UW Today

August 9, 2012

Housing market improving despite second-quarter dip in home sales

News and Information

Washington state’s housing market continued to improve during the second quarter of 2012 despite a slight drop in existing home sales, according to the Runstad Center for Real Estate Studies at the University of Washington.

Existing home sales during the second quarter of 2012 increased 10.4 percent compared with a year ago, however the seasonally adjusted annual rate dropped 2.6 percent from the first quarter.

“The market is clearly stronger than a year ago, but it eased off a bit compared with the pace we saw in the first quarter,” said Glenn Crellin, associate director of the center. “We always see actual sales numbers increase between the first and second quarter, but this year that increase was less than typical. As a result, the seasonally adjusted annual rate declined compared with what we were observing during the first quarter.”

Evidence of the improvement, Crellin said, is seen in the $236,000 second quarter median sales price of homes statewide, which is a 4 percent increase over 2011. The median price in King County, meanwhile, surged 6.5 percent to $370,800, the highest median price in the state.

The number of homes on the market also declined and buyers looking to take advantage of low interest rates are bidding up the prices of move-in-ready homes, Crellin said. Distressed properties represented a smaller share of the total in the second quarter, also contributing to the price increase.

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

The rise in home prices offset savings from lower mortgage rates, resulting in a modest drop in the Housing Affordability Index, which 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. However, that index shows that middle-income families — at an annual salary of $72,400 — “still have a significant cushion in terms of buying a median-priced home,” Crellin said.

The first-time buyer index, which assumes a less expensive home, lower income and a smaller down payment, also went down slightly. But that index shows “there is a considerable opportunity to find affordable homes in the marketplace for first-time buyers,” said Faye Nelson, president of Washington Realtors.

Regional data suggest that the I-5 corridor had the strongest home resale market in spring, with eight Western Washington counties reporting higher sales rates than in the first quarter. Among rural counties, Asotin County saw the greatest slide in activity since the first quarter. In terms of price changes, 22 of Washington’s 39 counties had higher median prices than last year, led by double-digit jumps in four smaller counties.

Homes remained affordable for median-income families in all Washington counties, Crellin said, with the highest affordability in Lincoln County and the lowest in San Juan County. For first-time buyers, Benton County was the most affordable and King County the least affordable.

“While the market appears to be improving, the sluggish economy combined with a continuing overhang of distressed properties means a sustained recovery is still tenuous,” Crellin said.

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.

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