Despite rising prices, higher mortgage rates, declining affordability and fears that a “housing bubble” may be about to burst, the number of homes sold in the state continued to rise in the final quarter of last year, the Washington Center for Real Estate Research at Washington State University reported last week.
But cold weather and high energy costs slowed the rate of growth to 2.9 percent in the final quarter, compared to the final quarter of 2004, the center said.
“Despite the bad press, the number of home sales during the October through December period was higher than during the last quarter of 2004, but the small year-to-year increase suggests that some slowing of the market is under way,” said Glenn Crellin, director of the center in Pullman.
For all of 2005, the number of existing homes sold increased by 8.1 percent to a record 183,320.
Crellin said 15 counties reported fewer home sales than in late 2004. They included Clark, King, Kitsap and Whatcom counties.
Cowlitz County had the largest percentage increase in sales, 38.5 percent. Whitman County had the biggest drop, 29.3 percent.
Crellin said that in some counties with fewer sales, real estate experts indicated the problem was a shortage of homes available for sale.
Prices for homes continued to rise rapidly.
Statewide, the median sale price soared to $275,700 during the fourth quarter, 19 percent higher than the previous year. For all of 2005, the statewide median price was $260,900, 16 percent higher than 2004. The median is the point where half the homes sold for more and half for less.
Adams County, which includes Ritzville, was the only county to report median prices below those of a year ago, and the only market in the state still reporting a median home price below $100,000. The median price of $81,700 was down 8.5 percent.
Double-digit price increases were seen in 29 counties.
The highest median price was in San Juan County, at $462,500. Counties reporting median prices of more than $300,000 were King ($390,000), Jefferson ($331,000) and Snohomish ($315,000).
The Housing Affordability Index, which measures the ability of a middle-income family (two or more people related by blood, marriage or adoption) to afford the purchase of a median-price home using a 30-year mortgage at prevailing interest rates, continues to worsen.
In the fourth quarter, the all-buyer index of 96 slipped below 100 for the first time since the center began preparing the statistic in 1994. This means that a typical Washington family has only 96 percent of the income required for the purchase of a median-price home.
Buyers in Island, Jefferson, King, San Juan, Skagit, Snohomish and Whatcom counties faced an index of below 100.
On the other end, Adams, Asotin, Benton, Garfield and Grant counties had index values above 150, suggesting the typical family would have little trouble qualifying for a median-priced home.
“Affordability declines are worrisome, but consistent with strong markets for the past 30 years,” Crellin said. “More troublesome is the inability to find affordable starter homes.”
The first-time buyer affordability index for the fourth quarter stood at 55.8 percent, the third consecutive quarter of record low affordability since the center has kept records.
The typical first-time homebuyer could afford the typical starter home in only Adams, Benton and Grant counties during the quarter, indicating affordability problems exist in all parts of the state.