Home sales continue to sizzle, prices increase

While there were fewer home sales in Washington during the third quarter than there had been during the second quarter, the market remained red hot, with 10.4 percent more homes sold than during the same time last year according to data prepared by the Washington Center for Real Estate Research at Washington State University. 

Glenn Crellin, director of WCRER, said, “The 50,800 homes sold between July and September were a record for the late summer/early fall period.  While some markets around the country have begun to report some softening, prices in Washington continued to surge and affordability continued to decline in the face of increased mortgage rates and higher prices.”

All but three counties, Clallam, San Juan and Skagit, reported higher levels of sales than a year ago, with 14 counties registering unit sales increases of more than 20 percent.  Among urban markets, the greatest increase in sales occurred in Asotin County (Clarkston/Lewiston, Idaho), where sales were 28.2 percent above last year.  Cowlitz County (Longview) was a close second with a 27.3 percent increase.  At the opposite extreme, sales in Skagit County (Mount Vernon/Anacortes) were 1.6 percent below the third quarter of 2004.

Spurred by the strong market, the median price for an existing home in the state jumped another 17.1 percent to a record $269,300.  The highest local median was $475,000 in San Juan County, while the lowest was $92,900 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, with a median cost of $380,000, while the least costly were in Yakima, $129,900 median cost.  Price increases were widespread, with 12 counties reporting prices at least 20 percent higher than a year ago.  Yakima and Garfield counties recorded price declines, but those percentage changes were very low.

Jim Harris, 2005 President of Washington REALTORS® from Kitsap County, said, “The demand for homes continues to exceed supply, resulting in continuing price increases and real challenges for first-time homebuyers looking for a modest home they can afford.”

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 fell, registering 101.6, its lowest level since WCRER began preparing the statistic in 1994. This means a typical family has only a 1.6 percent income cushion for the purchase of a median price home. Buyers in King County faced an index of 85.3, much less affordable than the statewide measure, and Jefferson and San Juan county buyers faced even greater challenges.

“Despite the record low affordability, conditions are typical of strong housing markets for the last 20 years,” Crellin said.  “A more pressing problem is the inability to find affordable starter homes.”  The first-time buyer affordability index for the third quarter stood at 59.0, the second consecutive quarter of record low affordability (since 1994).  The typical first-time homebuyer could afford the typical starter home in only three counties during the third quarter, indicating affordability problems exist in all parts of the state. Among urban counties, only Benton County (Tri-Cities) registered an index above 100.

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.

The Third Quarter 2005 Housing Market Snapshot can be viewed online at the WCRER Web site, www.cbe.wsu.edu/~wcrer.