UW News

May 12, 2015

Housing market strong, affordability issues linger in first quarter of 2015

UW News

A house for sale.Washington state’s housing market was strong in the first quarter of 2015, with both sales and new building permits up compared with a year ago and the market remaining largely affordable, according to the Runstad Center for Real Estate Studies at the University of Washington.

The statewide median sales price for a single family home rose to $270,600 in the first quarter, 8.5 percent higher than the same time in 2014, though still significantly lower than the all-time high of $316,700 in the second quarter of 2007.

Similarly, the seasonally adjusted annual rate of existing home sales rose 4.4 percent from the first quarter of 2014 — from 81,450 to 85,060. This means that if the quarter’s pace continued unchanged for a year, that number of homes would be sold. Although robust, the current annual rate of sales is 40 percent below the high witnessed in 2003.

Snapshot_1Q15Home prices rose in 15 of the state’s 17 metropolitan counties, with Clark and Walla Walla Counties being the exceptions. Cowlitz County recorded the highest relative increase of 16.2 percent, followed by Snohomish County at 11.2 percent. Median prices were lower than a year earlier in only six counties, with prices in Ferry County in northeast Washington again coming in 40 percent below last year.

Given the variety of location and market diversity in the state, median housing prices are highly variable, ranging from $70,000 in Ferry and Lincoln counties to $508,300 in San Juan County (King County has the second highest median values at $450,000).

Housing affordability for all buyers statewide continued to rise in the first quarter. That 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 152, up from 148.9 the fourth quarter of 2014. This metric suggests that, given the same down payment and mortgage, a middle-income family can afford a home selling for 52 percent above the median.

Statewide, the first-time buyer index showed an increase of 2.1 points, ending the quarter at 85.9. This index assumes a less expensive home, lower down payment and lower income. This means that a household earning 70 percent of the median household income — as may be true of first-time buyers — had only 85.9 percent of the income required to purchase a typical starter home statewide.

Though up in general, housing affordability varied widely across the state. The least affordable county continues to be San Juan, with Lincoln County the most affordable. For first-time buyers in metropolitan areas, Benton County was again the most affordable and King County continued to be the least affordable. All counties east of the Cascades except Kittitas County were affordable to first-time home buyers, while five counties west of the mountains, especially in the central Puget Sound, present issues for such newcomers.

Affordability remains a challenge in the state’s housing market, the report said. This is despite continued strong permitting activity of nearly 8,594 new units, primarily in multifamily housing units in metropolitan areas, marking a 71.6 percent increase in the number of units under construction compared to a year ago.

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 all Washington counties are available at the Runstad Center’s website.


For more information, contact Stephen O’Connor at 206-685-9989 or steveoco@uw.edu; or Alon Bassok at 206-356-1331 or abassok@uw.edu.