SEATTLE — Washington state’s housing market showed the continuing influence of high demand and tightening supply in the first three months of the year, according to the Runstad Center for Real Estate Studies at the University of Washington.
Pacific County reported some of the best real estate results in Western Washington in the first three months of 2017. Twenty percent more homes were sold during the quarter compared to the same months in 2016, and prices increased by 15 percent to an average of $150,900. The number of residential building permits issued in the county increased 125 percent.
Despite these gains, the Runstad Center still ranks Pacific County as having the most affordable housing in Western Washington.
Elsewhere in Southwest Washington and on the outer coast, an interesting development within regional house prices was the Olympic Peninsula, where the median price in Jefferson County (Port Townsend) was up 19.1 percent on a median price of $353,800 and Clallam County (Port Angeles) was up 13.8 percent on a median price of $256,000.
Grays Harbor County experienced a 4.2 percent decline in first quarter home sales, but prices were up 9.1 percent. Wahkiakum County had a 20 percent increase in home sales, but average prices were only up 4.4 percent.
Aside from Pacific County, in Southwest Washington one of the other bright spots was Cowlitz County (Longview-Kelso), with a 16.5 percent gain in sales numbers and 20.5 percent gain in prices. Lewis County (Chehalis-Centralia) had a steep 37.4 percent increase in home sales, with an 11.2 percent gain in prices.
The statewide median sales price rose to $324,300 in the first quarter, 12.1 percent higher than the same time period last year. While this does not represent an all-time high for statewide house prices, this price represents the highest first-quarter price ever recorded in Washington state.
Similarly, the seasonally adjusted annual rate of existing home sales rose 12.2 percent from the first quarter of 2016 to 107,590 homes. This indicates that the current annual rate of sales is well below that witnessed in previous periods of high house price growth, such as 2003. The low supply of existing homes listed for sale is likely a leading factor promoting rapid house price growth throughout the state.
Breaking down trends by region reveals a high level of variance in house prices throughout the state. Somewhat expectedly, median prices were highest in King County, at $577,300, with a year-on-year increase over 2016 of 11.1 percent. The lowest median prices were found in Lincoln County, at $70,000 with a low number of house sales recorded.
House prices in many other state markets rose significantly, with Spokane up 8.0 percent to a median of $208,100 and Whatcom County (Bellingham) rising 8.4 percent to $329,500. Perhaps not surprisingly, median prices typically rose the fastest in the Puget Sound region.
Interestingly, however, the fastest growth in the region was farther out from King County than expected. For example, median prices in Snohomish County grew by 10.6 percent while in Skagit County prices grew by 14.0 percent. This indicates that some of the demand for housing is likely moving farther away from downtown Seattle in search of more affordable prices.
Other regional markets posted significant price increases with Benton and Franklin counties (The Tri-cities) posting a median price of $232,400, a 6.9 percent increase over the same period last year. Chelan County (Wenatchee) posted a median price of $264,100, up 5.9 percent from 2016, and Walla Walla posted a median price of $209,800, up 4.4 percent from 2016. Yakima’s median house price was $192,700 up 8.6 percent over last year.
Statewide, housing affordability was lower in the first quarter of 2017 than both the first and fourth quarters of last year. The 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 124.3, down from 132.7 in the fourth quarter of 2016. This metric suggests that, given the same down payment and mortgage, a middle-income family can afford a home selling for 24.3 percent above the median price.
Statewide, the first-time buyer index dropped of 4.7 points, ending the quarter at 70.4. This index assumes a less expensive home than a typical family home, lower down payment and lower income. Using the assumption that a first time buyer households would earn 70 percent of the area median household income, the index reveals that they had 70.4 percent of the income required to purchase a typical starter home.
With the overall house price increases noted statewide, it is not surprising that the number of building permits has increased as builders respond to increased demand. In the first quarter of 2017, a total of 8,878 building permits were recorded, an increase of 11.1 percent from the first quarter of 2016.
This report is produced with data from the Washington Center for Real Estate Research, the research arm of the Runstad Center, which is part of the UW College of Built Environments. For much more about the real estate market in Pacific County, see the June issue of Coast River Business Journal in the June 7 Chinook Observer.