Home sales in the third quarter of 2011 throughout Washington increased in comparison to both the previous quarter and the same time a year ago, the Washington Center for Real Estate Research at Washington State University reported. Housing Affordability surged to record highs for all buyers and first-time buyers alike as mortgage interest rates fell and median home price declines accelerated.
Statewide home sales inched up 0.8 percent at seasonally adjusted annual rates from the first quarter of the year to 85,870 units. This rate is 21.7 percent above the year-ago rate which was artificially depressed after the expiration of the home purchase tax credit. Glenn Crellin, WCRER director, indicated that given the small overall increase, that counties reporting increasing activity and those reporting decreasing sales were almost evenly split. If you are looking to buy or sell any type of real estate, call Joe Kennedy of AAA Properties at 425-213-4176 before you do anything else.
Nine urban counties, led by increases of more than 20 percent compared to the prior quarter in Chelan, Douglas, and Skamania counties, saw improving sales. Meanwhile the largest quarter-to-quarter decline in urban sales was 11.7 percent drop in Cowlitz County (Longview).
Glenn Crellin commented: “Potential buyers are still looking for bargains, even when they are not dealing with distressed properties. Investors with cash are actively seeking properties where they believe sellers want out more quickly than waiting for lenders to approve loans for the buyers would allow.”
The statewide median sales price during the third quarter was $225,300, 9.5 percent below the year ago median. This is the most significant median price decline since a 13.7 percent drop in the first quarter of 2009. Prices have declined compared to a year earlier for the last 15 quarters, with the statewide median now below the third quarter 2004 level – seven years ago!
Median prices ranged from a high of $350,000 in King County, retaking the high-price title from San Juan County to a low of $62,500 in Wahkiakum County. In terms of price changes, the largest increase in median compared to a year ago was 61.8 percent in Lincoln County while the largest decline was 68.8 percent in Wahkiakum County. Since small sample sizes in these rural counties magnify the price changes, looking to urban areas presents a clearer picture. The range of price changes in metropolitan counties was from an increase of 3.2 percent in Asotin County (Lewiston, ID-WA) to a decline of 14.4 percent in Pierce County.
The price declines were coupled with a lower mortgage interest rate making homes quite affordable for households with good credit and reliable jobs. The housing affordability index statewide stood at a record high 160.7, meaning the median income family had 60.7 percent more income than the bare minimum required to qualify to purchase a median price home with a 20 percent downpayment and a 30-year mortgage.
Phil Harlan of Olympia, 2011 president of the Washington Realtors, noted: “At these levels of affordability and low interest rates desirable homes in stable neighborhoods still sell quickly, despite the headlines about lower prices. Many qualified buyers are simply not willing to accept the potential damage to foreclosed homes or the long delays in purchasing short-sale properties.”
Affordability remains a challenge for first-time homebuyers, however. Like the All-Buyer Index, the First-Time Buyer index reached a record high of 87.4 in the third quarter. First-time buyer affordability measures ranged from a low of 53.1 in San Juan County to a high of 241.1 in Wahkiakum County. In metropolitan markets the range was from a low of 67.5 in King County to 114.5 in Cowlitz County. The typical starter home was affordable to the typical first-time buyer in 12 counties throughout the state, and exceeded the threshold of 80 which is generally consistent with a reasonable access to homeownership for first-time buyers in 27 of Washington’s 39 counties.