May 8, 2013
Affordability drives Washington housing recovery in first quarter of 2013
Washington state’s housing market improved in the first quarter of 2013 — the third quarterly rise in a row — with median prices increasing and affordability improving statewide, according to the Runstad Center for Real Estate Studies at the University of Washington.
“Washington’s housing market is clearly recovering,” said Glenn Crellin, the center’s associate director for research. “However, the pace of sales activity is being held back somewhat by the limited inventory of homes available for sale.”
Crellin said this shortage of listings brings “classic supply and demand pressure on prices, consistent with the observed price increases.”
Existing home sales during the opening quarter of 2013 increased 5.6 percent from the fourth quarter of 2012 and 14.7 percent from a year ago, reaching a seasonally adjusted annual sale rate of 88,440 homes, meaning that if the sales rate for the quarter continued for a year, that number of homes would be sold.
Quarter-to-quarter home sales increased in 28 of Washington’s 39 counties at seasonally adjusted annual rates. Some counties with a slower sales pace were urban markets such as King County, which entered recovery mode earlier than some smaller communities.
Crellin said he has revised the statistics for seasonally adjusted sales retroactively to 2004 to make the numbers consistent with other data sources such as the 2010 American Community Survey and recent data from county assessors. Given that recalibration, he said, the first quarter of 2013 actually saw the highest seasonally adjusted sales rate since the third quarter of 2007.
The statewide median home price was $237,600, which is 14.1 percent higher than this time in 2012. Despite the steep single-year price gain, this median was seasonally lower than the final two quarters of 2012. County-level medians ranged from a high of $412,500 in San Juan County to a low of $65,000 in rural Lincoln County.
Despite the increased median prices, continued declines in mortgage interest rates allowed improvement in the Housing Affordability Index. This measures the ability of median-income families to buy median-price homes, assuming a 20 percent down payment and 30-year mortgage at prevailing rates.
Crellin said the index shows that middle-income families, at an annual income of $73,150, could qualify for a home priced well above the statewide median. Only San Juan County had an all-buyer index below 100, meaning that a typical middle-income family there could not quite afford a median-priced home in the county. King County had the second-lowest affordability at 134.6, meaning the typical family could afford a home priced about 35 percent above the local median.
Meanwhile, the statewide first-time buyer index reached a record high of 104.4 during the first quarter, meaning a household earning 70 percent of the median household income could just afford a typical starter home.
Regionally, housing affordability varied widely. Statewide, the most affordable community was Lincoln County where the index stood at 481.5 (where 100 means the median income family can barely qualify for the median price home) to a low of 92.1 in San Juan County. For first-time buyers in metropolitan areas, Benton County was again the most affordable and King County the least affordable.
“The biggest current impediment to the housing market remains a shortage of homes available for sale,” Crellin said. “Construction activity is improving, but builders cannot improve availability overnight. Lenders need to release properties which have been foreclosed, but are still owned by the lender to allow the market to stabilize and prevent renewed bubble conditions.”
Mark Kitabayshi, president of Washington Realtors, which produces home sales statistics in partnership with the Runstad Center, said, “If prices continue to rise the expectation of higher mortgage rates by late 2014 will result in greater challenges to first-time buyers who wait.”
Each of the Runstad Center’s quarterly releases coincides with information from the National Association of Realtors regarding median home prices by metropolitan area. Sales, median home prices and affordability data for each of Washington’s 39 counties are available at the 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
