ELLENSBURG, Wash. — Mike Hunter began to see an improving real estate market in Kittitas County about a year ago.

The evidence for Hunter, who manages the painting division of RTD Inc. in Ellensburg, was an uptick in commercial and residential painting jobs.

Hunter also did his part to help the market. In March, Hunter, 28, and his wife bought their first home after renting for several years. “It was actually cheaper to buy a house with three bedrooms than to rent a house with three bedrooms or more,” he said.

After several years of declining prices and sales, the real estate market in Kittitas County — like many other areas statewide — bounced back in 2012. The number of homes sold in the county increased by 14.9 percent over 2011, according to figures from The Snapshot, a monthly report from Selah-based KMW Enterprises LLC that highlights real estate trends for Kittitas County.

Kittitas County’s real estate market is really made up of two markets. The lower Kittitas County includes the greater Ellensburg area. That market is relatively typical, though Central Washington University, the county’s largest employer, has a major influence.

But it was the upper part of the county, which includes the area surrounding Roslyn and Cle Elum, that provided the bigger boost in the market’s recovery. The number of homes sold there in 2012 increased by 32.4 percent over the previous year, compared to 2.3 percent in the lower county.

The area is much more driven by the second-home market. The region, once dependent on the mining industry, is now a popular recreation area for Seattle-area residents looking to get away from the stress of urban life.

“That (vacation-home) market has come around,” said Erich Cross, broker for Coldwell Banker Kittitas Valley Realty in Ellensburg. “They’re buying them for a lot less than in 2007.”

The second-home market overall improved in the second half of 2012 as buyers were able to cash out investments that had grown in value, said Glenn Crellin, associate director for research at the Runstad Center for Real Estate Studies at the University of Washington.

With financing still a challenge for second-home buyers, most purchases were paid with cash, he said.

Buyers felt “they got an opportunity to get some bargains in the secondary market and decided to cash in some of their investments and put it in their housing,” Crellin said.

Central to Kittitas County’s second-home market is Suncadia, the four-season resort in Roslyn that opened in 2008 just as the recession started. The recession hit the resort hard during its first few years of business, forcing it to lay off workers and temporarily halt marketing efforts for its residential properties.

Suncadia resumed efforts after a recapitalization last May. That lead to a newly formed joint venture, New Suncadia LLC, that included original owner Lowe Enterprises and Oaktree Capital Management, a Los Angeles-based firm that specializes in distressed debt, which gained a majority stake in the resort.

Recent efforts kicked off with a condo auction at the Lodge at Suncadia in July, which resulted in the sale of 27 units. Overall, Suncadia generated $42 million from the sale of more than 150 condos, single family homes and lots in 2012, double what the resort sold in 2011.

The improving market, competitive prices, increased promotion and more amenities at the resort prompted more people to buy last year, said Roger Beck, managing partner of New Suncadia LLC.

Most sales were second homes for Western Washington residents, though some are making Suncadia their primary residence, he said.

“It’s a more attractive place to buy real estate than it was two years ago,” he said.

The Kittitas County real estate market also benefited from other trends seen elsewhere, such as competitive home prices.

Though prices have started to increase in the county, they still are well below the inflated prices during the real estate bubble. According to the Runstad Center, the median price for existing homes in Kittitas County during the fourth quarter of 2012 was $213,700. That’s an increase of 11.3 percent from the same period in 2011, but well below the $272,000 median price from the fourth quarter of 2007.

Such competitive prices, rock-bottom interest rates and rising rent prices prompted those on the fence to take action, said Cross of Coldwell Banker Kittitas Valley Realty.

“One common thread is the fact that it was cheaper to buy a home than to rent,” he said.

Hunter, the residential and commercial painter, considered buying a home back in 2008. But he and his wife realized they would be money ahead if they stuck with renting because their monthly payments would be upwards of $1,500 a month.

The couple came into a much different situation when they started looking again at the beginning of last year. They ended up buying a new 2,300-square-foot, three-bedroom home in the northwest corner of Ellensburg for $179,000. With a 30-year mortgage at just 3.75 percent, the monthly payment is just under $1,100, below what they would have paid for a three-bedroom rental.

“It’s nice because we’re paying for something we’re going to own,” Hunter said.

But while lower home prices provide an ideal situation for buyers like Hunter, they present challenges for some sellers, especially those who purchased or refinanced at the peak of the market in the mid-2000s.

Cross said he’s told many sellers to wait to list their home to allow the market to recover further and give them more time to gain additional equity.

And Cross anticipates that prices will continue to increase as the supply of homes remains tight and demand keeps growing.

But he’s not expecting drastic increases either.

“We’re not going to be jumping back to 2006,” he said. “(But) 2012 turned a corner and we’ll see a slow and steady uptick in 2013.”

• Mai Hoang can be reached at 509-759-7851 or maihoang@yakimaherald.com.