Housing markets in Washington, like most other parts of the nation, have retreated from the record high sales pace of 2005, but remained quite strong during the third quarter according to the Washington Center for Real Estate Research (WCRER) at Washington State University.
Glenn Crellin, director of WCRER, said median home prices continued to hit new record highs during the quarter, despite the reduced level of home sales.
“While sales rates are no longer setting records, the overall housing market in Washington remains strong,” Crellin said. “ Increased inventories of homes for sale mean greater choices and some opportunity for price negotiation, but there is no glut of listings – the market is simply becoming more normal.”
During the period, 43,050 homes were sold across the state, 16 percent fewer than a year ago. Sales declines were reported in all but three counties (Yakima, Grant and Thurston). In percentage terms, the greatest decline in unit home sales was 32.6 percent in Lewis County (Centralia/Chehalis). Among the urban counties, Snohomish County recorded the greatest year-to-year slide of 31.8 percent, but still had more than 5,100 sales during the three months of the quarter. Compared to third quarter 2005, Yakima had the largest increase in sales activity with a total increase of 13.8 percent.
Listings available for sale continued to increase to the point they are capable of sustaining current sales rates for 4.1 months even if no new listings come on the market. This inventory level is above the 3.5 month’s supply in the second quarter and well above the 2.6 month’s supply which prevailed a year ago, but is still characterized as the low end of normal, implying that aggregate price increases can be expected in the months ahead.
Strong sales and still-limited inventories were reflected in record median prices during the third quarter, with the statewide median reaching $300,900, which is an increase of 11.7 percent from the median recorded in the third quarter of 2005. Only San Juan County had a lower median than in the third quarter of 2005, but retained the dubious distinction of the highest median in Washington ($438,000, 7.8 percent below last year). The biggest jump in median prices was 30.8 percent in Lewis County. Among the urban areas, King County’s median was $432,600, 13.8 percent above a year ago while the lowest urban median was $139,100 in Yakima County, reflecting an increase of 7.4 percent. Adams County was the only reporting area with a median price below $100,000, recording a $98,800 median representing a 3.1 percent increase.
Terry Sullivan, 2006 President of Washington REALTORS®, said the record sales and rapid price increases have been expected to moderate as the market pauses to catch its breath.
“Washington remains one of the best housing markets in the country, but the challenges of affordability mean we cannot become complacent,” said Sullivan.” Promoting a strong economy and encouraging policies which foster development of homes affordable to all segments of the State’s population are our priorities.”
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 highlights the continuing affordability crisis.
In the third quarter, the all-buyer index slipped another 2.8 points to 85.1. This means a typical family has only 85 percent of the income required for the purchase of a median price home. Actually purchasing the home will require a larger than average down payment or a lender willing to extend the usual underwriting standards.
Buyers in 15 counties faced index values below 100, moving two more communities into the less-affordable category compared to three months ago. All-buyer affordability is especially low in San Juan, Jefferson, and King counties, which had all buyer index values ranging from 53.6 to 69.2.
Meanwhile, three counties had index values above 150, suggesting the some communities still offer real opportunities for families to purchase homes.
Unfortunately, those areas are beyond the commuting radius of many jobs.
“Home ownership depends on the ability to purchase the first home, and too often that is more a dream than a reality,” said Crellin. “Only two counties offer the typical entry-level buyer the opportunity to afford a typical starter home, and neither is in an urban area.”
The first-time buyer affordability index for the third quarter stood at 49.7, the sixth consecutive quarter of record low affordability (since 1994). Among urban areas first-time buyer affordability index values ranged from a low of 38.8 in King County to a high of 96.4 in Benton County.
WCRER has produced these 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 36 of Washington’s 39 counties.
