Home Prices Soaring

Here's an interesting article from the Wenatchee World, discussing the current Wenatchee and surrounding area real estate market.


Home prices soaring
By Christine Pratt, World staff writer
Posted May 17, 2007


http://wenworld.com/apps/pbcs.dll/article?AID=/20070517/NEWS04/705170400/0/FRONTPAGE


WENATCHEE -- Median home prices have climbed at a record rate in Chelan and Douglas counties, but the area still remains relatively affordable, except for first-time buyers, local and statewide studies show.


The median price of homes sold in the greater Wenatchee area was $229,000 in March, up 31 percent from $174,475 recorded in March 2006, according to the latest real estate Snapshot report from Pacific Appraisal Associates, a Wenatchee firm. Across the complete, two-county area, the median price increased 32 percent.


Longtime Wenatchee-area home seller Doug Morgan says that high demand and short supply have caused sale prices to soar, particularly for single-story homes in sought-after neighborhoods.


He cited an example of a home in Wenatchee's popular Western Heights subdivision that sold for $239,000 in September last year and then resold recently for $297,900 -- an appreciation of about 24 percent. In 2003, before the housing boom, the same house sold for $149,900. Since then, the home's value has appreciated 98 percent.


"This is the biggest price increase we've ever had," says Wenatchee mortgage broker Karen Norlin. "About 15 percent per year has been the largest appreciation we've had until right now."
Soaring home prices in Greater Wenatchee are linked to a reduced supply of homes available for sale in most price categories lower than $300,000, the local Snapshot report shows.


"We no longer have homes in those lower classifications," said Brian Vincent, author of Pacific Appraisal's Snapshot. "Houses have stepped up to the higher price ranges, where inventories are now higher than they've ever been."


Year to date through March, 184 homes sold in Greater Wenatchee, down 12 percent from 208 sold during the same period last year, the Snapshot shows.


But the total dollar value of those sales increased 13 percent to $47.2 million from $42 million last year.


Norlin estimates that current price appreciation is not sustainable at its current rates, but says she expects the area to continue to appreciate.


Median prices listed in Wenatchee's local snapshot are only slightly higher than those of a similar report released quarterly by the state Center for Real Estate Research at Washington State University in Pullman.


The WSU study rates housing affordability statewide and nationwide.


Findings through March give Chelan County a housing affordability index rating of almost 103, meaning repeat home buyers have slightly more income than needed at the national average to be able to afford a median-priced home. Douglas County ranks slightly lower with a 96.


The index shows that homes are more affordable in Grant and Okanogan counties, which rated 149 and 121 on the index.


The statewide rating is 89.


Norlin says many of the repeat buyers in the Wenatchee area are from outside North Central Washington and are relocating here or buying second homes.


First-time buyers have a rougher time.


The WSU index shows that first-time buyers in Chelan and Douglas counties have only about 60 percent of the income they'd need to qualify for a mortgage on a typical starter home valued at less than $229,000 in the Wenatchee area.


"It's becoming more and more difficult for first-time buyers," Norlin said Wednesday. "Entry-level policemen or teachers are finding it next to impossible on one income to purchase a home. And a lot of us don't see our area slowing down."


She said first-timers may have the income, but insufficient savings for a sizable down payment. With little money down, monthly mortgage payments are beyond their means, she said.


"This is bittersweet," Norlin says of the growing market. "It's sweet because our area is such a diamond, and people are finding us. It's bitter because we want our kids to be able to come home to Wenatchee. It's almost like that time has escaped."


By contrast, Grant County is one of the state's most affordable for first-time buyers. The index shows that the county's first-timers earn about 94 percent of the income needed to qualify for a home loan. Okanogan County first-timers earn about 74 percent of the income needed to qualify.


Statewide, first-time buyers have about half the income needed to qualify, the index shows.


Christine Pratt: 665-117
pratt@wenworld.com