PULLMAN, Wash. — The housing market remains one of the bright spots in Washington’s economy this year, according to the latest statistics on home sales, prices and affordability released today by the Washington Center for Real Estate Research at Washington State University.
Home re-sales were 1.6 percent over the pace of a year ago, with 37,000 homes sold during the April-June quarter. The median price of home sold also continued to increase, reaching $187,100, 3.7 percent higher than this time in 2001, indicated Glenn Crellin, WCRER director.
“Interest rates are the biggest factor influencing a household’s decision to buy a home,” he said, “especially when they are confident about their personal employment situation.” As widely reported, mortgage rates are currently at 30-year lows, making it possible for large numbers of households to realize the dream of homeownership without putting undue strain on the family budget.
The impact of lower mortgage rates is felt directly on the affordability of housing. Despite the 3.7 percent increase in the median home price, lower mortgage rates and higher incomes combined to make housing more affordable. The housing affordability index, which measures the ability of a middle-income family to purchase a median price home, rose to 131.2. This means that a family could afford a home priced 31 percent above the median. A year ago the statewide housing affordability index stood at 124.0, indicating Washington housing is significantly more affordable today than it was a year ago, said Crellin.
The all-buyer index, however, assumes a 20 percent down payment, a financial impossibility for most first-time buyers, who lack cash and typically have incomes below the median. WCRER’s first-time buyer affordability index assumes a lower down payment, lower income, and a less expensive home. While the resulting index indicates that the typical renter at that income level could not afford the typical starter home in their community, the gap has declined. The index during the second quarter was 78.7, compared to 74.0 a year ago and 63.8 two years ago.
“With starter homes more affordable than recent years, it’s no wonder first-time buyers are flooding the market,” said Pili Meyer, a Port Angeles realtor and 2002 president of the Washington Association of Realtors.
Crellin emphasized that real estate remains a highly localized commodity, with many communities reporting sales levels well above 2001, while some markets reported slower home sales. The sales rate was below the second quarter of last year in Tri-Cities and many urban communities in western Washington (excluding King County). Similarly, price changes are not uniform, with nine counties registering declines in median prices of more than 10 percent compared to a year ago. However, most of the declines were in rural communities with few home sales.
The most affordable housing was reported in Pacific County, where the typical family could afford to purchase a home priced at more than double the $72,800 median. Jefferson County again had the least affordable housing, with an index of 99.5, indicating the typical family could afford to purchase a home just below the $174,400 median price. For first time buyers, the most affordable community was Grant County (116.4) with Jefferson still the least affordable (58.6).
WCRER and WAR have produced quarterly statistics since early 1994, timing releases to coincide with releases of existing home sales by state and median home prices by metropolitan area from the National Association of REALTORSÂ®. Sales data is available for every county, and median home prices and affordability are reported for 34 of Washington’s 39 counties on the WCRER Web site at www.cbe.wsu.edu/~wcrer.