PULLMAN, Wash. — Washington’s housing market continued to take advantage of very low mortgage rates during the closing months of 2003, pushing annual home resales to a record 156,880 single-family homes sold, reported the Washington Center for Real Estate Research at Washington State University.
The figure eclipses the previous sales record set in 2002 by 17.8 percent, said Glenn Crellin, director of the WCRER.
“Consumers recognize that such low interest rates will not last indefinitely,” he said. “And, the overall economy seems poised for improvement. They feel that this a good time to become homeowners or move up the housing ladder.”
Reflecting the strong sales, the median price resale home sold during 2003 carried a price tag of $203,800. This prevailing price was 8.1 percent above a year earlier, more than double the rate of inflation.
Fourth quarter home sales totaled 33,230 units statewide, seasonally lower than the previous quarter but nearly 15 percent above sales at the same time last year. Quarterly sales were below last year levels in only 5 counties, and were up by at least 10 percent in 24 counties. Total building permit statistics were somewhat below a year ago during the fourth quarter, but the decline was limited to multifamily housing, with single-family permits 6.4 percent above the closing months of 2002.
The median sales price for an existing home in Washington was $205,700 during the fourth quarter, 9.1 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 rising much more rapidly than overall inflation.
Mike Flynn, 2004 president of the Washington Association of REALTORS® said, “Low mortgage rates are offsetting high prices, keeping our housing affordable, but to maintain our quality of life, we need to remain vigilant to promote economic growth and ample housing construction.”
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) increased modestly to 134.4, meaning the typical family could afford to purchase a home priced 34 percent higher than the median. Housing was again rated as affordable in every county in the state except San Juan during the quarter.
“A balanced housing market needs to provide opportunities for people to purchase their first home,” noted Crellin. Fortunately, housing affordability for those would-be first-time buyers improved during the fourth quarter, with the related affordability index of 78.4. While this indicates that the typical homebuyer looking for a starter home would come up a little short, achieving home ownership has always been challenging.
Significantly, the first-time buyer affordability index is above the magic 100 level in roughly half of Washington’s 39 counties, including these metropolitan counties: Benton, Clark, Cowlitz, Spokane and Yakima. Achieving homeownership was most difficult in late 2003 in San Juan and Jefferson counties, with the lowest urban first-time buyer affordability in King County.
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 for every county and median home prices and affordability are reported for 36 of Washington’s 39 counties.
A Fourth Quarter 2003 Housing Market Snapshot is available online on the WCRER Web site at http://www.cbe.wsu.edu/%7Ewcrer/.
