November 6, 2013
Washington home sales surged, affordability declined in third quarter
Washington state’s housing market continued to strengthen in the July-September quarter, registering the fifth quarterly consecutive improvement in home sales activity, according to the Runstad Center for Real Estate Studies at the University of Washington.
Similarly, median home prices throughout the state advanced, while the affordability of homes dropped measurably.
The number of existing home sales during the third quarter of 2013 increased 7.1 percent from the second quarter and 30 percent from a year ago, reaching a seasonally adjusted annual sale rate of 99,960 homes. That means that if the pace for the quarter continued unchanged for a year, that number of homes would be sold. This represents the highest sales rate since the second quarter of 2007.
Quarter-to-quarter home sales increased in number in 31 of Washington’s 39 counties at seasonally adjusted annual rates.
“Comparing market activity to a year ago saw stronger sales in 36 counties,” said Glenn Crellin, associate director of the center, “and the declines were all in smaller communities.” The greatest year-to-year gain in a metropolitan county was 43.6 percent in Skagit County, while the lowest was 5.3 percent in Asotin County.
“Available listings remain a problem,” said Mark Kitabayashi, president of Washington Realtors, which works with the center to produce home sales statistics. “There are more homes on the market today than a year ago, but the sales rate has increased more rapidly, meaning buyers need to decide quickly and make strong initial offers. Even then, there are often multiple offers.”
The imbalance between limited supply and strong demand resulted in a median price during the quarter of $264,300, an increase of 8.4 percent compared to a year ago. Six counties had lower median prices and three small counties had significant jumps, but even metropolitan markets often had double-digit percentage price surges. Among metropolitan counties the range of median price changes in the past year ranged from a decline of 2.8 percent in Chelan County to a jump of 17.5 percent in Clark County.
Crellin said, however, that since prices remain well below the market peak, worries of a bubble reforming are minimal.
In addition to reduced selection and higher prices, buyers are faced with higher mortgage interest rates, Crellin said. While family and household incomes are increasing a bit, they are not offsetting the other increases, resulting in a decline in the affordability of housing compared to three or 12 months ago.
The all-buyer affordability index was 144.4 statewide, meaning a middle-income family could afford a home selling for 44 percent above the median provided they have the assumed 20 percent down payment and good credit. Despite the decline in affordability, only San Juan County had a measure which would be interpreted as unaffordable median home prices for a median income family. Among metropolitan counties the affordability index ranged from a high of 183.8 in Benton County to a low of 106.8 in King County.
The challenges are greater for first-time buyers. Although the homes typically purchased are less expensive, first-time buyers usually have smaller down payments and lower incomes. The statewide first-time buyer index, an affordability index for new homeowners, stood at 80.6 during the quarter.
Crellin said, “This is the bottom threshold for what represents the likelihood that first-time buyers can find a home they can afford. Unfortunately, nine counties now have index levels below that cutoff, and several others are only marginally above.” Rural areas dominate the list of communities where the first-time buyer index exceeds 100.
Usually this release includes information on building permit activity, but the data for September will not be released in a timely fashion by the Census Bureau because of the government shutdown in October.
Sales, median home prices and affordability data for each of Washington’s 39 counties are available on the Runstad Center’s website.
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For more information, contact Crellin at 206-685-8020 or crellin@uw.edu.
Tag(s): College of Built Environments • Glenn Crellin • Runstad Department of Real Estate
