PULLMAN, Wash. — While most measures of economic activity in Washington pointed to a continuing recession during the first quarter of 2002, the housing market — especially for existing homes — continued to behave as if the underlying economy was very strong, reported the Washington Center for Real Estate Research at Washington State University.
Statistics on home resales from January through March show 28,150 home sales. “This is a 4.3 percent increase compared to early 2001, and is the highest sales rate on record for the first quarter of a year,” said Glenn Crellin, WCRER director who prepared the report.
Crellin attributed the strength of the housing market primarily to low interest rates. While the effective rate on mortgage loans that closed in early 2002 was marginally above late 2001, it remained well below the comparable period last year, and very low compared to mortgage rates for most of the past 20 years. As a result, homeownership continues to increase as buyers seek to share in the American Dream, said Crellin.
Communities did not share the market strength equally, however. Home sales were less active than a year ago in 12 of Washington’s 39 counties, including Benton/Franklin (Tri-Cities), Kitsap (Bremerton) and Snohomish (Everett). Meanwhile, activity was sharply higher in the Chelan/Douglas (Wenatchee) and Kittitas (Ellensburg) counties.
The WCRER report also shows a 6.1 percent increase in the state’s median price — $186,900 — over the past year. This increase is roughly double the inflation rate and illustrates the competition for good quality homes. Median prices were higher than a year ago in all but six counties where statistics are reported.
“The combination of higher prices and interest rates more than offset income gains, resulting in a small decline in affordability compared to late 2001,” said Pili Meyer, a Port Angeles realtor and 2002 president of the Washington Association of Realtors. “Still, homes are more affordable than a year ago in most communities.”
WCRER employs a housing affordability index to measure the ability of a middle income family to purchase a median price home. An index of 100 indicates the point at which a median income family can just afford to purchase a median priced home. In 2002’s first quarter, the index values ranged from a high of 202.7 in Asotin County (meaning a middle-income family could afford a home at twice the median price) to a low of 89.4 in Wahkiakum County. This quarter, housing was less affordable than the 100 standard in only two counties — Wahkiakum and Jefferson.
Gains in homeownership can only be achieved if renters can afford to become homeowners, said Crellin. This is measured by the first-time buyer index, which assesses the ability of a household with an income at 70 percent of the median to purchase a starter home. Values of 100 or greater indicate a household at that income could afford to purchase a home priced at 85 percent of the area median. The index values ranged from a high of 115.5 in Asotin County to a low of 53.4 in Jefferson County. There were also 10 other counties with an index of at least 100 in this quarter. But, the statewide measure was 78.3, indicating that serious challenges still exist throughout the state in terms of renters’ ability to become homeowners, said Crellin.
WCRER and WAR have produced these statistics since early 1994, timing each quarterly release to coincide with wire releases of existing home sales by state, and median home prices by metropolitan area from the National Association of REALTORS®. Sales data is available from WCRER for every county, and median home prices and affordability are reported for 34 of Washington’s 39 counties.
For a look at these WCRER statistics, visit its Web site at www.cbe.wsu.edu/~wcrer.
