Seattle’s housing market isn’t cooling quite as fast it was earlier this spring, but prices are still dropping as inventories build and would-be buyers continue to search outside the city limits for better prices.

In June, the median home price in Seattle fell to $781,000, a 3.9% drop from June of 2018, according to data released Monday by the Northwest Multiple Listing Service.

That monthly median was also down about a half-percent from the comparable figure in May. In King County overall, median prices dropped by 2.3% in June from the same period last year, to $695,000.

June’s year-over-year decline is a marked change from the double-digit price growth of the last several years — and still more evidence that the Seattle area housing market has hit some sort of threshold.

The King County market is “experiencing a bit of a hangover,” says Mike Larson, the president at Allen Realtors in Lakewood, just south of Tacoma.

By contrast, homes prices in outlying regions — especially north and south of the Seattle area —continued their recent escalations.

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In Tacoma and Pierce County, the median home price in June climbed to $376,500, representing a 7.3% year-over-year increase, and a 1.7% increase over the median price in May. The data is yet another indication that Pierce County’s relatively large supply of affordable homes is still highly attractive to priced-out buyers from Seattle and King County.

“The things that most buyers are looking for in a house — you can find here for a lot less money,” said Larson, adding that buyers in the Tacoma-Pierce County market can get around twice the house for half of what they would spend in Seattle.

The downside, Larson acknowledges, is a Tacoma-to-Seattle commute that can easily eat up two to three hours a day if those new Pierce County homeowners are still working in the Seattle area, which has a much more robust job market than does Tacoma-Pierce County.

Other nearby counties are also seeing more homebuying refugees from King County. In Kitsap County, the median home price in June was $391,657, 10.6% higher than a year ago, and around 1.7% higher than May’s median price.

To the north in Skagit County, meanwhile, demand is even sharper. In June, the median home price increased to $380,000, an 11.8% jump from June of 2018, but down slightly from May.

By contrast, across much of the Seattle area, the numbers have been negative.

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In the Queen Anne-Magnolia neighborhood, the median price in June fell to $1,107,500, down 8.1% from June 2018.

Similarly, in the Ballard-Greenlake neighborhood, the median price settled to $799,950, which is 6.4% lower than a year ago.

In Redmond, the median home price fell to $840,000, down 10.2% from a year ago.

The cooling Seattle-area market is rippling across the real-estate sector. Stephen Cancler, who owns Full House Inspections Services, says his business is down around 25% since 2017, when a booming market pushed up demand for inspections. “I’d like to see it come back up a bit,” he said.

That’s not to say that the Seattle-area market is anywhere close to a full correction. Housing inventories, though slightly larger, are still well below the six-month mark that signals a buyers’ market. Seattle still has less than 2 months’ worth of housing supply at current rates of buying.

And if prices have cooled in the Seattle area, they’re still well above where they were this time in 2017.

June’s $695,000 median price for King County is 23% higher than it was in June of 2017, when it stood at $565,000.

What’s more, there have been some telling exceptions to the Seattle area’s cooling trend.

In some of King County’s tonier neighborhoods, prices in the “ultra” luxury home category are still climbing like it’s 2017.

Mercer Island saw median prices jump 14.9% in June year-over-year, to $1.9 million. In nearby West Bellevue, the median price in June climbed 16% year-over-year, to $2.9 million.

Windermere broker Anna Riley, a veteran of the county’s luxury market, says these neighborhoods may also be benefiting from their own Seattle effect.

Many buyers are looking to take advantage of the Eastside jobs boom, as Amazon, Google, and other tech firms open offices in the Bellevue area rather than concentrating their growth in Seattle.

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A related factor, Riley said, may be the Eastside’s relatively conservative, business-friendly politics. When the Seattle City Council enacted a per-employee “head tax” last year to pay for additional homeless services, Riley said, she got a lot of calls from Seattle residents who “hadn’t been open to living on the Eastside and ‘now we’re thinking we are.'”

Even with the subsequent repeal of the head tax, Riley said, more Seattle residents may regard the Eastside as an option.

While Seattle continues to lose some homebuyers to neighboring markets, real-estate experts can also see the possibility of another effect.

In places like Tacoma, the wave of incoming buyers is not only reducing the supply of affordable homes; it’s also increasing the costs of adding new homes.

Between the rising costs of land, material, and labor, the median cost to build a new home in Pierce County is now above $500,000, or around $150,000 higher than the median-priced existing home in Pierce County, said Dick Beeson, principal managing broker at RE/MAX Northwest Realtors in Gig Harbor.

As in Seattle, addressing that shortage will be challenging both economically and politically. The conventional solution, said Beeson, is to build houses at “higher density — and nobody wants higher density — ‘not in my backyard.'”

In other words, Beeson said, Tacoma could well find itself in a very Seattle-like dilemma.

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“We in the South Sound have enjoyed the benefits of King County’s heated market,” Beeson said. But unless local leaders come up with a way to increase supplies, he said, “I think we’re going to run into our own problems.”

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This story has been updated. In an earlier version, a chart showing the annual change in median prices inadvertently transposed the June prices for Kitsap and Pierce counties.