While national statistics about the housing market show significant declines in the number of sales and in median prices, home sales in Washington declined only 5.2 percent in the second quarter and stood 11.6 percent below the sales rate a year ago, according to statistics released by the Washington Center for Real Estate Research at Washington State University.
Glenn Crellin, WCRER director, said that, “Washington’s housing market is reflecting national trends, but also reflects the stronger underlying economics, especially job growth, locally.” Sales during the second quarter stood at a seasonally adjusted annual rate of 132,560. This means that if the same relative pace were to continue for an entire year a total of 132,600 units would be sold. Actual sales during the first quarter were 36,440, a decline of 11.3 percent from the same time a year earlier.
Washington’s housing market remains one of the bright spots nationally, especially in terms of prices. The national median price for a single-family resale home during the first quarter declined 1.5 percent compared to the April-June period of 2006. By contrast, the Washington median price of $316,700 was 8.1 percent higher than a year ago. This is a modestly more rapid increase than seen during the opening quarter of the year, but still suggests a gradual return to balance in the housing market.
Dennis Rose, 2007 president of Washington REALTORS®, said, “It is important to remember that aggregate price statistics, like medians, may mask underlying price changes in individual markets. More listings available for sale are giving buyers more choices in the market and strengthening their bargaining position. They may be spending more than they did a year ago, but they are getting more house for their money in many cases and securing some bargains in the process. Sellers need to price their properties realistically if they want a quick sale.”
Significant variations in both home sales and prices remained apparent across the state. Home sales increased compared to last quarter in 11 counties, declined in 23, and were unchanged in five. However, earlier this year more counties had improvements in sales instead of declines.
Year-to-year comparisons indicate four increases, two stable sales, and 33 declines. The range of sales levels (seasonally adjusted annual rates) was from an increase of 77.8 percent compared to the first quarter in Wahkiakum County to a decline of 38.5 percent in Adams County over the same period.
Median prices ranged from the usual high of $520,000 in San Juan County to a low of $103,800 in Columbia County. The median price was below that of a year ago in four counties (Adams, Jefferson, San Juan, and Wahkiakum), but increased by more than 20 percent in three counties (Chelan, Douglas, and Okanogan). Prices in urban areas ranged from $470,000 in King County to $145,900 in Yakima County. The largest percentage increase in urban area prices was 29.8 percent in Chelan County (Wenatchee).
“Home prices only tell part of the story,” Crellin said. “The real question regarding housing’s future strength is whether households can afford the homes, and after a couple of quarters of improvement affordability declined again.” The Housing Affordability Index (HAI), which uses median home prices, mortgage interest rates, and family incomes as inputs, measures the degree to which a middle-income family can afford the mortgage payments on a typical home. The statewide index slipped a bit as price increases exceeded income gains while mortgage rates were almost unchanged. The HAI stood at 84.5, meaning the typical family needs about 15 percent more income to be able to afford the median price home statewide. Housing for all buyers was affordable (meaning the HAI was at least 100) in 21 of the 38 counties where data was available. However, in many of the remaining counties the affordability shortfall was significant. For example, in King County the typical family had only 66 percent of the income required to qualify to purchase the median price home.
A healthy housing market needs to provide opportunities for renters to become home owners. Here is where the most significant problems are observed. WCRER’s first-time buyer affordability index explores the ability of a household earning 70 percent of the median income in their area to qualify for a mortgage on a starter home. Again affordability declined in the second quarter, with the statewide measure matching its previous low of 49.5, meaning the would-be homebuyer has less than half the income required to qualify for a mortgage on the typical starter home statewide. Seven counties offered less opportunity for first-time buyers than the statewide measure, including both King and Snohomish counties.
WCRER has produced these statistics in partnership with the Washington REALTORS® 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 REALTORS®. Sales data is available for each county and median home prices and affordability are reported for 38 of Washington’s 39 counties.
Second Quarter 2007 Housing Market Snapshot Online:
http://www.business.wsu.edu/overview/news/Documents/CB%2008.15.07%20WA%20Home%20Sales.pdf
