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Record housing market, but affordability risks

Existing single-family home sales in Washington surged 11.4 percent in the closing months of 2004, compared to results from a year earlier. The surge established a new annual record of 169,560 homes sold, reported the Washington Center for Real Estate Research at Washington State University.

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, said Glenn Crellin, director of WCRER. However, surging sales resulted in higher prices, which translates into some risks to housing affordability in 2005.

Fourth-quarter home sales totaled 42,500 units statewide, which is 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 Washington’s 39 counties, and most increases were more than 10 percent.

Among metropolitan population centers, the greatest increase was 25.5 percent in Wenatchee, followed by 20.6 percent in Spokane. Yakima and Lewiston, ID-WA reported modest fourth-quarter declines.

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 Washington reached another record level of $231,700 during the fourth quarter, which is 12.6 percent higher than late 2003. The fourth quarter median selling price ranged from $81,400 in Columbia County to $337,000 in San Jan County. Only Grant County reported a quarterly median below a year earlier, and all counties reported annual prices above 2003 levels. Among urban areas, the most rapid increase in annual median was reported in Whatcom County (Bellingham). The annual median was $225,000, an increase of 10.4 percent compared to a year earlier.

Jim Harris, 2005 president of the Washington Association of REALTORS® from Kitsap County said the housing market in Washington continues to have a shortage of homes to sell combined with strong demand. The result is continued rapid price increases and challenging affordability, especially for first-time buyers.

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