Thursday, December 29, 2011

Home Affordability in Vancouver WA at Record High Level for Q3 2011

One of the "Gifts" the current real estate downturn has given us in Vancouver Washington and Clark County, is that the Home Affordability Index (HAI) is at a very high level.  In fact, the data provided by the Washington State University's Washington Center for Real Estate Research (WCRER) shows we are at a High not seen in at least two decades!

The Quarterly Report prepared prepared by WCRER (Third Quarter 2011 Report can be seen --> Here) is an accumulation of data by County within Washington State, allowing us here in Clark County to see how our real estate market has tracked over time; and to see how we compare to other Counties and the State Average.  The public report is only in tabular form for any given quarter, and we thought it would be informative to prepare a graph, visually showing over time just how amazing the current position is.  The resulting chart below starts with the Second Quarter in 1994 through the Third Quarter of 2011:

Reading the Chart: The Housing Affordability Index (HAI) measures the ability of the Median Household Income (as currently reported by the US Census Bureau) for Clark County to purchase a Median Priced Clark County Home.  The home purchase will be made with a 20% down-payment at the current rate of interest.  A benchmark number of 100 means that the Median Household Income equally matches the requirement to purchase a Median Priced home.  Numbers above 100 mean improved Affordability; while numbers below 100 indicate decreased Affordability.

For the current heights of the HAI, we know that soft home prices and falling home loan rates have weighed in significantly.  On the Household Income measure, apparently Clark County on whole, has not had enough of a drop in income to keep the HAI from rising up.

As we can see the most recent peak in the HAI was at the time of the previous housing recession in the early 2000's.  Once that recovery turned to Boom, and then on to Bubble, the HAI dropped to it's lowest level.  Of note, even at the peak of the Bubble, the HAI for Clark County was just under the 100 benchmark level.

A Word to Wise Home Buyers: we do not expect Clark County and Vancouver WA Homes and Houses to be any more affordable than they are right now!  We've already started seeing home prices firm up, and no one expects home loan interest rates to stay below 4%.  Clark County is also more affordable than most other metro areas in Washington; and we are seeing inbound moves from the Seattle area, for example, as they take advantage of such a move!

We'd love to hear your questions or comments on this topic!

The above information was assembled from data provided by the WSU Washington Center for Real Estate Research, and is deemed reliable but not guaranteed.  The chart was created by John Slocum, Broker with Vancouver WA REMAX using this data.

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