August 28, 2017
Home prices up, supply down in second quarter of 2017
Washington state’s housing market showed the continuing effects of high demand in the second quarter of 2017, according to the Washington Center for Real Estate Research at the University of Washington
The statewide median sales price rose to $337,700 in the second quarter, 6.6 percent higher than the same time period last year. This represents an all-time high for statewide house prices and the highest median price ever recorded in Washington state.
Similarly, the seasonally adjusted annual rate of existing home sales rose 11.6 percent from the second quarter of 2016 to 113,030 homes. That represents the number of homes that would be sold if the quarter’s pace continued unchanged for a year.
The low supply of existing homes listed for sale is likely a leading factor promoting rapid house price growth throughout the state.
Breaking down trends by region reveals a high level of variance in house prices throughout the state. Somewhat expectedly, median prices were highest in King County at $650,800, with a year-on-year increase over 2016 of 14.9 percent. The lowest median prices were found in Lincoln County at $89,000 with a low number of house sales recorded.
House prices in many other state markets rose significantly, with Spokane up 7.4 percent to a median of $225,100 and Whatcom County (Bellingham) rising 14.6 percent to $343,500. House prices in Pierce County rose by 12.1 percent recording a record high of $313,200.
House price growth continued strong growth outside of King and Pierce counties, with median prices in Snohomish County growing by 12.9 percent to $439,700 and Skagit County prices up by 6.4 percent to a median of $315,500. This indicates that some of the demand for housing is likely moving further away from downtown Seattle in search of more affordable prices.
Other regional markets posted significant price increases with Benton and Franklin counties (the Tri-cities) posting a median price of $244,100, a 8.3 percent increase over the same period last year. Chelan County (Wenatchee) posted a median price of $294,400 (up 9 percent from the same period in 2016) and Walla Walla posting a median price of $217,400 (up 4.5 percent). Compared to last year, the Yakima median house price stood at $205,900 up 11.8 percent over last year.
Other Puget Sound region house prices broke records, including Thurston County (Olympia) up 8.1 percent on a median price of $289,800 and Kitsap County up 11.3 percent on a median price of $325,000. Within the state, 20 of the 39 counties in Washington had record high median prices in the second quarter of 2017.
Housing affordability was lower in the second quarter of 2017. The affordability index – where 100 means a middle-income family can just qualify for a median-priced home, given a 20 percent down payment and a 30-year fixed mortgage rate at prevailing rates – was 123.7, down slightly from 124.3 in the first quarter of 2017. This metric suggests that, given the same down payment and mortgage, a middle-income family can afford a home selling for 23.7 percent above the median house price.
Statewide, the first-time buyer index showed a decrease of 0.2 points, ending the quarter at 71.2. This index assumes a less expensive home than a typical family, lower down payment and lower income. Similar to the index above, this figure reveals that first-time buyers had 71.2 percent of the income required to purchase a typical starter home.
With house prices increasing statewide, one might expect building activity to rise as well. However, the second quarter of 2017 revealed a total of 10,889 building permits recorded, a decrease of 8 percent from same period last year. This suggests that construction capacity is tight and longer development pipelines are making it hard for demand levels to be met in the short term.
The Washington Center for Real Estate Research (WCRER) produces home sales statistics in partnership with Washington Department of Licensing and the Washington Real Estate Commission.
The WCRER is housed in the Runstad Center for Real Estate in the University of Washington’s College of Built Environments. Sales, median home prices and affordability data for all Washington counties are available at the center’s website.
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For more information, contact Young at 206-685-7088 or jyoung4@uw.edu.
Tag(s): James Young • Runstad Department of Real Estate • Washington Center for Real Estate Research
