MEDIAN HOME RESALE VALUE INCREASING STEADILY -
The boom in the housing market over the past few years has received a lot of attention. Increasing population in Washington State, fewer available lots suitable for building new homes, and a low number of homes available for sale have added to the increasing resale value of homes, not just locally, but across the state and U.S. too.
With the area receiving national accolades, such as making the Forbes list of Best Places To Retire in 2018, Chelan and Douglas Counties can no longer hide as one of Washington State's best places to live, work, and play. Additionally, the growth of the economy on the West side of the Cascade Mountains has extended into the local area creating new jobs, while increased tourism has exposed more people to the advantages of living here. The result is more people from outside the local area, often with greater financial resources than the local residents, bidding on and purchasing homes potentially driving up home prices.
Supply side factors affecting median home resale values include new tariffs on lumber and a combination of skilled labor shortages and young workers not interested in construction work, rising rents, and a decreased number of foreclosures available.
According to the U.S. Department of Housing and Urban Development, Office of Policy Development and Research (HUD), homeownership is a "principal source of wealth accumulation for a majority of Americans [and] also provides a greater degree of insulation from rising housing costs allowing more income to be saved or put to other uses." Homeownership "locks-in" monthly payments (assuming fixed interest loan terms) that become more affordable, provided household income increases, over time.
Affordable housing is important because low income households that pay a high percentage of income on shelter, regardless of renters or homebuyers, are at greater risk of becoming homeless. But strains on the housing market, such as a decrease in the typical number of homes on the market and home values increasing at a much faster pace than wages can have an effect on that accessibility.
HUD also points to new research quantifying non-financial benefits to homeownership, such as 'improved housing quality, satisfaction, and conditions for childhood development." Yet, the agency remains concerned about "the extent to which low-income or minority homebuyers share in the traditional benefits of homeownership".
How do these considerations play out in the greater Wenatchee area? Chelan Douglas Trends covers 15 metrics of housing. Let's consider a key one.
Looking at the Median Home Resale Value indicator, we see the trend line for the combined counties closely follows that of the state; however, it lies consistently below the state.
More specifically, during the second quarter of 2018 (18Q2), the median resale value of homes in:
- The combined counties was $331,678 increasing from $245,148, or by 35% since 2008Q2.
- Chelan County was $334,100, increasing from $251,500, or by 32% since 2008Q2.
- Douglas County was $327,900, increasing from $230,000, or by 46% since 2008Q2.
- Washington State was $373,400, increasing from $291,900, or by 28% since 2008Q2.
While the state has a higher median resale value than the combined counties and for Chelan and Douglas Counties individually, the growth rate since the start of the series for both counties has exceeded the state benchmark.
While not a new phenomenon, it's also important to note at $334,100 during the second quarter of 2018, Chelan County has the highest median home resale value for counties east of the Cascade Mountains. Both supply and demand strains are contributing to the high median home resale value in Chelan County, as well as the popularity of vacation homes. To what degree each of these and other factors are contributing to the high median home resale value in Chelan County is uncertain, but each is a contributing factor.
In 2008, housing affordability in the two counties was the lowest among all eastern Washington metro areas, essentially the same as that of the state average. Since 2008, the median home resale value in the combined counties has increased by 35%; per capita personal income increased by 36%; median household income increased by 26%; and the nominal overall average annual wage increased by 25%. So, wage growth has been a little more sluggish than the growing median home resale value. Checking back on this indicator over the next few years will show us if the wage and housing gap have closed, or widened even further.
Securing affordable housing is an important aspect of Our Valley Our Future's work "tackling tough community challenges and working toward transforming the region into a better place to live, work and play." A variety of housing reports and surveys can be accessed from OVOF's Library webpage.
