It didn't sound good when the Northwest Multiple Listing Service reported today that housing prices in King and Snohomish counties plunged by 16.5 percent in October from a year ago. The average price in King County fell to $370,000 while the average in Snohomish fell to $243,000.
Average prices were depressed in part by the high proportion of the sales (38 percent) that involved "distressed" properties. Bankers or other parties selling distressed properties typically accept lower than sellers would accept under nomal market conditions.
But there was also some bright news in the report. The number of houses on the market also plunged, dropping to 12,694, from 18,590 the year before. And the number of deals under contract rose to 3,995, from 3,162 the year before.
Inventories have to come down before housing prices start to firm again. What is still unclear is the level of "shadow" inventories, housing that could flood the market if credit conditions continue to deteriorate.