Housing markets in Washington State began to rebound a year ago but could not sustain the pace during the third quarter this year. Meanwhile, housing construction in the state, as elsewhere in the country, was robust during the quarter.
Home prices continued to advance in most markets, and when combined with increased mortgage rates and modest income gains produced less affordable housing in most parts of the state.
During the third quarter a total of 24,260 home resales were recorded in the state, 4.9 percent fewer than during the third quarter of 1995.
Resales were down even more in Pierce County, where there were 2,860 reported, down 16 percent from the same period last year. Corresponding figures for Thurston County were 660 resales, down just 0.9 percent; Mason, 300, down 3.4 percent; Lewis, 240 resales, down 5.3 percent.
At the same time, residential building permits surged across the state for both single-family and multi-family construction. Total permits increased by 39.9 percent to 10,500 units. For single-family construction there were 7,074 permits issued, an increase of 4.5 percent compared to the third quarter of 1995.
Figures on building permits for housing were also considerably higher in all South Sound counties: Pierce reported 1,160, up 44.3 percent; Thurston issued 415, up 49.3 percent, and Lewis had 73, up 78 percent over the previous year. There were 112 in Mason County, with no percent increase reported.
Median price for a resold home in the state during the third quarter was $143,500, a level 3.3 percent higher than during the third quarter of 1995. While this increase cannot be used to infer a 3.3 percent appreciation rate because the characteristics of the units sold may have changed, it is indicative of generally higher prevailing prices.
Prices ranged widely around the medians, with 19.4 percent of the homes selling for $100,000 or less while 12.8 percent exceeded $250,000.
Median prices for homes in South Sound counties were: Pierce $124,700; Thurston, $119,000; Mason, $102,400; Lewis, $80,000.
Higher prices and mortgage rates offset increases in incomes, causing housing affordability to continue its decline. The Housing Affordability Index for all buyers during the quarter stood at 108.5, meaning the median income family earned 8.5 percent more than the bare minimum required to qualify to purchase the median-priced home, assuming a 20 percent down payment. Affordability index figures for South Sound counties were: Pierce, 119; Thurston,128; Mason,120.6; Lewis, 149.9.
While that index makes housing seem affordable, the typical renter household in the state looking for that first home to purchase (as opposed to those who actually bought) has only 64.9 percent of the income required to qualify for a starter home, with a 10 percent down payment.
In South Sound counties this figure is somewhat higher, at 72.7 percent for Pierce, 77.6 percent for Thurston, 76.5 percent for Mason and 91 percent for Lewis.
– Courtesy of Washington State University’s Washington Center for Real Estate Research.