UW Today

February 7, 2013

Washington housing recovery strengthened in fourth quarter 2012

News and Information

A house for sale.Washington state’s housing market continued to improve during the fourth quarter of 2012 as the number of homes sold and median prices increased while affordability also improved statewide, according to the Runstad Center for Real Estate Studies at the University of Washington.

Existing home sales during the quarter increased 3.5 percent from the third quarter and 12 percent from a year ago, reaching a seasonally adjusted annual sale rate of 103,230 homes. That is the highest sales rate since the third quarter of 2007.

“Washington’s housing market is clearly recovering,” said Glenn Crellin, associate director of the center. “Sales throughout 2012 totaled 98,130 units, well above any of the last four years, but still well below the pre-recession frenzy.”

Further evidence of the sales improvement and increasing shortage of listings, Crellin said, is apparent in the 11.8 percent increase in median home price statewide from the same time in 2011, to $242,500. While the median price was marginally below the third quarter, the dip is entirely seasonal. County-level medians ranged from a high of $381,100 in King County to a low of $112,300 in Grays Harbor County (Aberdeen).

Despite the higher median prices, further declines in mortgage interest rates allowed modest improvement in the Housing Affordability Index, which measures the ability of median-income families to buy median-price homes, based on a 20 percent down payment and 30-year mortgage at prevailing rates. The index shows that middle-income families — at an annual income of $72,900 — could qualify for a home priced well above the statewide median, Crellin said. “Moreover, the all buyer index indicates a family with the median income could afford the median price home in all 39 Washington counties.”

Meanwhile, the statewide first-time buyer index, which dipped a bit during the third quarter, improved toward year’s end, recording a fourth quarter reading of 100.3. That means that a household earning 70 percent of the median income could just afford a typical starter home.

“Confronted with increasing prices and expectations that interest rates cannot really decline further, buyers who had been waiting for recovery have returned to the market,” said Mark Kitabayshi, president of Washington Realtors.

Local data continue to indicate that urban markets are stronger than smaller communities, but that improvement in market conditions is widespread. In fact, only six counties reported slower home sales in the fourth quarter than a year ago.  Seven less-populous counties had lower median prices than a year ago.

Regionally, housing affordability varied widely. For all buyers the most affordable community was Pacific County, where the index stood at 282.8, to a low of 112.5 in San Juan County. On the affordability index, a rating of 100 means the median-income family can just qualify for the median-price home; a higher number means the home is more affordable. 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 is a shortage of homes available for sale,” Crellin said. “Construction activity is improving, but sellers who believed they were underwater need to reassess their ability to successfully sell and put their homes back on the market.  At the same time, lenders can begin releasing their shadow inventory to help stabilize the market.”

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.

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

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

 

 

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