Washington housing market uneven in fourth quarter

By University of Washington News and Information | Feb 19, 2014

Washington state's housing market softened in the fourth quarter of 2013 compared to the quarter before, but remained stronger than a year ago, according to the Runstad Center for Real Estate Studies at the University of Washington.

Sales of existing homes declined 8.6 percent in the September-December quarter of 2013, but still were 9.2 percent higher than the same time in 2012.

The seasonally adjusted sales rate was 91,340 homes, meaning that if the quarter's pace continued unchanged for a year, that number of homes would be sold.

"Washington's housing market is finding its balance," said Glenn Crellin, associate director of the Runstad center. "Sales throughout 2013 totaled 93,730 units, well above any of the last five years, but still well below the pre-recession frenzy.”

An inadequate supply of listings available for sale continues to be a problem and contributes to increases in home prices, Crellin said.

The statewide median home sales price during the fourth quarter was 6 percent above a year ago at $256,300. Price increases were especially strong in the metropolitan Seattle area.

Median prices were lower than a year earlier in 16 counties, but most declines were less than 2 percent. Median prices ranged from $70,000 in Lincoln County to $421,000 in King County.

The all-buyer affordability index was 149.4 statewide, meaning a middle-income family could afford a home selling for 49.4 percent above the median, provided they have the 20 percent down and a 30-year mortgage at prevailing rates.

This represents a modest improvement from the third quarter, but shows that homes in Washington were significantly less affordable than a year earlier.

Statewide, the first-time buyer index, an affordability index for new homeowners, improved after a third-quarter dip and ended the year at 83.5.

This means that a household earning 70 percent of the median household income had only 83.5 percent of the income required to purchase a typical starter home statewide.

"The stronger housing market with increased prices coupled with higher interest rates than last year has clearly made it harder for first-time buyers to find a home with the features they desire, especially in greater Seattle,” said George McGilliard, 2014 president of Washington Realtors.

Local data show stronger home sales than a year ago in all but four of Washington's 39 counties, though 25 counties saw the seasonally adjusted sales rate decline compared to the third quarter. Crellin said this is evidence the market is stabilizing.

Housing affordability varied widely across the state. The most affordable community was Lincoln County, where the all-buyer affordability index stood at 406.4 (where 100 means a middle-income family can just qualify for a median-price home) to a low of 82.8 in San Juan County.

For first-time buyers in metropolitan areas, Benton County was again the most affordable and King County the least affordable.

"A shortage of listings remains the biggest problem in the strongest markets," Crellin said. "New home construction helps, as do news reports indicating many people are interested in selling now that their mortgages are no longer underwater.

“The biggest current negatives are increasing prices and mortgage rates making it harder for buyers to qualify."

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.

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