PULLMAN, Wash. – Second quarter 2003 home resales surged 15 percent ahead of the same period last year, and first-time and trade-up buyers found housing affordable all across the state, reports the Washington Center for Real Estate Research at Washington State University.
“When the lowest mortgage interest rates in 40 years occur during the spring/early summer — prime home buying season — the result is an extraordinary housing market, even if the remainder of the economy is struggling,” said Glenn Crellin, WCRER director. Price increases were commonplace, he added, but not excessive, and housing construction was strong.
Second quarter home sales totaled 42,570 units statewide, the strongest quarterly sales since WCRER began preparing statistics in 1994. The previous record was a year earlier, but that sales rate was considerably lower than the current statistics, said Crellin.
Building permit statistics tell a mixed story, as total permits were basically unchanged from a year ago. Single-family permits increased by 6.4 percent, reflecting weakness in the apartment market, consistent with the surge of home buying and homeownership.
The median sales price for an existing home in Washington was $199,900 during the second quarter, 6.8 percent higher than last year. Half of all homes sold during the quarter were less expensive than this median, but the increase suggests housing prices are generally rising more rapidly than overall inflation, Crellin said.
DeWayne Granacki, 2003 president of the Washington Association of REALTORSÂ® added, “Despite the higher prices, homes were more affordable than last year because of the savings in interest rates, encouraging both first-time and trade-up buyers to be part of the housing market.”
The housing affordability index, which measures the ability of a middle-income family (two or more persons related by blood, marriage or adoption) to afford to purchase a median price home using a 30-year mortgage at prevailing interest rates (provided they had access to a 20 percent down payment) reached 148.2. That means the typical family could afford to purchase a home priced 48 percent higher than the median, explained Crellin. This index value was the most affordable on record. Housing was rated as affordable in every county in the state during the quarter.
First-time homebuyers have been able to participate in the market as indicated by statistics on affordability tailored to represent their choices. Crellin noted that a would-be first-time buyer statewide had 89 percent of the income required to qualify for the purchase of a typical starter home, also a record high. Second quarter statistics indicate that most potential first-time buyers would have been able to afford a starter home in 18 Washington counties, including the Spokane, Clarkston, Tri-Cities, Vancouver, Wenatchee and Yakima metropolitan areas. The greatest difficulty achieving homeownership in an urban area was in Whatcom County (Bellingham).
Crellin is cautiously optimistic about third quarter results. Shortly after the end of the second quarter, mortgage rates began to increase, he said. This suggests uncertainty about the future strength of the housing market.
WCRER and WAR have produced 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 REALTORSÂ®.
Sales data is available for every county, and median home prices and affordability are reported for 35 of Washington’s 39 counties. Check the WCRER Web site at http://www.cbe.wsu.edu/%7Ewcrer/.