There seemed to be a lot of interest in last week’s column, which looked at a number of reasons why home prices keep falling in Snohomish County, the most significant being the number of foreclosed homes still clogging the market.
It was from the perspective of the homeowner, as in what’s happening to my investment, and when is it going to stop dropping?
Last week, Glenn Crellin and his Washington Center for Real Estate at Washington State University looked at another piece of that puzzle: How lower home prices and low mortgage rates are affecting affordability.
The numbers are pretty amazing.
The real estate center pegged the median price for a home in Snohomish County at $240,000, down 12.7 percent from a year ago. That’s different from the Northwest Multiple Listing Service numbers we talked about last week, but it’s still pretty close.
The center used an index to estimate the affordability of homes. For Snohomish County, the index is at 171.5 percent, an incredible number. It means that the county’s typical family has 71.5 percent more money coming in than the minimum amount needed to buy a home with a 20 percent down payment and a 30-year mortgage.
Things are tougher for first-time home buyers who are estimated to have 5.1 percent less income than the minimum required to buy a home. First-time homebuyers would be expected to put less money down and to buy a less expensive home.
The median prices estimated for the county this fall were similar to the third quarter of 2003, when the median was $235,000. The median stayed that low until the second quarter of 2004, when it jumped to $248,000.
It’s pretty amazing that we’re seeing prices today that we last saw eight years ago. Back then, in the fall of 2003, the median family income was $58,231, and residents of the county were estimated to have 30 percent more income then they needed to cover the price of the 30-year mortgage for a home.
So, homes are a lot better deal today than they were eight years ago. That’s partly because mortgage rates are at all-time lows.
The WSU report last week said the median prices statewide had dropped 9.5 percent.
In Island County, the median was $250,000, down 5.7 percent. Island County residents had an affordability index of 143.1 percent, meaning they had 43 percent more income than they needed to buy a median priced home.
There’s still enough uncertainty about the economy and about what will happen to the housing market in recent months to keep many potential home buyers on the fence. But if you’re in that group, I hope the numbers help you put things in perspective.
Crellin told The Associated Press that today’s homes are quite affordable for households with good credit and jobs. That’s certainly the case in Snohomish County, where prices have fallen further than in many others.
Mike Benbow: 425-339-3459; benbow@heraldnet.com.
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