deal on homes in most of South King County.”
That’s what Haris and Rasema Svraka were hoping to take advantage of when they set out three years ago to find a home that boasted a family-friendly neighborhood, good schools for their children and an easy commute to their jobs in South King County.
“I just felt like the money they were asking for the houses wasn’t worth it,” said Haris Svraka, a fueling supervisor at Sea-Tac Airport. “I was patiently waiting.” And that wait paid off.
Last May, the couple snagged a three-bedroom, two-bathroom house in Des Moines for $228,000. The one-story, 1,500-square-foot home was built in 1964.
“The best deal at the time was in Des Moines,” Haris Svraka said. “It was a foreclosed house. … A great neighborhood. It’s nice and quiet.”
Although Troncoso’s new 2,600-square-foot home was priced slightly more than the Auburn area’s median home price, it boasted everything he wanted: plenty of room, walking distance to his children’s schools and a short drive to the Sounder train station.
The home also features several construction upgrades, such as premium appliances and hardwood floors, that he hopes will help the property hold its value.
“It was a great school system, a great neighborhood, and the commute was a lot easier,” he said.
“I wish I would have held off a little longer. But I still believe I made a good decision.”