There was never a better time for Lars Knudsen to realize one of his goals: to buy a home on Lake Sammamish.

The 51-year-old financial planner is taking advantage of the battered home market across the Puget Sound region.

He has snapped up a three-bedroom house on the lake for $1.26 million, 25 percent less than it would have fetched a year ago.

"I've always wanted to live on the lake," says Knudsen. "I saw a 'For Sale' sign and went to look at it and fell in love with it."

Enabling him to consummate that love affair was a dearth of competing suitors. Sales of luxury homes in Sammamish and Issaquah plummeted 70 percent in 2008, to 43, according to Windermere Real Estate.

Homes in that area sat on the market last year an average of 240 days.

The picture is similar throughout the Puget Sound region's luxury market, which once seemed shielded from the worst of the housing downturn but lately has suffered more than the affordable sector.

Some local specialists in high-end housing see signs of a budding spring-summer spike generated by bargain hunters like Knudsen. If so, that would be in stark contrast to a deep lull that has prevailed in the upper tier of the local market. Sales of homes priced at $1 million or more in King County dropped 43 percent in 2008 from the previous year, to about 1,000, according to Windermere's annual luxury home market recap.

So far this year, sales are down 56 percent compared with the same period last year. By comparison to that freeze-up in the luxury sector, home sales across King County overall were down just 15 percent in April compared with last year, according to the Northwest Multiple Listing Service.

"There was a lot of hesitancy as far as (luxury) buyers were concerned," says Barbara Shikiar, an associate broker at Windermere. "From September to December, it was slow. It was dead from January to March."

To be sure, the drop in prices has been gentler than the crash in sales volume. The median price of a luxury home has fallen about 8 percent, to $1.2 million so far this year. But the highest price of a home sold — $9.7 million — is down about 38 percent.

Local real estate agents say there are several reasons why the luxury market has taken a bigger beating this year, including the inability of buyers to get mortgages and their struggles to sell their current homes.

For luxury buyers, the challenge had been trying to find a jumbo mortgage during the height of the credit crunch, when lenders were particularly wary of handing them out, says Teri Herrera, a John L. Scott broker who works on the Eastside and specializes in luxury homes.

If a buyer could find a mortgage, it often required up to 30 percent down and came with a higher interest rate. Some lenders have since started offering the loans again, Herrera says.

In addition, a lot of potential buyers took a big hit to their investment portfolios when the stock market tanked in the last year, dampening their plans to move.

"It was the double whammy of loss in value of equity and the combination of credit that was too expensive," Herrera says. "We had a lot of different things working against us."

In addition to the huge decline in Sammamish and Issaquah, sales in what the Multiple Listing Service defines as West Bellevue, which includes the affluent enclave of Medina, were down 48 percent so far this year.

Kirkland also suffered, with a 46 percent drop, and sales declined 55 percent in Redmond and Woodinville.

Other areas saw homes sit on the market for months on end.

In the exclusive Highlands north of Seattle, for example, homes sat on the market for an average of 340 days in 2008, according to Windermere's report. That's compared with 300 days the previous year. Some of the hardest hit high-end neighborhoods were the ones that were the most popular before the housing market's downturn, according to real estate agents.

But they also are areas that are seeing something of a comeback, says Herrera.

Sales in the Lake Sammamish area were hot in 2006 and 2007, but returned last year to 2005 levels. Now, once again, the lake is becoming a hot spot for buyers looking for a deal, in part because they're able to take advantage of the price decline.

"The biggest driving factor for buyers right now, more than the condition of the home, is the value of the home," says Herrera.

Knudsen spent six months searching for his new home after personal circumstances prompted a move. He looked at 20 houses over a six-month period before he settled on his current house, which was exactly what he was looking for, he says.

But Knudsen is also a victim of the housing market as well—he says he's trying to sell a beach house in Poulsbo that "last year was a million-dollar house and this year is a $700,000 house."

"On the one hand, the market is completely dead," he says. "On the other hand, there's activity and people are looking."