The slowing real estate market appears to be making it a little easier to purchase a home locally, according to a recently released report.
The Washington Center for Real Estate Research at Washington State University released its Housing Market Snapshot, which uses an affordability index to track a family’s ability to make payments on a median-priced home. Whatcom County’s overall affordability index score was 92 for the first quarter of 2008, up more than 10 points from six months ago. The latest first-time homebuyer index was 51.5, up about five points since the end of September.
An index score of 100 means there is a balance between the ability to pay and the cost. The lower the score under 100, the less affordable housing is.
According to the report, the median home price in Whatcom County in the first quarter was $280,000, down 3.4 percent from a year ago.
Glenn Crellin, director at WCRER, said housing affordability has been increasing across the state during the past two quarters because, while home prices have decreased or remained flat, home loan interest rates have dropped and incomes have risen.
“All three factors have played a role, but the slowdown in home prices has been the biggest factor,” Crellin said.
While the affordability numbers have risen as the real estate market has slowed, there is still a long way to go to fix the home-affordability issue, said Paul Schissler, executive director at Kulshan Community Land Trust, a group that holds land with the goal of creating affordable home ownership. He noted that Whatcom County’s index for firsttime homebuyers was the sixth-lowest among the state’s 39 counties.
“We’re not seeing many price deductions for the starter homes, and the current index number shows there is still a huge gap for first-time homeowners,” Schissler said. “Whatcom County has some catching up to do, which is difficult because the popularity of this area has put home ownership out of reach for many people who live here.”
However, there seems to be an uptick in home sales around the median price range heading into the peak home buying season, said Jon Hansen, owner of Lakeway Realty.
“It’s not like things are suddenly hot, but there has been more activity in that $260,000 to $295,000 price range,” Hansen said. “I think what’s happening in that price range is, many may have had the means, but were sitting on the sidelines because of the national headlines about the market. With interest rates low, and with salaries going up, maybe that has them looking again.”
Local first quarter numbers appear to back up Hansen’s observation.
While Whatcom County home sales in the first quarter were down 12.8 percent overall compared to the same time in 2007, according to the WCRER study, the one price range that has remained active has been homes between $250,000 and $299,000. According to a study done by Coldwell Banker Miller-Arnason, the number of Whatcom County homes sold in the first quarter between $250,000 and $299,000 was nearly identical with the first quarter of 2007.
Heading into the peak buying months, Crellin said overall it may take a further rise in the affordability index to get more potential buyers looking again.
“This summer we’ll have to watch to see if interest rates start drifting upward or whether credit tightens further, because that will have an impact on affordability,” Crellin said.
Hansen is optimistic, saying he’s noticed much more interest this month.
“We’re getting many more calls asking about listings and there are more pending sales now than earlier this year,” Hansen said. “It has the feel that the market is going back to a cyclical busy summer market that we previously have seen.”