For a county-by-county detailed report, see chart at bottom of page.)
PULLMAN, Wash. Home sales in the second quarter of 2011 throughout Washington declined compared both the previous quarter and the same time a year ago, reported the Washington Center for Real Estate Research at Washington State University.
Median home prices similarly declined. The silver lining is affordability. Lower home prices are combining with continued exceptionally low mortgage rates and modestly rising incomes to push affordability to record high levels. Uncertainty, however, is keeping potential buyers from making offers.
Home sales declined statewide by 4.0 percent at seasonally adjusted annual rates from the first quarter of the year to 85,210 units. This rate is 11.3 percent below the year-ago rate when the home purchase tax credit was expiring for good. (See below for a county-by-county detailed report.)
Sales increases and declines
Glenn Crellin, WCRER director, indicated that while most of Washington’s 39 counties had lower sales activity compared to the prior quarter, four counties in metropolitan areas had increased sales activity and one more was unchanged. Only four counties had higher sales rates than a year ago.
Pierce County was the only urban county to have increasing sales compared to the prior quarter and the prior year, but the sales increases came at a price. The median selling price of homes in Pierce County declined by 10.5 percent which represents a greater decline than in the surrounding counties.
At the other extreme, tiny Skamania County, which is considered part of the Portland-Vancouver-Beaverton metropolitan area, saw a 73.3 percent decline in sales activity compared to both the first quarter this year and the second quarter last year.
Bargain hunters, foreclosures
“Bargain hunting and short sales/foreclosures were driving much of the activity,” said Crellin. “Judging by the share of sales which are being conducted in cash, investors are purchasing properties to use as rentals, focusing on the lower price ranges.”
The median sales price during the first quarter was $226,900, 7.6 percent below the year ago median. This is the most significant median price decline since an 8.5 percent drop in the fourth quarter of 2009. Prices have declined compared to a year earlier for the last 14 quarters, with the statewide median now below the first quarter 2005 level.
Median prices ranged from a high of $422,500 in San Juan County (King County was second at $348,300) to a low of $70,000 in Lincoln County. In terms of price changes, the largest increase in median compared to a year ago was 133.3 percent in Lincoln County, while the largest decline was 45.0 percent in Wahkiakum County.
Urban areas offer clearer picture
Since small sample sizes in these rural counties magnify the price changes, looking to urban areas presents a clearer picture. The range of price changes in metropolitan counties was from an increase of 7.8 percent in Asotin County (Lewiston, ID-WA) to a decline of 20.2 percent in nominally urban Skamania County. Among larger communities, the greatest decline in median price was 19.0 percent in Cowlitz County (Longview).
Changes mean affordability
The price declines were coupled with essentially unchanged mortgage interest rates making homes quite affordable for households with good credit and reliable jobs. The housing affordability index statewide stood at a record high 154.7, meaning the median income family had 54.7 percent more income than the bare minimum required to qualify to purchase a median price home with a 20 percent downpayment and a 30-year mortgage.
Phil Harlan of Olympia, 2011 president of the Washington Realtors, noted: “Despite media articles suggesting we are entering an era of renters, surveys indicate young people still desire to own their own homes, and with rental costs beginning to jump the current market offers the opportunity of a lifetime to become a home owner.”
Affordability remains a challenge for first-time homebuyers, however. Like the All-Buyer Index, the First-Time Buyer index reached a record high of 85.0 in the second quarter. First-time buyer affordability measures ranged from a low of 42.5 in San Juan County to a high of 201.9 in Lincoln County. In metropolitan markets the range was from a low of 66.4 in King County to 124.5 in Cowlitz County.
The typical starter home was affordable to the typical first-time buyer in 12 counties.
WCRER produces these statistics in partnership with the Washington REALTORS®. 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, median home prices and affordability data are available for each of Washington’s 39 counties.
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Source: Glenn Crellin, WA Center for Real Estate Research, firstname.lastname@example.org, 509-335-7080
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