Amid housing bust, some markets still boom

Allison Linn Senior writer • Profile • E-mail

In many ways, Stuart Isett’s situation typifies the recent housing slump. After trying unsuccessfully to sell their home outside Chicago last year, Isett and his family recently put the home back on the market with a lower price and renewed hopes.

But Isett also is in the unfortunate position of seeing the other side of the coin. As he waits for his house to sell, he has been househunting in Seattle, one of the few markets where house prices are still on the rise.

“We’re, like, sitting here watching prices go up (in Seattle), and we’ve had to knock down the price in Chicago,” lamented Isett, 40.

While most of the country frets about what could turn out to be the worst housing bust in a generation, in a selected few metro areas home buyers are still trying to figure out how to break into markets that seem to get pricier by the day.

Seattle, along with the cities of Portland, Ore., and Dallas, were the only major metropolitan areas that saw housing prices increase in February from the previous month, according to a Standard & Poor’s index released this week. The monthly index tracks prices in 20 major metropolitan areas, including Atlanta, Boston, San Francisco and Detroit.

The trend is even starker compared to February of last year. While prices in the 20 markets overall were down 1 percent from a year earlier, homes in Seattle were up 10.6 percent, according to Standard & Poor's, while in Portland, Ore., prices were up 7.7 percent.

That's bad news for people like Isett. Last summer, he and his wife had hoped to find a three-bedroom home in a nice Seattle neighborhood for around $450,000. Now, the couple and their toddler are hoping they can land a two-bedroom house, perhaps with room to add another bedroom later, for $475,000.

“We know we’re going to have to go higher now and dig further into our savings,” said Isett, a freelance photographer.

Isett also knows all too well that he may not even get the house he wants even with his recently increased budget. While the housing market in Seattle isn't as red-hot as it once was, and “price reduced” signs are popping up, it’s still not uncommon to hear of bidding wars in which people end up paying thousands of dollars over the asking price.

Seattle real estate agent Carole Alexander recently looked at a condominium in the Seattle area that was priced at $255,000 — for 580 square feet. In addition, she said the buyer would face condo fees of about $265 per month.

“Unless you have some relatives give you a big chunk of money, if you’re a first-time buyer, you’re pretty much in big trouble,” she said.

The ripple effect is especially hard on extremely low-income families. Not only can’t they afford to buy their own home, the also are seeing themselves priced out of rentals as overall property costs go up.

Rhonda Rosenberg, spokeswoman for the King County Housing Authority, which serves suburban areas surrounding Seattle, said about 11,000 people applied for section 8 housing vouchers last year. The waiting list for the housing authority’s approximately 3,000 public housing units is about two years.

“High costs of home ownership are basically placing home ownership out of the reach of working people,” Rosenberg said.

The rising costs also are hurting her agency, which has had to increase the amount of money it provides to its clients in order to keep up, and therefore isn’t able to serve as many people.

The housing authority does have a program to help people getting housing assistance buy their own home, but Rosenberg said only 30 or 40 people were able to take advantage of it last year.

The trend toward higher housing prices also appears to extend beyond just the major metropolitan areas in Oregon and Washington. For the fourth quarter of 2006, the Office of Federal Housing Enterprise Oversight saw some of the sharpest year-over-year home price increases in smaller towns in those same states, including Bend, Ore., and Wenatchee, Wash.

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