King County home sales and prices continued to rise in the second quarter, pushing down affordability, according to a new report.
Sales of existing homes rose by a seasonally adjusted 3.2 percent from the first quarter and 17.2 percent from a year earlier, the Runstad Center for Real Estate Studies at the University of Washington reported. The median resale price was $370,800, up 15 percent from the first quarter and 6.5 percent from a year earlier.
The most notable statistic in the report had to do with statewide sales. While the actual number of sales rose from the first quarter to the second, sales declined by 2.6 percent after adjusting for typical seasonal variation.
“It means that the market didn’t increase as much as it usually does between the first and the second quarters of the year,” center Associate Director Glenn Crellin said Thursday. “And that’s consistent with the fact that overall economic statistics haven’t been as strong in the second quarter as they were in the first.”
But good job growth, particularly in the central Puget Sound area, should buoy the situation going forward, Crellin said. “I think we’re going to be looking at strengthening housing markets for the next few quarters.”
Other factors likely to boost sales are rising prices and, finally, indications that mortgage interest rates are starting to inch up, Crellin said. These will motivate buyers to act now, he said.
But these factors are lowering home affordability. The median-income family made 131.9 percent of what was needed to buy the median-price house in King County in the second quarter, down from 146.2 percent in the first quarter, the center reported.
First-time-buyer families made 72.7 percent of the income needed to afford a starter home, down from 76.7 percent in the first quarter.
The biggest potential cloud for the area’s housing market is the same one that’s been lingering for a while now — homes in or under threat of foreclosure.
The Mortgage Bankers Association reported Thursday that 6.9 percent of Washington mortgages were at least 90 days past due or in the foreclosure process in the second quarter. That’s nearly 80,000 loans.
This “points to the biggest challenges that we have,” Crellin said. “I had hoped that their data was going to show a decline in the delinquent inventory because of the strength in the market, and it didn’t.”
Homes sold through or under the threat of foreclosure tend to carry lower prices, so they weaken the market.
One reason this hasn’t happened much this year is that the actual number of foreclosures “really has fallen off,” Crellin said. “We’ve got a significant amount of properties out there that are still in that foreclosure limbo. Something has to happen to them. …
“The rat isn’t moving through the snake as rapidly as I expected it to.”
Mortgage Bankers Association Chief Economist Jay Brinkmann noted in a news release that Washington had the second largest increase in foreclosures started, after new filing requirements delayed new foreclosures in the first quarter.
Looking at the nationwide situation, Brinkmann said:
Mortgage delinquencies were up only slightly over the last quarter. Perhaps more important than the small size of the increase, however, is the fact that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year. This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate. Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will fundamentally depend on the direction of employment over the remainder of the year.
(from Seattle Pi)