The lowest mortgage interest rates in 40 years continued to overcome sluggish performance in other sectors of the Washington economy, resulting in increased home sales, housing construction, home prices and housing affordability compared to the opening months of 2002, according to statistics released by the Washington Center for Real Estate Research at Washington State University.
“The 13.6 percent increase in unit resales shows the continuing impact of low mortgage rates as first-time buyers take advantage of a great opportunity to become home owners, and families who already own better match their housing to their changing needs,” Glenn Crellin, WCRER director, said.
First quarter home sales totaled 32,030 units statewide, the strongest opening quarter since WCRER began preparing statistics in 1994. The previous record was a year ago, but that was in part due to postponed sales from the weeks immediately following the Sept. 11, 2001, terrorist attacks. Building permit statistics indicate that home building in Washington state was also very strong this quarter, with total residential permits 18 percent above a year earlier.
The median sales price for an existing home in Washington was $194,400 during the first quarter, 5.8 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.
“The key to the market is housing affordability,” DeWayne Granacki, 2003 President of the Washington Association of REALTORS®, added. “Without the advantages provided by low interest rates, the high prices and limited inventory would be difficult for would-be homebuyers.”
The center’s 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 145.1, meaning the typical family could afford to purchase a home priced 45 percent higher than the median.
Housing was rated as affordable in every county in the state except San Juan during the quarter. Among urban areas, the most affordable housing was in Spokane County. The biggest challenge was in Island County.
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 87.1 percent of the income required to qualify for the purchase of a typical starter home. Since this measure assumes that higher income households have made the transition to homeownership, it generally remains below 100, with the current value a record. However, the first quarter statistics indicate that most potential first-time buyers would have been able to afford a starter home in 17 Washington counties, including the Spokane, Tri-Cities, Vancouver and Yakima metropolitan areas. The greatest difficulty achieving homeownership in an urban area was in Whatcom County (Bellingham).
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 34 of Washington’s 39 counties. For a detailed snapshot of the data, go to the WCRER Web site at WCRER.