PULLMAN – The housing market in Washington looked a bit more like national reports during the closing months of 2007, according to statistics prepared by the Washington Center for Real Estate Research at WSU.
Homes sold during the quarter at an annual rate of 99,120 units statewide, a level 13.7 percent lower than the previous quarter and 25.6 percent below a year earlier.
“This was the first quarter with a seasonally adjusted annual sales rate below 100,000 units since the first quarter of 1998,” said Glenn Crellin, WCRER director.
When the entire year 2007 was summarized, a total of 120,760 resale housing transaction took place, a decline of 16.1 percent from 2006. This was the lowest annual home sales total since 2001.
Washington’s annual sales decline was roughly the same as the national experience, but other states in the west, particularly Nevada, California, and Arizona, saw much sharper sales declines. The combination of fallout from the collapse of subprime mortgage lending and other nontraditional mortgage products, which resulted in significant tightening of credit standards by lenders, combined with public perception that housing is in freefall kept potential home buyers on the sidelines as the year ended.
The median price home sold in Washington during the fourth quarter carried a price of $293,900, resulting in a 2.5 percent decline in median prices compared to the closing months of 2006. This is the first year-to-year decline since WCRER began compiling the data in early 1994. Meanwhile, the national median slipped 5.8 percent and the entire Western Region declined 8.7 percent during the same time period. For the year 2007 as a whole the statewide median price was $309,600 reflecting a 5.4 percent increase for 2006.
Significant variations in both home sales and prices remained apparent across the state. Six counties (Adams, Chelan, Columbia, Douglas, Walla Walla, and Whatcom) recorded more home sales during the fourth quarter than a year ago. Meanwhile in the counties reporting slower sales activity, the drops ranged from 1.4 to 45.5 percent. Among the most urban areas, annualized sales activity was below the third quarter in all 17 metropolitan counties, with declines ranging from 1.1 percent in Cowlitz County (Longview/Kelso) to 19.8 percent in Spokane County. As always, King County had the highest sales rate, 24,170, while Garfield and Wahkiakum counties both recorded annualized sales rates less than 100 homes sold.
Median prices ranged from $110,000 in Adams County to $693,800 in San Juan County. Among the urban markets the range was somewhat less, from $148,800 in Asotin County to $439,000 in King County.
In terms of price changes compared to a year ago, the median price declined by 22.9 percent in Wahkiakum County comparing fourth quarter 2007 to a year earlier. At the other extreme, the median price in Grant County was 20.6 percent above a year ago. Having small counties with the most extreme changes in both volumes and prices is not unique; it is a reflection of small samples producing wide swings. Among the population centers, the change in median prices ranged from a decline of 3.1 percent in Asotin County to a jump of 18.4 percent in Chelan County (Wenatchee). It must be emphasized, however, that the change in median prices should not be referred to as an appreciation rate.
“Median prices reflect the amount being spent by buyers for homes, but do not reflect any changes in the composition or quality of the homes sold,” Crellin said.
WCRER completes these market statistics with measures of the ability of typical families to purchase typical homes, measured through the Housing Affordability Index. The statewide all buyer index stood at 90.5 for the fourth quarter, the most affordable housing has been since the opening months of 2006. This means that a median income family has a little over 90 percent of the income required to qualify for a mortgage on a median price home.
Jan Ellingson of Burlington, the 2008 President of Washington Realtors said, “Not only did affordability improve late last year but lower mortgage rates as the Federal Reserve fights a recession means that home purchases today make good sense for families with good credit.” Local affordability measures ranged from 157.4 in Adams County to 33.6 in San Juan County.
More critical to the long-term health of the housing market is the ability of potential first-time buyers to enter the ranks of homeowners. The companion first-time buyer affordability index assumes a lower purchase price, a lower income incorporating the fact that most higher-income households are already homeowners and the fact that single persons (who are excluded from the family income statistics) are more likely to be potential buyers. The statewide measure was 53.5, meaning that the typical would-be homebuyer has a little over half the income needed to qualify for a mortgage on the typical starter home. Again the statewide measure reflected greater affordability then recent quarters. The range in first-time buyer affordability measures was from 106.1 in Adams County to 19.9 in San Juan County. The metropolitan range was from 95.7 in Benton County to 40.4 in King County.
WCRER has produced these statistics in partnership with the Washington REALTORS® since 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 38 of Washington’s 39 counties.
The Fourth Quarter 2007 Housing Market Snapshot is available online at http://www.business.wsu.edu/overview/news/Documents/CB%2002.14.08%20Housing%20Snapshot_07Q4.pdf