New homebuyers feeling the pain

In what’s becoming a familiar refrain for anyone hoping to purchase real estate in Spokane County, a recent study showed that property values are up and affordability is down.

But the good news is Spokane is still one of the most affordable places in Washington State to buy a home.

A study by the Washington Center for Real Estate Research at Washington State University found that first-time homebuyers in the county and state are feeling pinched.

Glenn Crellin, the center’s director and pioneer of the Housing Affordability Index, said the pain is being felt elsewhere.

“It’s a national phenomenon,” he said.

People looking to buy a first home in Spokane County had only 75.4 percent of the income they needed to buy a median priced-house in the fourth quarter last year, the report said. The median means half the houses are more expensive and half are less expensive.

“Certainly, the rapid increase in prices is accelerating the process. But the fact that interest rates are going up creates, in essence, a double-whammy,” Crellin said.

In Spokane County, middle-income families still had more than enough money to buy a median-priced home, although the affordability index fell sharply. In the fourth quarter last year, middle-income homebuyers had 135.5 percent of the money they needed to buy a median-priced home, which cost $168,700. In the same period the previous year, that group had 169.2 percent of the money needed for a median-priced home.

WSU researchers base the findings on a formula called the Housing Affordability Index. The index measures the ability of a two-person middle income household to purchase a house. It looks at income versus the costs of buying a home, factoring in a down payment and 30-year mortgage at current interest rates.

A rating of over 100 is good, meaning people have more than enough money to buy a home. A rating of under 100 means that lenders may ask for higher down payments or go beyond typically accepted underwriting standards.

For first time homebuyers, the index formula uses more modest wages and a down payment and 30-year mortgage for a lower priced home.