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Wednesday, May 16, 2007

WCRER: Affordability Still at Record Lows

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)

9 comments:

Deejayoh said...

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.

Mike said...

Affordability has INCREASED!!!

Trends, regardless of magnitude or historical context, are far more important than objective facts.

B said...

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.

Ken-Ken said...

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

Deejayoh said...

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...

Mike said...

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.

Denny Retrograde said...

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?...

B said...

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.

christiangustafson said...

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.