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Washington home sales continue to decline

PULLMAN – Home sales were below year-ago levels for the third consecutive quarter during the final months of 2006, according to statistics released by the Washington Center for Real Estate Research at Washington State University.

Glenn Crellin, WCRER director, said that, “While sales volumes are down, the market is still strong and median prices are higher than a year ago in most parts of the state, although the rate of increase is slower than in previous quarters. Consumers have greater choices, can take a bit more time, and can select a home that really meets their needs.” A total of 36,480 homes sold during the final three months of 2006, 16.6 percent below the closing quarter of 2005. The median home price was $301,400 during the quarter, 9.3 percent higher than the same time a year earlier.

Annual total sales statewide were 161,240 homes, representing a decline of 12 percent from 2005, but still the third highest number of homes sold in one calendar year on record. In terms of prices, the annual median for 2006 was $293,800 – 12.5 percent above the prior year. Dennis Rose, 2007 president of Washington Realtors, said that despite the sales decline, the demand for affordably priced homes was still very strong. He challenged local governments to encourage the development of additional moderately-priced housing in their communities.

Significant variations in both home sales and prices remained apparent across the state. Home sales increased 18.9 percent in Whitman County (Pullman) compared to a year earlier, while the number of homes sold in Chelan County (Wenatchee) declined 40.5 percent. All but four counties recorded fewer sales than a year ago. On the price side, San Juan County had a 34.1 percent increase compared to a 23.2 percent decline in Columbia County (but extreme price movements are not unusual or meaningful when based on such a small number of transactions). Median prices ranged from a high of $620,000 in San Juan County to a low of $87,900 in Adams County. Among urban areas, the price range was from $440,000 in King County to $137,600 in Yakima County.

“Home prices only tell part of the story,” Crellin said. “The real question regarding housing’s future strength is whether households can afford the homes.” The Housing Affordability Index, which uses median home prices, mortgage interest rates and family incomes as inputs, measures the degree to which a middle-income family can afford the mortgage payments on a typical home. The statewide index, after declining each quarter since late 2003, finally inched up in the fourth quarter to 87.0. This means the typical family had only 87 percent of the income required to qualify for a mortgage on a mid-price home. Individual county indexes were often well above or below this guideline, ranging from a very encouraging 193.9 in
Adams County to a highly unaffordable 39.3 in San Juan County. Among urban areas, the most affordable was Benton County (Kennewick/Richland) at 180.9 while King County surprised no one with the least affordable measure (69.6).

Sustaining the economic and social benefits of a high homeownership rate requires opportunities for renters to become home owners. The first-time buyer affordability index explores the ability of a household earning 70 percent of the median income in their area to qualify for a mortgage on a starter home. Again, there was very modest improvement against a record low starting point. The statewide measure was 50.9 meaning the typical renter hoping to purchase a home has only half of the income required to buy. The index exceeded 100 in only two counties (Adams and Benton). Meanwhile, the would-be homebuyers had less than one quarter of the income needed for a starter home in San Juan County. Again, King County offered the second most limited opportunity (39.0), despite incomes which are well above average.

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 36 of Washington’s 39 counties.

To view the ‘Fourth Quarter 2006 Housing Market Snapshot’ visit : http://www.business.wsu.edu/news/Documents/CB%2002.15.07%20WA%20Home%20Sales%20Continue%20to%20Decline_SNAPSHOT_06q4.pdf

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