Windermere is marketing several homes in the Snoqualmie Ridge area. Photo courtesy of Windermere Services Co.

Windermere Services Co. recently released its quarterly Windermere Index, an indicator of the direction of the housing market in the Puget Sound area. The index combines changes in the number of homes sold, the price and how long they took to sell, into one measurement. Windermere says the index increased by 0.3 percent last quarter.

The index shows that, while the number of homes sold rose 3.2 percent in the region, the average home took longer to sell. The price also fell 3.2 percent. Jeff Wood, president of Windermere Services Co., said the numbers are taken from a four-county area, and paint a broad picture of the local real estate market.

If average housing prices are going down, “I think the reason is that the upper end has slowed,” Wood said.

During the dot-com boom, Wood said the million-plus houses would have several offers. Since the bust, however, there have been fewer buyers of the more expensive properties. “It’s more of a traditional real estate market,” he said. “There’s only so many buyers out there (for the high-priced properties).”

Fewer buyers also means those properties tend to sit on the market a little longer, Wood said. However, “Properties that are listed below $500,000... we’re still seeing multiple offers on those kinds of properties,” he said.

With interest rates at historic lows, Wood said many first-time home buyers are getting into the market.

“Three years ago, when we had this gang-buster economy, it was really tough to be a first-time home buyer. We had buyers that would make five or six offers until they were able to find a house,” Wood said. “Now buyers can shop around a little bit more.”

Low interest rates are also helping with affordability, as people are finding it cheaper to buy than to rent.

Wood said that while house prices in the Puget Sound area may seem high, low interest rates mean they’re just as affordable as they’ve been in the past.

So what happens if rates go back up?

“It’s hard to say,” Wood said, but there are two different scenarios.

One is the pessimist’s view, that the national economy will take off while the local economy is still in the doldrums. Since mortgage rates are tied to the national economy, local residential real estate would become less affordable.

The second, more optimistic view, would have the national and local economies improving at the same time, with the demand for local real estate following along.

“The year ahead is really hard for anyone to predict what’s going to happen in the real estate business,” Wood said.