PULLMAN — Like housing markets throughout the nation, home sales in Washington during the second quarter of 2005 set a new record of 52,140 single-family homes sold, according to statistics released by the Washington Center for Real Estate Research at Washington State University.
Glenn Crellin, director of WCRER, said, ”Despite media attention on a potential ‘housing bubble,’ the market has remained red hot with 6.3 percent more homes sold than at this time last year and with price increases well above the inflation rate. Unfortunately, prices are now so high that it is especially difficult for someone who does not already own a home to buy one in most urban areas.”
The second-quarter data represents the first time that more than 50,000 homes have been sold in a single three-month period. The combination of continued low mortgage interest rates, innovative mortgage lending products and strong investment sales contributed to market strength. Despite the robust overall market, sales were lower than a year ago in a handful of counties, but more counties reported 20 percent increases than any slowdown in sales. Among urban markets, the greatest increase in sales occurred in Spokane County, where sales were 18.2 percent above last year. At the opposite extreme, sales in Whatcom County were 6.6 percent below the second quarter of 2004.
Spurred by the strong market, the median price for an existing home in the state jumped another 13.9 percent to a record $254,900. The highest local median was $449,500 in San Juan County, while the lowest was $89,300 in Columbia County, the only market remaining below $100,000 for the typical home. Among the metropolitan markets, the most expensive homes were in King County ($369,000 median) while the least costly were in Yakima County ($126,700 median). Price increases were widespread, with 26 counties reporting prices at least 10 percent higher than a year ago. Two small counties recorded price declines, but the small number of sales means those percentage changes are insignificant.
Jim Harris, 2005 President of Washington REALTORS® from Kitsap County, said, “The demand for homes by both owner-occupants and investors exceeds the supply in virtually all markets, resulting in rapid price increases and real challenges for households endeavoring to purchase their first home.”
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, illustrates the impact of rapidly increasing prices and slowly increasing incomes on the ability of the market to sustain its strength. Once again, the Housing Affordability Index declined, falling to its lowest level since early 2000, registering 106.6. This means a typical family has a 6.6 percent income cushion for the purchase of a median-price home, and buyers in four counties now face affordability conditions where the median income household would need to purchase a home significantly below the median price, have a much larger down payment or use a risky alternative mortgage instrument (interest only or option).
“Despite the declining affordability, conditions are typical of strong housing markets for the last 20 years,” Crellin said. “A more pressing problem is the inability of current renters to afford starter homes.” The first-time buyer affordability index for the second quarter stood at 61.9, its lowest level since WCRER began calculating the measure in 1994. The typical first-time homebuyer could afford the typical starter home in only three counties during the second quarter, indicating affordability problems exist in all parts of the state.
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 35 of Washington’s 39 counties.