Glenn Crellin, director of WCRER said that an improving statewide economy reinforced with mortgage interest rates that remain near 40-year lows convinced many Washingtonians that this was an ideal time to buy a home. Surging sales resulted in higher prices, which translates into some risks to housing affordability during 2005.
Fourth quarter home sales totaled 42,500 units statewide, seasonally below the last two quarters, but a record for any October-through-December period. The annual sales total was 8.0 percent above the previous annual record set only last year. During the last quarter, sales rose compared to a year earlier in 32 of
In terms of new residential construction, building permits during the fourth quarter totaled 11,375 units statewide, an increase of 31.4 percent compared to one year ago.
The median sales price for an existing home in
The annual median was $225,000, an increase of 10.4 percent compared to a year earlier. The fourth quarter median selling price ranged from $81,400 in
Jim Harris, 2005 president of the Washington Association of REALTORSÂ® from Kitsap County, added, the housing market in Washington continues to have a shortage of homes to sell combined with strong demand. The result is continual rapid increase in price that challenges affordability, especially for first-time buyers.
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, illustrates this concern. The fourth quarter index slipped to 116.9, the lowest reading since the end of 2000. While the index suggests a typical family could still afford to purchase the median home with a 17 percent income cushion, a drop of 17.5 points in the last year is worrisome. Whenever this affordability index is below 100, even repeat buyers face affordability constraints.
First-time buyers are having an especially difficult time locating affordable housing, noted Crellin. Housing affordability for those would-be first-time buyers also declined to its lowest level since mid-2000, with an index value of 67.9. This means the typical renter-household looking to own has only about two-thirds of the income required to cover the mortgage payments on the typical starter home. First-time buyer affordability remained above 100 in only seven counties, primarily in rural areas.
WCRER has produced these statistics in partnership with the Washington Association of REALTORSÂ® since early 1994. Each quarterly release is timed to coincide with news 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 each county, and median home prices and affordability are reported for 35 of