At the same time prices have stalled, particularly for more expensive homes. The median selling price in King County is now $201,223.

Additionally, Seattle's superheated real estate market, characterized earlier this year by one-day sales and bidding wars in some neighborhoods, is showing signs of slowing. Although the experts can't agree on whether this is anything more than the usual fall slowdown, a cooler market is advantageous for buyers.

Real estate agents, like Coldwell Banker Bain's Sharon Berry, are joyful over the falling interest rates and rising number of properties for sale.

Berry, who's helping Young and Tsui with their house hunt through Seattle's Montlake, Capitol Hill and Madison Park neighborhoods, has been able to point them toward three dozen possibilities - a large selection compared to what was available six or seven months ago.

"What we have to look at is monthly payments," says Young, a recently hired Microsoft product manager whose wife is a social worker. "If the interest rate is lower, that's allowing us to buy a little bit more home for our money. It's definitely an attractive time to buy, and that's part of the push behind our decision."

Preapproved for a loan, the couple has been spending weeks exploring neighborhoods and "trying to get a feel for what's priced accurately," he says. Thus they now know what they want - three bedrooms, 1.5 baths, easy access to Highway 520 - in a comfortable neighborhood, hopefully near the Washington Park Arboretum. "Being able to run or bike through the Arboretum would be pretty special," says Young.

GOOD TIME TO MOVE UP

Agent Berry says the current conditions aren't good just for first time buyers. "It's a wonderful time if you're considering a move up because you have less competition (for houses) and better interest rates, so you can very well get into a house with lower monthly payments than you might have (now)."

Falling interest rates also make it a good time for those hoping to refinance, notes mortgage broker Stephen Bozick, president of The Loan Source in Redmond.

"We've seen a steady decrease (in rates) over the last six to eight weeks. Unfortunately that came at the end of summer and a lot of people were on vacation or getting ready for school, and they weren't aware."

But after Labor Day, "the phones started ringing. Refinancing is picking up steam again," says Bozick.

David Trott, senior vice president of the US Bank Home Loan Division, is seeing the same thing. Refinances accounted for 50 to 60 percent of his loan volume in August, but rose into the low 70 percentiles in September. New purchase loans and refinances combined brought the lender a 20 percent increase in volume.

"I guess we're in historic times," Ana Adum, assistant research director of the Mortgage Bankers Association of America, says of the current mortgage rates.

WHO SHOULD REFINANCE?

Nationally, according to the latest statistics from the MBAA, refinancing activity accounts for 63 percent of all mortgage applications, up from 55 percent in early September.

So who's a good candidate for a refinance?

Anyone with an adjustable-rate mortgage, a balloon mortgage or fixed-rate 30-year note with an interest rate above 7 3/4 percent, Bozick says.

Other candidates are people with high-interest-rate second mortgages, those who are paying private mortgage insurance (if a refi would allow them to drop PMI), and those saddled with a high interest rate because of a poor credit history - the so-called "subprime" borrowers.

If they've cleaned up their credit, they may qualify for the best available rate, Bozick says. And with it comes lower payments.

However Ben Comilang, Federal Way branch manager of Full Spectrum Lending, the division of Countrywide Home Loans that specializes in mortgages for those who have less than perfect credit, cautions that such customers may face prepayment penalties if they try to refinance.

"Typically on a subprime loan, there's a five-year prepayment penalty," Comilang says, "so you have to make sure the loan program makes sense for the borrowers and the borrowers' goals."

Others who may not be good refi candidates include owners considering moving within three years. Why? Because the cost of the average refinance, excluding points, is roughly $1,700 to $2,000, Bozick notes, and three years generally isn't enough time to recoup these costs through lower payments.

Bozick also questions refinancing for those who have a fixed-rate mortgage in the mid-to-low 7 percent range. "By the time you figure out the cost, it doesn't make any sense to do it," he says.

However if what's being contemplated is turning in a 30-year fixed rate for a 15-year, that's another story, and one homeowners should talk over with their lender.

WILL RATES GO LOWER?

Interest rates last fell below 7 percent just 10 months ago, for three weeks in January, and that spurred a mini refinance boom. Will homeowners have a longer window of opportunity this time?

Robert Van Order, chief economist for Freddie Mac (a secondary mortgage market company located in Virginia), thinks that may well be the case.

"The chances of going over 7 percent in the next year are pretty low," says Van Order, who thinks rates may decline further. The low rates are the result, he explains, of investors worldwide pulling their money out of the ailing Russian and Asian economies and putting it into essentially risk-free U.S. Treasury bills and bonds.

"This has lowered the rate on treasuries, and mortgage rates follow them and follow them down," he notes.

At the same time, sales of existing single-family homes are falling nationally, according to the National Association of Realtors. However because sales have been so hot, a decline is relative, explains the organization's president, R. Layne Morrill. He says sales remain strong.

Locally, Lennox Scott, president of John L. Scott, also confirms a solid market. "I don't see that the market has slowed at all. It may appear it's slowing because of additional inventory, but sales are strong."

Indeed, not even Boeing's recent announcement that it will trim 28,000 from its workforce in the next 15 months (not all in the Seattle area), has Scott worried - despite the fact that Boeing downturns traditionally lead to a weakening in the real estate market.

"It used to be that job creation was the leading indicator driving the market, but now it's low interest rates," Scott says.

William Riss, president of Coldwell Banker Bain, also believes Boeing's slowdown won't affect housing. "There are too many other companies looking to hire or looking to move here."

However Riss does think the market has slowed. "Prices have leveled off; I saw early signs of it in June," he says, adding "clearly you can tell by the sales activity that sales have flattened out a bit and stayed that way."

The flattening is most obvious in higher price ranges. In the starter house market, particularly in Seattle, demand still outstrips supply, the realtors say.

Riss thinks this flattening is healthy because "prices are stable, there is a selection, and buyers have time to negotiate. Chances are you'll no longer be in a bidding war to get the house you want."

Indeed agent Berry, who's helping Young and Tsui with their house hunt, says she's seen cases recently where sellers are taking less than asking price, accepting contingencies, and on the Eastside at least, even paying points for buyers who will pony up full price. The benefit there, especially for first-time buyers: They need less cash up front to get into a home.

Nationwide, first-time buyers account for 42 percent of home sales, proof Scott says that with low interest rates "this is opportunity time for first-time buyers."