First-quarter statistics on existing home sales, median home prices and housing affordability indicated that the nationally reported market improvement did not generally include Washington, but improved affordability suggests stabilization may be on the horizon.
Statewide home sales slipped 8.6 percent at seasonally adjusted annual rates from the fourth quarter of last year to 67,070 units. This is a sales rate 30.6 percent below that of a year ago, and the slowest sales rate since the Washington Center for Real Estate Research at WSU began monitoring the housing market in 1994, said Glenn Crellin, WCRER director.
Seasonal adjustment allows comparisons from quarter to quarter by taking into consideration that sales are always lower in winter months and stronger in spring and summer.
Market performance was quite different from county-to-county with the sales rate declining by 50 percent in Wahkiakum County but increasing from the fourth quarter in six counties, led by a 13.3 percent improvement in Pacific County. Among the five largest urban counties, sales changes were more consistent, ranging from an increase in the sales rate of 2.3 percent in Spokane County to a decline of 15.0 percent in King County.
“Home prices follow the market, and with such significant declines in sales in most communities, it is not surprising that median home prices continue to lag levels from a year ago,” Crellin said. The median sales price statewide was $253,500, a level 13.7 percent below a year ago.
Because the nature of homes sold shifts from quarter to quarter, comparisons to last quarter prices are not meaningful. The median price has declined compared to a year earlier for the last six consecutive quarters, with the current observation representing the steepest decline. This was the lowest median price reported since the first quarter of 2005.
Although price declines predominated, six counties reported higher median prices, with the median price in Wahkiakum County, based on a very small number of sales, double the prevailing price a year ago. All counties with higher medians were small.
Among the metropolitan counties the smallest decline was in Benton/Franklin counties with a 1.8 percent slide, while the biggest decline was 29.5 percent in Skamania County (now part of the Portland, Ore.-Washington metropolitan area). The highest median price among the urban areas was $375,000 in King County, while the lowest was $137,300 in Yakima County.
While March is typically a time of year when families put their homes on the market, the limited sales potential continues to hold listings down, helping the market move toward a more stable inventory. As of the end of March there were just over 47,000 homes listed on multiple listing services throughout the state, a decline of 12.2 percent compared to the inventory at the end of the first quarter last year.
At current sales rates this represents an 11.9 month’s supply of homes. While this is above the supply that prevailed during the fourth quarter, it is well below the value observed a year ago. As expected, the month’s supply of homes on the market is greater for more expensive homes.
Lower prices combined with lower mortgage interest rates to significantly improve housing affordability in most of the state. The statewide housing affordability index for all buyers reached 125.5 in the first quarter, meaning the median income family had 25.5 percent more income than the minimum required to purchase a median price home.
The index presumes lenders are willing to offer loans to families making a 20 percent down payment and who will allocate a quarter of their gross income to principal and interest mortgage payments.
“Improved affordability coupled with the $8,000 tax credit included in the federal stimulus bill passed by Congress in February provides a real opportunity for first-time homebuyers with good credit to purchase a home and begin building their future through homeownership,” said Greg Wright, Washington Realtors® President.
Affordability remains a problem for first-time homebuyers, but the opportunities to purchase are improving. The first-time buyer affordability index (which assumes a lower purchase price, a lower down payment and a lower buyer income than the basic index) recorded a level of 73.3, nearly 10 points higher than during the closing months of last year and 17 points above a year ago.
Despite the improvement in overall affordability, the opportunity for first-time home buyers to purchase a home remains a problem. The first-time buyer index (which assumes a lower price, a lower down payment, and lower income than the all buyer index) reached 63.0 in the fourth quarter.
“This is the most affordable housing has been for the typical first-time buyer in Washington since the opening months of 2004,” Crellin said. The typical first-time buyer had more than 90 percent of the income to qualify for that first home in 16 of Washington’s 39 counties, indicating that significant opportunities to attain home ownership exist throughout the state.
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 38 of Washington’s 39 counties.
The First Quarter 2009 Housing Market Snapshot available online here.
