June 30–If you want to buy a median-priced home in Pierce County with average wages, get ready for sticker shock.
A new analysis shows a single-income family earning the average wage of $49,556 a year will pay more than half of that on housing if they expect to buy.
The report by ATTOM Data Solutions pulls information from federal sources, and shows housing prices are skyrocketing as wages stagnate. The median home sale price in Pierce County grew by about 16 percent since last year, while average wages grew by 3.5 percent, ATTOM’s analysis shows.
“Pierce County buyers often need help with the cost of acquiring a loan to purchase,” said Dick Beeson, principal managing broker with Re/Max Professionals. “Sellers get their price, but often assist the buyer in order to make the sale happen.”
Nationwide the picture is similar, with a red-hot housing market fueled by population growth and a relative lack of homes for sale reaching a fever pitch on the West Coast.
Only about a month of inventory is on the housing market for buyers to choose from in King and nearby counties. Nationwide, the figure rises to about three months. A balanced market, where buyers and sellers are on even footing, is three to six months worth of inventory.
Pierce County residents earning the single average income will spend more than half of their paychecks on mortgage payments, the analysis shows. Housing is considered affordable when people pay 30 percent or less of their paychecks on those costs, according to the U.S. Department of Housing and Urban Development.
Locally, each home for sale usually generates multiple offers, and cash offers tend to fare better than loans.
The share of cash offers varies by city.
“The percentage of all-cash sales runs from a high of 21 percent of all sales in Gig Harbor to a low of 8 percent in Lake Tapps/Bonney Lake area,” Beeson said.
“Cash sales have been spurred on by cross-county buyers, Seattleites, who come into town with a pocket full of cash from selling their Seattle/King County home for astronomical prices.”
A median-priced home in King County in May was $726,000; in Pierce County it was $355,000.
A recent report by Harvard University’s Joint Center for Housing Studies shows younger generations are renting longer before buying their first homes.
Nationwide, rents have risen about 20 percent between 1990 and 2016, according to the Harvard report, while median household income has risen by 7 percent in roughly the same time.
There’s also an earnings gap between owner and renter households. In 2016 dollars nationwide, homeowners’ median earnings were $72,600 compared to $37,500 for renters.
Millennials, those born between 1981 to 1996, are about to be the largest home buying group in the nation’s history.
The generation is entering its 30s, the Harvard report says. They are also starting to marry, though at a slower clip than previous generations.
In counties where home prices have surged the fastest, birth rates dropped, according to a study by real estate data firm Zillow. The study postulates the growing cost of housing and child care are linked to lower birth rates. In one survey, 82 percent of women said they wanted to be financially established before having children.
A third of young adults, aged 18 to 34, still live with their parents — and they outnumber those who live with spouses, the U.S. Census Bureau reported last year.
Though many millennials remain saddled with tens of thousands of dollars in student loan debt, they still are able to offer significant down payments for homes, thanks to mom and dad, said real estate agent John Douville with Windermere Professional Partners.
“They don’t have large reserves of cash,” he said of millennial buyers. “These parents who had opportunities to buy homes in an easier market when the cost of living was lower, they have incredible equity and they want to give it to their kids so they can experience something similar for themselves.”
Young or first-time home buyers also tend to take advantage of federally backed loans, including those available to veterans and service members, even though Veterans Administration and Federal Housing Administration loans tend to come with more paperwork than conventional offers.
VA and FHA loans are most prevalent in Lakewood, Parkland, Spanaway, South and East Tacoma, representing nearly 50 percent of all sales in in these areas, Beeson said.
Buyers in some areas of Pierce County are getting help from sellers contributing money to the buyer’s closing costs.
In Parkland and Spanaway, the percentage of FHA and VA sales having some seller contribution runs as high as 61 percent. In North Tacoma and Gig Harbor, less than 10 percent of all sales attributed to government loans, according to Beeson.
“East Pierce County (Puyallup, Lake Tapps, Graham) contribute half of all the total sales in the past six months, with a one-fourth of their sales being government-sponsored loans,” he said.
Sellers still might be in control, but Beeson noted “on average, nearly 40 percent of FHA and VA sales have seller’s concessions (the paying of buyer’s closing costs) and on average nearly 30 percent of all conventional sales do as well.”
The scenario is the same for Thurston County buyers, Beeson said.
“Thurston County has experienced similar growth compared to Pierce County,” he said. “While prices remain slightly less overall, there tends to be fewer cash sales, on average about 13 percent of all sales.”
“Thurston County buyers look like buyers who are buying in the South and East parts of Pierce County.”
“Nearly half of all Thurston County sales include an FHA or VA loan. Sellers are expected to assist buyers with their closing costs similar to what’s occurred in Pierce County.”
That’s an increase since the first part of 2017, when about 40 percent of buyers used FHA or VA financing to buy a home, according to data from the Northwest Multiple Listing Service.
This article provided by NewsEdge.