First quarter data has been released by the WCRER. There’s not much new information about King County that isn’t already in the Seattle Bubble spreadsheet, but it’s worth noting anyway since their audience is somewhat broader than Seattle Bubble’s.
Here are a few quotes from the fluffy, feel-good AP report:
Washington’s housing market remains a pricey bright spot, but that means renters are seeing fewer opportunities to become home owners, a study finds.There were 26,720 homes sold statewide during the first three months of 2007, a 9.2 percent drop from the same quarter in 2006, according to statistics released Tuesday by the Washington Center for Real Estate Research at Washington State University in Pullman.
But the median price of $300,800 in Washington was 7.4 percent higher than a year ago. That compares to a 1.8 percent decline in the national median price for a single-family home during the first quarter.
…
Dennis Rose, 2007 President of Washington Realtors, said Washington’s economy is helping keep home prices high.“Strong job growth, coupled with a commitment to quality of life issues, is helping Washington avoid much of the pain of declining home prices observed in other areas,” Rose said.
The Housing Affordability Index uses median home prices, mortgage interest rates and family incomes to measure the ability of a middle-income family to afford mortgage payments on a typical home.
In Washington, the affordability index climbed for the second consecutive quarter, mostly because the mortgage interest rate declined slightly during the first quarter, the WSU center said.
Is anyone else getting tired of the state Realtors’ It’s A Priority campaign and their endless disingenuous quotes about “quality of life”?
To give you some context on that quote that the Affordability Index “climbed for the second consecutive quarter,” check out this graph (found in the Seattle Bubble spreadsheet):
In King County, after plummeting from 121.3 in the second quarter of 2003 to a low of 69.2 in the third quarter of 2006 (a 52.1 point drop), the index has “climbed” a whopping 1.5 points in the past six months.
Let’s throw a party.
(John K. Wiley, Associated Press, 05.15.2007)
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10 responses so far ↓
1
Deejayoh
// May 16, 2007 at 12:49 pm
Washington’s housing market remains a pricey bright spot, but that means renters are seeing fewer opportunities to become home owners, a study finds.
Um, why would I want to be a homeowner right now? I am absolutely stealing money from my landlord.
2
Mike
// May 16, 2007 at 1:08 pm
Affordability has INCREASED!!!
Trends, regardless of magnitude or historical context, are far more important than objective facts.
3
B
// May 16, 2007 at 1:46 pm
I assume by “fewer opportunities” they mean either:
a) credit for marginal buyers had already began tightening by this time, making it impossible for “owners” to temporarily overextend themselves to get into a mortgage
b) simply a euphemism for people shrugging their shoulders, and waiting for price deflation.
A. above I think is basically impossible - credit has hardly begun to tighten yet. Maybe this explains a little of the decline in Snohomish regional (and condos) that S. Crow posted about recently — however, any hypothetical subprime tightening wouldn’t have been visible in the time period for this study. It might not even be visible in the next release of the data. Still a *LOT* of loose $$ flying around out there - Believe it.
B) I think is a little more likely. I know of several anecdotal cases (including my own) where high-income, financially savvy individuals who could in some cases easily afford 50% down or more, are deciding to stash money elsewhere. Unless you have >2 kids, it’s a no-brainer.
“Opportunities” indeed. Opportunities to line a broker’s pocket with fees, and an agent’s pocket with commissions? No thanks — I’ll take my no-load funds and monthly rent at 45% of equivalent mortgage PITI.
4
Ken-Ken
// May 16, 2007 at 3:03 pm
Funny article up on the seattle times that im sure will get a a lot of comments here, check it out:
http://seattletimes.nwsource.com/html/businesstechnology/2003709453_webcondo16.html
5
Deejayoh
// May 16, 2007 at 3:17 pm
Ken Ken -
did you mean this one?
Prices driving single women from downtown condo market
Love that quote about “demand outstripping supply”. That’s why there are twice as many on the market this year as there were last year…
6
Mike
// May 16, 2007 at 4:02 pm
Regarding the women and condos article…
The remaining units in a new building at Ninth and Virginia were priced between $970,000 and $1.9 million in March.
What perfect timing, right next door both Cosmo and 2200 have over 25% of their units back on the market, with most priced well under a million bucks.
7
Denny Retrograde
// May 16, 2007 at 4:02 pm
It’s fun to count the unsupported “facts” this reporter can pack into each article. I’ve got three fresh ones so far:
1. It’s those darn construction costs to blame for unaffordability downtown.
2. It’s the “females” (in LeslieW’s turn of phrase) who can’t afford downtown prices.
3. To soothe downtown affordability problems we just need to build more in Georgetown, Pioneer Square and SODO.
- Extra credit for statistical magic: the article says 17% of new owners downtown are single women, and that 80% of downtowners are renters. What’s the percentage of single women downtown, renters, existing owners, and new owners combined? Anyone?.. Bueller?…
8
B
// May 16, 2007 at 9:28 pm
I’m going to bite my tongue and try not to make any jokes about who is “out-stripping” who.
I’ve read a few metrics about construction costs actually *falling* as some builders are having trouble, slowing starts, and idling crews as these projects go to completion. It’s not just labor - some supply costs are falling too (was demand driven up by the building bubble, or was it gouging, or was it due to the general commodities bubble of the last few years? I would like to see some analysis if anyone has seen it)
Anyone who buys shelter today without negotiating *HARD* on cost is getting taken.
9
christiangustafson
// May 17, 2007 at 6:30 am
Congratulations, Women of Seattle! By not buying a Belltown condo at $500+ /sq ft, you are avoiding making the worst financial mistake of your life.
There will be a fire sale soon enough.
10
Ravenor
// May 21, 2007 at 7:38 am
Readers here have probably already seen the Seattle Times Sunday piece “Home prices: from sizzle to simmer”, which is essentially a concession that home prices are starting to cool off in the Puget sound area. A key point from that story is the statement that the average wage in King County in 2005 was $50k. Assuming both adults in a household earn that average, and factoring in relatively low interest rates and teaser/adjustable mortages, the recent median home price from your chart above is really not out of reach for a household.
The Times piece also mentions the cyclicality of the Puget Sound real estate market relative to other metros in the country(which I’m sure all of your readers are well aware of). The piece says that during the 2001-2004 recession in Seattle, “home-price appreciation during much of that time coasted at 4 percent or so — roughly half of what it had been in the late ’90s.” I attribute the fact that home prices continued to appreciate even during the recession to pent-up demand from the preceding boom years, the continuance of low long-term rates, and the rise of the creative loan packages.
Homes are still affordable if you and your significant other both make the average wage or better, or if an individual makes significantly more than the average. I have to agree with the Times’ author in that I don’t see Puget Sound medianhome prices dropping significantly unless a large number of people used teaser/neg-am loans.
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