PULLMAN, Wash. — Washington homebuyers disregarded stagnant economics and modestly higher mortgage rates and purchased homes in record numbers during the late summer and early autumn, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University as the center released statistics on the third quarter housing market.
During the July-September 2003 period, the home resale market in Washington reached record levels, with sales activity surging by 27 percent compared to the same time last year. Price increases reflected the strong demand, generally posting increases exceeding inflation rates. Housing construction remained strong, however mortgage rates increased a bit. This caused affordability to decline compared to the previous quarter but remained above levels of a year ago.
Third quarter home sales totaled 44,070 units statewide, the strongest quarterly sales since WCRER began preparing statistics in 1994. The previous record was set only three months ago. Home sales increased compared to a year ago in all counties except Grant/Adams in central Washington. Building permit statistics were also strong, with total units permitted increasing by 22 percent compared to last year, with single-family permits up 16.7 percent. The weakness in multifamily construction evident in recent quarters was not experienced this time, as apartment permits were 40 percent above last year.
The median sales price for an existing home in Washington was $208,000 during the second quarter, 8.6 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.
DeWayne Granacki, 2003 president of the Washington Association of REALTORS®, added, “Despite higher home prices and interest rates which have crept up from 40-year lows, homes remain affordable to the typical family in Washington.” 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) slipped to 132.1. That indicates that the typical family could afford to purchase a home priced 32 percent higher than the median. Housing was rated as affordable in every county in the state except San Juan during the quarter.
First-time homebuyers continue to play an active role in the housing market, despite challenges of affordability. Crellin noted that a would-be first-time buyer statewide had 77.0 percent of the income required to qualify for the purchase of a typical starter home, a decline from the second quarter but above a year ago. Third quarter statistics indicate that most potential first-time buyers would have been able to afford a starter home in 16 Washington counties, including the Spokane, Clarkston and Tri-Cities metropolitan areas. The greatest difficulty achieving homeownership in an urban area was in King County.
WCRER and WAR have produced these statistics for a decade, 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. The report incorporates income revisions tied to Census 2000 in the calculation of all affordability indices.
For more information and a housing market snapshot, visit the WCRER Web page at https://www.cbe.wsu.edu/%7Ewcrer/.
