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ECONOMIC OVERVIEW
Washington State finished the year on a high, with jobs continuing to be added across the region. Additionally, we are seeing decent growth in the area’s smaller cities and towns, which to date have not benefitted from the same robust growth as the larger metropolitan markets. Unemployment rates throughout the Eastern Washington region continue to drop and several markets are getting close to full employment. In the coming year, I anticipate that we will see income growth starting to rise as companies look to recruit new talent and keep existing employees happy.
HOME SALES ACTIVITY
- Sales activity in the Eastern Washington market areas saw a 13.4% increase compared to the same period in 2015. In total, there were 3,630 home sales in the fourth quarter of this year.
- Sales rose at the fastest rate in Walla Walla County, which had a 30.4% increase over Q4 2015. There were also noticeable increases in Kittitas and Okanogan Counties.
- A majority of counties in the region saw home sales improve relative to the fourth quarter of 2015, but two counties did experience declines. The largest drop in sales was seen in Whitman County.
- Sales are a product of supply and, unfortunately, the number of homes for sale in Eastern Washington is well below historic averages—and trending lower. Unless we see more listings come on the market, this will likely have a negative impact on sales growth in 2017.
HOME PRICES
- Average prices in the region rose by 10.2% year-over-year to $230,102. Double-digit price growth is unsustainable, but I expect to see prices slow somewhat as interest rates rise.
- Kittitas County saw the greatest price growth, with homes selling for 21.6% above that seen a year ago.
- All of the counties in this report saw prices rise when compared to the fourth quarter of 2015, with all but two increasing by more than 10%.
- The key takeaway here is that the market still clearly favors sellers over buyers.
DAYS ON MARKET
- The average number of days it took to sell a home in the region dropped by 16 days when compared to the fourth quarter of 2015.
- The average time it took to sell a home in the region was 69 days.
- Douglas County was the only area where the average days on market rose (from 42 to 57 days).
- Counties where homes sold the fastest were Franklin and Benton, where it took just over a month to sell homes.
CONCLUSIONS
The speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economic factors. Economic growth in Washington State continues to trend well above the nation and it is one of the fastest-growing regions in the country. Housing markets throughout the state have benefited greatly from this economic vitality. Home prices continue to increase while the number of homes for sale remains stagnant. The average number of active listings in the fourth quarter was 21% lower than the same period a year ago, and pending sales were 7% higher. As such, the market remains staunchly in favor of sellers, even with interest rates that jumped in December.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.
