Home sales in Washington state improved modestly from the closing months of 2006 but remained below levels from one year ago during the first quarter of 2007, according to statistics released by the Washington Center for Real Estate Research at Washington State University.
“Beginning with the first statistics of 2007, WCRER has changed reporting to sales on a seasonally adjusted annual rate basis, finally allowing meaningful comparisons in sales activity from quarter to quarter,” said Glenn Crellin, WCRER director.
Sales increased 4.4 percent in early 2007 to a seasonally adjusted annual rate of 139,080. This means that if the same relative pace were to continue for an entire year a total of 139,000 units would be sold. Actual sales during the first quarter were 26,720, a decline of 9.2 percent from the same time a year earlier.
Washington’s housing market remains one of the bright spots nationally, especially in terms of prices. The national median price for a single-family resale home during the first quarter declined 1.8 percent compared to the opening months of 2006.
By contrast, the Washington median price of $300,800 was 7.4 percent higher than a year ago. While still double the general inflation rate, this price movement represents a gradual return to balance in the housing market.
“Strong job growth, coupled with a commitment to Quality of Life issues, is helping Washington avoid much of the pain of declining home prices observed in other areas,” said Dennis Rose, 2007 President of Washington REALTORS®.
Significant variations in both home sales and prices remained apparent across the state. Home sales increased compared to last quarter in 20 counties, declined in 15, and were unchanged in four. Year-to-year comparisons indicate five increases, three stable sales, and 31 declines.
The range of sales levels was from an increase of 34 percent in Chelan and Douglas counties, compared to late 2006, to a decline of 18.2 percent in Wahkiakum County over the same period. Median prices ranged from the usual high of $475,000 in San Juan County to a low of $96,700 in Adams County.
The median price was below that of a year ago in four counties, but increased by over 20 percent in eight other counties. Prices in urban areas ranged from $440,000 in King County to $134,000 in Yakima County. The highest percentage increase in urban area prices was 13.8 percent in Snohomish County.
“Home prices only tell part of the story,” Crellin said. “The real question regarding housing’s future strength is where households can afford the homes.”
The Housing Affordability Index (HAI), 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 notched its second consecutive improvement mostly because the mortgage interest rate declined a bit during the first quarter. The HAI stood at 88.9, meaning the typical family needs about 11 percent more income to be able to afford the median price home statewide.
Housing for all buyers was affordable (meaning the HAI was at least 100) in 24 of the 36 counties where data was available. However, in the other 12 counties the affordability problem was pronounced.
A healthy housing market needs to provide opportunities for renters to become home owners. This is where the most significant problems are observed. WCRER’s 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 for the second straight quarter, but the problems achieving homeownership are apparent in the statewide index value of 52.0, meaning the would-be homebuyer has only about half of the income required to qualify for a mortgage on the typical starter home statewide.
The problem is even more pronounced in individual markets such as King County where the index stood at 39.7 during the first quarter. The first-time buyer index was also below 50 in Jefferson, San Juan, Snohomish, and Whatcom counties.
