The latest distress signal in a softening real-estate market comes from, which found that 29 percent of homes in the Seattle-Tacoma-Bellevue area sold at a loss during the final three months of 2008.

Share story

The latest distress signal in a softening real-estate market comes from, which found that 29 percent of homes in the Seattle-Tacoma-Bellevue area sold at a loss during the final three months of 2008.

And a Seattle Times analysis of property data from the King County assessor’s office shows that early summer of 2005 was the tipping point. Most homes bought since mid-2005 and sold during the last three months of 2008 fetched lower prices than their owners paid in communities ranging from Mercer Island to Kent to Federal Way.

Sellers hardest hit were those who bought in the first three months of 2007. If they sold their homes in the fourth quarter of 2008, they typically lost more than $100,000.

The opposite was true for those who bought homes early in 2000. They walked away with a median appreciation of about $200,000 if they sold at the end of last year.

The quarterly analysis of single-family home, condominium and co-op values in 161 metropolitan areas from Zillow, a Seattle-based real-estate Web site, displays the impact of the credit crisis, job losses, shrunken retirement savings, plunging consumer confidence and tighter lending standards.

Stan Humphries, Zillow vice president of data and analytics, dubbed the combo a “witch’s brew of economic insecurity.”

Across the nation, home values fell for the eighth consecutive quarter and foreclosures made up nearly one-fifth of all transactions. In the Seattle-Tacoma-Bellevue area, 11.5 percent of all transactions last year were foreclosures.

The data also show more than 20 percent of all Seattle homeowners are “underwater,” owing the bank more than their home’s current value, particularly those who bought during the real-estate market’s peak in 2007. More than half of all area homes bought that year have negative equity, the report showed.

In a sign of growing financial struggle, more than 10 percent of all transactions during 2008 were short sales, in which lenders accepted less than what was owed on a home to avoid a costly foreclosure when the owner cannot make the mortgage payments.

All this spells the likelihood of more economic hardships to come, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

Underwater homeowners often lack enough equity to qualify for record-low mortgage rates that could save them hundreds of dollars in payments each month. Those who want or need to sell their homes must offer steep discounts or freebies to woo buyers in a slow market and also convince the bank that they’re in straits dire enough to approve a short sale, Crellin said.

“That’s going to slow the process down and makes it even harder to buy the house,” Crellin said.

“Until it actually closes, the lender is going to keep looking for a better deal. You’d certainly have to wait as a purchaser and hope that nobody comes out of the woodwork with a better offer than what you’ve put on the table.”

The numbers of homes sold at a loss continues to rise.

At least half of homes sold in the Pierce County communities of Orting, Lake Tapps and Anderson Island and the King County community of Algona sold at a loss at the end of last year, according to Zillow.

Nearly 40 percent sold at a loss in Tacoma, and just over 19 percent in Seattle.

Where did home values hold steady? Vashon Island, Clyde Hill, Carnation and Brier, the report said.

The Puget Sound region continues to fare about in the middle compared with the rest of the nation. In contrast, about 73 percent of homes sold at a loss in the fourth quarter in the Las Vegas/Paradise market in Nevada.

Karen Gaudette: 206-515-5618 or

5 worst in

Snohomish County

% of homes sold for loss
City Pct.
Sultan 46.7%
Marysville 40.1%
Snohomish 35.3%
Bothell 33.5%
Arlington 33.3%
In 4Q ’08. Source:
5 worst in

King County

% of homes sold for loss
City Pct.
Algona 50.0%
Kent 43.6%
SeaTac 42.6%
Maple Valley 40.4%
Fall City 40.0%
In 4Q ’08. Source: