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Washington's housing market strengthens in second quarter of 2013

Washington state's housing market continued to advance in the April-June quarter, with four consecutive monthly improvements in home sales activity. Median home prices rose statewide while home affordability dipped a bit, according to the Runstad Center for Real Estate Studies at the University of Washington.

Existing home sales during the second quarter of 2013 increased 5.4 percent from the first quarter, and 21 percent from a year ago, reaching a seasonally adjusted annual sale rate of 93,280 homes. That means that if the pace for the quarter continued unchanged for a year, that number of homes would be sold. This represents the highest sales rate in six years.

"The biggest current impediment to the housing market remains a shortage of homes available for sale,” said Glenn Crellin, associate director of the center. “Construction activity is improving, but builders cannot improve availability overnight. Lenders need to release properties that have been foreclosed, but are still owned by the lender to allow the market to stabilize and prevent renewed bubble conditions."

While quarter-to-quarter home sales increased in only half of Washington’s 39 counties at seasonally adjusted annual rates, strong markets in the largest urban areas pulled the statewide tally higher, Crellin said. Declines, he said, were all in smaller communities.

"Stronger sales activity is encouraging some owners to put their homes on the market," said Mark Kitabayashi, president of Washington Realtors, which partners with the center to produce home sales statistics. "But in many markets listings are so scarce, buyers don’t have time to see many properties before making an offer — and well-priced, move-in-ready homes sell very quickly, often with multiple offers."

The imbalance between limited supply and strong demand resulted in a median price of $251,100 during the quarter, an increase of 6.4 percent compared with a year ago. The Seattle metropolitan area saw especially steep increases in median prices – 14.7 percent in Snohomish County, 13.8 percent in King County and 12.5 percent in Pierce County. Meanwhile, the median price declined in the Olympia and Yakima metropolitan areas.

In addition to reduced selection and higher prices, buyers are faced with somewhat higher mortgage interest rates. While an improving job market is resulting in slightly higher incomes, it does not offset the other increases, causing a decline in the affordability of housing compared with three months or a year ago.

The all-buyer affordability index was 166.6 statewide, which means that a middle-income family could afford a home 66 percent above the median price provided they have a 20 percent down payment and good credit. All 39 counties recorded index values above 100, suggesting that middle-income families statewide could afford a median-price home.

The news was worse for renters seeking to purchase their first home. The statewide measure dipped back below 100, registering a score of 99.5, with 14 counties similarly below 100. Since it is traditionally a challenge to obtain that first home, Crellin said he thinks a first-time buyer index of 80 represents a reasonable opportunity for renters to qualify for a home. Unfortunately, five counties, including King County — which recorded the lowest index in the state (71.0) — fell below that line.

Sales, median home prices and affordability data for each of Washington's 39 counties are available on the Runstad Center's website.

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