UW Today

May 9, 2012

First quarter home sales surge, while prices languish

News and Information

Washington’s housing market in the first quarter of 2012 saw the highest seasonally adjusted sales since the first-time buyer tax credit program expired in 2010, according to the Runstad Center for Real Estate Studies at the University of Washington.

Overall, sales returned to a level close to the average of the last 20 years, reflecting both a return to the market by first-time and move-up buyers and continued interest in distressed properties by investors.

“The prevalence of distressed properties in some neighborhoods held prices back,” said Glenn Crellin, associate director for research at the center. In areas with more desirable properties, he said, prices are up because fewer distressed properties are holding the market back. “It is clear some markets are seeing increasing prices as the available inventory of quality properties has dwindled significantly.”

The seasonally adjusted sales rate during the quarter was 97,000 homes, meaning that if the sales rate for the quarter continued for a year, that number of homes would be sold. That rate is 7.9 percent above the last quarter of 2011 and 11.3 percent higher than a year ago.

“Despite the stronger market, median home prices continued to decline compared to a year earlier,” Crellin said. The first quarter median fell to $208,300, a decline of 8.7 percent from the same period in 2011. Crellin said the drop in the median price does not mean that prices of individual homes are uniformly continuing to decline. Rather, falling prices are primarily in neighborhoods with a significant number of homes at some stage of foreclosure. Nine counties reported higher median prices.

Sales, median home prices and affordability data for each of Washingtons 39 counties are available at the Runstad website.

The combination of lower median prices and low mortgage interest rates means the affordability of homes has not been higher in the last 20 years.  According to the centers Housing Affordability Index, the median-income family in the state had 84.7 percent more income than the minimum required to buy a median-price home, assuming a 20 percent down payment. The data show that in all 39 counties in the state, a median-income family could afford a median-priced home.

“Affordability is also at a record high for first-time buyers, and rent increases are encouraging them to begin seriously pursuing home ownership,” said Faye Nelson, president of Washington Realtors.

In Washingtons urban counties, the greatest quarterly gain in sales was 33 percent in Chelan County, while the greatest decline, 7.1 percent, happened in Whatcom County. The only year-to-year slowing of sales was a 0.6 percent decline in Benton/Franklin counties.

Among the urban markets, median home prices ranged from a high of $322,400 in King County to a low of $128,000 in Asotin County.

“The shadow inventory of distressed properties continues to hold back the market in some neighborhoods,” Crellin said, “but other neighborhoods have a real shortage of homes on the market, leading to increasing prices, short marketing times and often multiple offer situations. It is truly a story of two markets.”

The Runstad Center produces home sales statistics in partnership with Washington Realtors. Each quarterly release coincides with information from the National Association of Realtors regarding median home prices by metropolitan area.

###

For more information, contact Crellin at 206-685-8020 or crellin@uw.edu.