The state of Washington is home to some of the world's most popular corporations. The downside of this, however, is that home prices are above average, especially in the areas where these companies are located, which can put homeownership out of reach for young people who do not work in the tech industry. The state also has two property taxes.
Washington state attracts many home buyers with its gorgeous scenery, temperate climate, and high tech industries. Median real estate values for major Washington metropolitan areas are generally higher than the median values for the US as a whole. Both the Seattle and Vancouver/Portland metro areas have experienced rapid growth which has led to significant home price increases, while the Spokane metro area has remained relatively affordable.
The Washington Center for Real Estate Research has calculated the median home price in the Evergreen State to be roughly $338,000. This represents a 6.6% annual increase from the organization's previous survey. The property analyst also estimates that the number of home sales has been increasing at a very impressive 11.6%. Slightly less than 120,000 homes are sold in Washington every year. With a population of over 7 million, this figure is smaller than expected. Combined a rapid increase in home sales, there is most likely a housing shortage in the state.
Housing affordability has decreased slightly in the Evergreen State, according to the Washington Center. The group calculates affordability to be 123.7 where 100 is the point where a middle-class family has the exact income necessary for a median-priced home. Higher figures represent greater affordability. The 123.7 number means that the typical family will have 23.7% more income than is necessary to qualify for an average home loan. The previous figure was 124.3, which means the state has become slightly less affordable.
The Evergreen State is building fewer homes than it did in the past. At last count, there were 10,889 building permits issued, which is a drop of 8% from a year earlier. With fewer houses being built, prices will probably continue rising.
The National Association of Realtors gauges the overall American market to be somewhat less expensive than Washington. The group places the average home price in the United States to be under $260,000. It also estimates the national affordability index to be roughly 164, which is far beyond Washington State.
The real estate site Trulia shows a heat map of housing list prices in Washington. Dark green represents homes with low values, while dark red is for high prices. The state is mostly light and dark green, with orange and red surrounding the Tacoma, Seattle, and Everett regions. Areas in Haro Strait near the Canadian border also have plenty of orange.
The property company RealtyTrac shows a foreclosure rate of 1 in 3,104 properties in the Evergreen State. This is much better than the national average of 1 for every 1,758 homes.
According to the Washington Center for Real Estate Research, the Evergreen State saw a decline of more than 26% in home sales during the Great Recession of 2007-2008. This was worse than the national average. The think tank also analyzed the number of building permits issued in the state and found that the mortgage crisis had a significant impact there, too. There was a decline of over 42% in permits for single-family homes during the Recession, while multi-family homes saw an even greater decline.
The Center has also looked at the effect the Recession had on home prices. The Evergreen State suffered a 10.4% drop in selling prices from 2007 to 2008, and this reduction was seen in most parts of the state. Klickitat County, a small area, actually saw home prices increase. King County, home to Seattle, saw a drop of 9.5%.
Another issue the Center analyzed was the state's housing affordability index. It found consistent numbers up until the Recession, with significant drops for both first-time buyers and buyers overall. The state had an affordability index of over 120 right before the mortgage crisis appeared followed by a rapid 33% decline. As we have already seen, the index today is back to pre-crisis levels.
The Federal Reserve Bank of St. Louis estimates that home prices for low-tier homes in the Seattle region dropped nearly 44%. After bottoming out in the spring of 2012, they have steadily increased. They reached pre-Recession levels in early 2017 and have continued upward since.
Despite being hard hit by the housing catastrophe, the Evergreen State actually performed better than the nation in the foreclosure arena. Washingtonians saw a foreclosure rate of 1 house out of 631. The national average at that time was 1 out of 452 homes.
The number of houses in Washington that was seriously delinquent during the Recession was also lower than the rest of the country, according to the Mortgage Bankers Association. Only 1.84% of mortgages outstanding in the Evergreen State were more than ninety days past due. The national average was 4.5%.
Homeownership across the state stood at 61.6% in 1995 and rose to a peak of 67.6% in 2005. In the decade after the peak, this rate has returned to 61.6% in 2016.
|WA Rank||US Rank||Metropolitan Area||2016 Pop||2010 Pop||Change||% △|
|2||25||Portland-Vancouver-Hillsboro, OR-WA Metro Area||2,424,955||2,226,009||198,946||8.94%|
|18||515||Lewiston, ID-WA Metro Area||62,675||60,888||1,787||2.93%|
Washington boasts two of the fastest growing metro areas in the United States: Seattle and Vancouver. Growth in Washington is concentrated around these metro areas, with 8 of the 10 fastest growing communities in Washington proximate to Seattle and Vancouver. Seattle is the 91st fastest growing metro area in the country, while Vancouver is the 76th fastest growing. The Tri-Cities metro area in Southeastern Washington has also experienced unprecedented growth during the past decade.
The largest city in the Evergreen State is Seattle with a population of roughly 700,000. The metro area, which includes Tacoma and Bellevue, is above 3.8 million. The local economy has a large technology sector. Amazon, for example, is headquartered in the city. Microsoft is located in Redmond, which is part of the metro area. The city's air and sea ports also provide many jobs.
The median home price in Seattle is a rather pricey $722,000, according to The Seattle Times, the largest newspaper in the state. Most areas of the city have seen significant increases in prices, although a few areas have seen declines. The east side of the city (defined as the suburbs east of Lake Washington) is around $900,000 per home. Clearly, it is very expensive to live in many parts of the metro area. The lowest prices are in Pierce County, which occupies the southeast part of the metro area. Here, the median home price is around $297,000, still above the national average. Many who save on housing offset that by being forced into a longer commute to work each day.
The U.S. Census Bureau reports a median household income of $71,000 for Seattle. Compared to a home price of $722,000, we see a price-to-income ratio of 10.17, which is high.
Many high tech industries are based near Seattle. Employers in these fields and a multitude of cultural options and natural beauty of Puget Sound and the Cascades draw many people to the Seattle area. Although housing prices are high in the Seattle area, the quality of life is also very high and a major draw. Seattle boasts excellent public transportation and schools, as well as many famous restaurants and entertainment venues. Baseball fans can watch the Mariners play MLB games while football fans can watch the Seahawks play NFL games.
Amazon has had such a profound impact on the city that they announced intent to open a second headquarters in a different city where they intend to invest up to $5 billion and create 50,000 high-paying jobs. That, in turn, has caused property market analysts to guide future growth prospects lower for the Seattle area as the metro area digests the recent construction boom.
One of the fastest growing areas in the Evergreen State is Clark County, home to Vancouver (not to be confused with nearby Vancouver, Canada). The county has a population of almost half a million, and it's growing at more than 2% per year, according to Washington State's Office of Financial Management.
Vancouver is also a strong growing metro area because of its proximity to Portland, Oregon. Many Vancouver residents commute to Portland for work. The Vancouver area is home to many export farms growing strawberries, cherries, and apples, although the biggest employer is local and state government. The city is undergoing a downtown revitalization project to make it more attractive to businesses and consumers. The Vancouver area is becoming a popular destination for retirees who favor its mild climate, proximity to Portland and Oregon, which has no sales tax, and the lack of an income tax in Washington state. Vancouver is also a significant rail hub, making rail travel and freight transportation easy and convenient.
The median selling price for a home in Vancouver is $306,000, according to the National Association of Realtors. With a median annual income of $51,000 from the Census Bureau, we see a price-to-income ratio of exactly 6.0, much better than Seattle's, but still high by national standards.
Another fast growing area of Washington is the Tri-Cities area in Southeastern Washington that includes the cities of Kennewick, Pasco, and Richland. The Tri-City area economy is primarily agricultural and focused around the growth of apples, wheat, corn, and wine grapes. The wine industry in this region is second only to California’s Napa valley and brings many jobs to the region. Median home prices in the Tri-City region are roughly a third of the median prices in the Seattle metro area, making low cost of living a major draw to the area. Many residents are attracted by the dry and sunny climate as well.
The most affordable area in Washington State is Lincoln County. Davenport is the county seat. It is located 35 miles from Spokane, which lies on the eastern side of the state. The primary economic engine in Lincoln County is wheat farming. In nearby Spokane, the economy is much more diverse, with mining and forestry employing many people. Government bureaucracies also provide jobs.
According to the Census Bureau, the median household income in Lincoln County is slightly less than $47,000. The median value of owner-occupied homes in the area is roughly $143,000. Thus, we have a ratio of 3.0, which is very good. With jobs in nearby Spokane, Lincoln County offers affordable real estate.
According to the United States Census an estimated 7,288,000 people live in the state of Washington. The state has 66,455.52 mi² of land area, which gave it a population density of 109.67 per mi². Here is a list of cities, towns, villages & Census Designated Places with more than 5,000 residents, with their estimated population as of June 2016 & the 2010 United States Census. For Census Designated Places (CDP) where there was no population estimate available for 2016, the 2011-2015 American Community Survey 5-Year Estimates data was used.
All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. Cities with higher levels of population growth typically see the increased demand drive faster real estate price appreciation.
|Rank||Geography||County||2016 Pop||2010 Pop||Change||% △||Land mi²||Pop Den mi²|
|15||Auburn||King & Pierce||77,472||70,180||7,292||10.39%||29.62||2,615.53|
|South Hill CDP||Pierce||55,592||52,431||3,161||6.03%||18.36||3,027.89|
|26||Bothell||King & Snohomish||44,546||33,505||11,041||32.95%||12.11||3,678.45|
|37||Walla Walla||Walla Walla||32,132||31,731||401||1.26%||12.8||2,510.31|
|East Hill-Meridian CDP||King||29,878||29,878||0||0.00%||8.02||3,725.44|
|Cottage Lake CDP||King||23,703||22,494||1,209||5.37%||22.66||1,046.03|
|Inglewood-Finn Hill CDP||King||22,707||22,707||0||0.00%||5.82||3,901.55|
|Silver Firs CDP||Snohomish||22,153||20,891||1,262||6.04%||6.85||3,234.01|
|Union Hill-Novelty Hill CDP||King||21,510||18,805||2,705||14.38%||24.23||887.74|
|Salmon Creek CDP||Clark||21,301||19,686||1,615||8.20%||6.35||3,354.49|
|Hazel Dell CDP||Clark||20,155||19,435||720||3.70%||4.84||4,164.26|
|Five Corners CDP||Clark||19,662||18,159||1,503||8.28%||5.9||3,332.54|
|Bothell West CDP||Snohomish||19,088||16,607||2,481||14.94%||4.22||4,523.22|
|North Lynnwood CDP||Snohomish||18,829||16,574||2,255||13.61%||3.12||6,034.94|
|Mill Creek East CDP||Snohomish||17,967||15,709||2,258||14.37%||4.45||4,037.53|
|Martha Lake CDP||Snohomish||17,163||15,473||1,690||10.92%||4.55||3,772.09|
|Bryn Mawr-Skyway CDP||King||16,473||15,645||828||5.29%||2.84||5,800.35|
|White Center CDP||King||14,728||13,495||1,233||9.14%||2.24||6,575.00|
|Elk Plain CDP||Pierce||14,252||14,205||47||0.33%||7.69||1,853.32|
|Lakeland South CDP||King||13,460||11,574||1,886||16.30%||4.98||2,702.81|
|70||Lake Forest Park||King||13,266||12,598||668||5.30%||3.53||3,758.07|
|Fort Lewis CDP||Pierce||13,163||11,046||2,117||19.17%||10.27||1,281.69|
|Lake Tapps CDP||Pierce||12,710||11,859||851||7.18%||12.4||1,025.00|
|Prairie Ridge CDP||Pierce||12,495||11,464||1,031||8.99%||4.09||3,055.01|
|Lakeland North CDP||King||12,380||12,942||-562||-4.34%||3.25||3,809.23|
|75||Enumclaw||King & Pierce||11,654||10,669||985||9.23%||4.26||2,735.68|
|East Renton Highlands CDP||King||11,092||11,140||-48||-0.43%||11.32||979.86|
|Lake Morton-Berrydale CDP||King||9,921||10,160||-239||-2.35%||12.28||807.90|
|Walnut Grove CDP||Clark||9,732||9,790||-58||-0.59%||3.83||2,540.99|
|Alderwood Manor CDP||Snohomish||9,337||8,442||895||10.60%||1.96||4,763.78|
|Bothell East CDP||Snohomish||9,307||8,018||1,289||16.08%||2.05||4,540.00|
|87||College Place||Walla Walla||9,142||8,765||377||4.30%||2.66||3,436.84|
|Picnic Point CDP||Snohomish||9,094||8,809||285||3.24%||3.04||2,991.45|
|Lake Stickney CDP||Snohomish||8,930||7,777||1,153||14.83%||1.53||5,836.60|
|Birch Bay CDP||Whatcom||8,404||8,413||-9||-0.11%||16.01||524.92|
|Mount Vista CDP||Clark||7,995||7,850||145||1.85%||5.24||1,525.76|
|95||Milton||Pierce & King||7,970||6,968||1,002||14.38%||2.51||3,175.30|
|102||Pacific||King & Pierce||7,122||6,606||516||7.81%||2.42||2,942.98|
|Summit View CDP||Pierce||7,014||7,236||-222||-3.07%||3.23||2,171.52|
|Lake Shore CDP||Clark||6,957||6,571||386||5.87%||1.64||4,242.07|
|Terrace Heights CDP||Yakima||6,952||6,937||15||0.22%||8.01||867.92|
|Sudden Valley CDP||Whatcom||6,815||6,441||374||5.81%||6.25||1,090.40|
|Clover Creek CDP||Pierce||6,792||6,522||270||4.14%||6.47||1,049.77|
|Otis Orchards-East Farms CDP||Spokane||6,792||6,220||572||9.20%||8.04||844.78|
|Clarkston Heights-Vineland CDP||Asotin||6,590||6,326||264||4.17%||6.02||1,094.68|
|Bangor Base CDP||Kitsap||6,392||6,054||338||5.58%||11.11||575.34|
|114||Woodland||Cowlitz & Clark||5,952||5,509||443||8.04%||3.37||1,766.17|
|115||Ocean Shores||Grays Harbor||5,831||5,569||262||4.70%||8.51||685.19|
|West Side Highway CDP||Cowlitz||5,812||5,517||295||5.35%||2.53||2,297.23|
|Woods Creek CDP||Snohomish||5,652||5,589||63||1.13%||14.03||402.85|
|Country Homes CDP||Spokane||5,573||5,841||-268||-4.59%||1.65||3,377.58|
|Town and Country CDP||Spokane||5,481||4,857||624||12.85%||1.4||3,915.00|
|West Clarkston-Highland CDP||Asotin||5,470||5,261||209||3.97%||2.81||1,946.62|
|East Port Orchard CDP||Kitsap||5,109||5,919||-810||-13.68%||2.48||2,060.08|
Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.
In Washington a loan cannot be made unless the lender discloses to the borrower a summary of all terms relevant to the loan, including fees and discount points, interest rates, any penalties, how loan payments will be adjusted, and any other information deemed necessary. This disclosure must be provided to borrowers within three days of them filing a loan application.
The most popular mortgage in the state of Washington is the 30-year fixed-rate loan. Choosing this term produces the lowest stable monthly payment, although the mortgage will have a higher APR than a shorter-term product. This loan has an interest rate that does not change (it is fixed) over the life of the mortgage. Thirty-year mortgages carry a higher interest rate than 15-year loans, as the lender is guaranteeing a fixed rate for twice as long. Switching from a 30-year mortgage to its 15-year cousin will increase monthly payments, but can cut the amount of interest owed by tens of thousands of dollars over the lifetime of the loan.
Many home loan options are available in the Evergreen State. These include fixed-rate loans and adjusted-rate mortgages (ARM loans). For these products, banks typically want a 20% down payment, although some might accept as little as 3% down. Putting less than 20% down will require you to pay private mortgage insurance, however.
Mortgage lenders also can charge fees for putting less than 20% down. Typically, the smaller the down payment, the larger the fee. Mortgage underwriters can also charge higher APR's for loans with down payments under 20%, and this will lead to a much higher total interest paid during the life of the loan.
The piggyback loan is another type of mortgage available to Washington residents. This is simply two mortgages in one. The piggyback loan can eliminate the need for private mortgage insurance by covering 80% of the home's value with the first loan, while the second loan helps to pay for part of the down payment. This mortgage is a good way to avoid the standard 20% down payment, which is required by most private banks issuing loans.
Credit scores of 740 and higher will qualify for lenders' best rates. Cleaning up your credit report before applying for a home loan can save thousands of dollars in interest. Mortgage lenders usually prefer to see debt-to-income ratios below 40%, but they will look at all variables on an application before making a decision.
ARM loans have a fixed term in the first few years and then change once per year. Although adjustable-rate mortgages usually have a lower initial rate than 30-year fixed loans, interest rates on ARM loans can rise later in the loan. Balloon loans are similar to ARM loans, but they are required repayment in full or refinancing at a fixed date.
As of 2020 the conforming loan limit across the United States is set to $510,400, with a ceiling of 150% that amount in HERA high-cost areas where median home values are higher. The $510,400 ceiling apply across most of the state outside of the Seattle metro region - which has seen a boom in real estate prices as Amazon.com has rapidly grown. Dual unit homes have a limit of $653,550, triple unit homes have a limit of $789,950 & quadruple unit homes have a limit of $981,700.
The following counties contain HERA high-cost areas. Premium properties in the Seattle area may cost significantly more than these limits, requiring borrowers to take out a jumbo loan. Jumbo loans typically have a slightly higher rate of interest than conforming mortgages, though spreads vary based on credit market conditions.
|County||Metropolitan Area||1 Unit Limit||2 Unit Limit||3 Unit Limit||4 Unit Limit|
The Washington Consumer Loan Act authorizes lenders to charge higher interest rates in order to increase loan accessibility to buyers that represent a higher credit risk. This can mean that Washington mortgage rates are often higher than the national average, though the rate charge depends as much on the borrower as the lender.
Besides loans from private banks, there are important government programs that also offer mortgages. The Veterans Administration provides current & former members of the armed services with home loans that require zero down payment. While this sounds like an unbeatable deal, there is a funding fee. It can be reduced by making a down payment.
The Federal Housing Administration also provides mortgages and the governmental agency only requires a 580 credit score with 3.5% down. Lower scores must put more down. Any loan with a down payment of less than 20% must also pay insurance premiums.
USDA loans can help people with low incomes in rural parts of the state qualify for a subsidized low-interest loan.
The Washington State Department of Social and Health Services provides housing assistance to low-income families. An adult needs to be unable to work for at least three months to be eligible for the state's programs.
Reverse mortgages are an option for elderly Washington residents. Anyone over 62 is eligible. The Washington legislature inadvertently banned reverse mortgages in 2008 by requiring unregulated brokers to be covered by the Consumer Loan Act; however, banks and credit unions can still offer reverse mortgages.
Homeowner's insurance policies typically do not cover flooding. Most of the state of Washington is considered to have a very low to low flooding risk. The following counties have a moderate flooding risk: Cowlitz, Ferry, Grant, Island, Whatcom & Yakima.
Thursoton & Whatcom counties have a moderate risk of hurricane storm surges, while Island county has a very high risk of hurricane storm surges.
Home buyers with mortgages in high-risk areas are required to buy flood insurance. Most flood insurance policies are sold by the United States federal government through The National Flood Insurance Program. Under-priced flood insurance in high-risk areas act as a subsidy to wealthy homeowners.
The NFIP does not charge nearly enough to cover the expected costs of its liabilities. The assessments are not sufficient to build any buffer to cover an extraordinary year, such as what occurred with Hurricane Katrina in 2005 or Hurricane Sandy in 2012. Because homeowners don't incur the full cost of building in a flood zone we end up with more houses there than if homeowners incurred the full cost of the flood risk, which exacerbates the government's costs in the next disaster.
Homeowners who live in lower risk areas & are not required to purchase flood insurance heavily cross-subsidize homeowners who are in areas where floods are more common.
Washington has a moderate to high earthquake risk, with the western portion of the state having a very high risk.
Standard rental and homeowner insurance policies typically do not cover earthquake damage, though they usually cover losses caused by fires which resulted from an earthquake. You can supplement your homeowner's insurance with an earthquake policy.
The risk of wildfires is considered moderate to high in the Northeast portion of the state. Fire damages from wildfires & other types of fires are typically covered in most homeowner's insurance policies. If you own expensive items you may want to keep an up-to-date household inventory list which lists specific valuables, such as fine art & jewelry.
There are two property taxes in Washington State. One is the normal county-wide annual tax. The state average hovers around 1%, although it does vary from region to region. According to SmartAsset the effective property tax rate in San Juan County recently was 0.58%, while residents of Pierce County paid roughly 1.2% during the same period.
The average home across the state sells for $406,602 and has an annual propert tax assessment of $3,592. In Settle annual property taxes cost $4,767 whereas the national average is $3,313.
The other property tax is a state-level property sales tax. It is 1.28% and is assessed against the value of any property, residential or commercial, when it is sold. It is normally paid by the seller.
Washington is one of the few states to have no income tax, although it does have a steep sales tax that hovers averages around 8.85% throughout the state. The state sales tax is 6.5%, and each municipality imposes its own tax.
Washington is a community property state. This means money, property, and debts that are acquired during a marriage are jointly held by both husband and wife. Income received by one spouse during a marriage is also the property of the other spouse. The same is true of debts. Credit reports of both spouses must be submitted for VA and FHA loans in community property states. Debts from a non-borrowing spouse must also be considered in Washington.
Washington judicial code allows the choice of non-judicial no deficiency foreclosure or judicial foreclosure. Non-judicial foreclosure is generally the most common in the case of consumer deeds in Washington, although judicial foreclosure can occur on commercial loans. Washington law forbids deficiency judgments on loans secured by deeds of trust. Homeowners who file for Chapter 7 bankruptcy can sometimes keep property valued up to 125 thousand dollars by claiming it as a homestead.
In Washington, foreclosures can be either judicial or nonjudicial. Under the judicial type, foreclosures are handled within a court of law, meaning that a claim is filed by the plaintiff (who will be the lender) against the defendant (who will be the borrower). A judge oversees the proceedings.
Under the nonjudicial system, a trustee auctions off the home in the case of a default. Nonjudicial proceedings are quicker and easier. Another advantage (if you're the borrower) of the nonjudicial process in Washington is that a bank cannot use a deficiency judgment against you if the market price of the home at auction doesn't cover the outstanding mortgage balance. The deficiency judgment would allow the lender to pursue other assets besides the loan's collateral in this situation. This is called recourse.
Under a nonrecourse system, a lender cannot pursue anything other than the collateral that was put up for the loan, which is typically just the house itself. Deficiency judgments are allowed in the Evergreen State if a foreclosure occurs within a court of law. Most foreclosures in Washington occur outside the judicial system, however.
The Evergreen State has many large corporations that provide jobs for Washingtonians. Besides Amazon and Microsoft, Starbucks and Alaska Airlines are based in the state. But median incomes don't justify Washington's high real estate prices in the very areas where most of these jobs are found. The state has bounced back from the mortgage crisis, and prices can only be expected to continue rising. For more information on the Evergreen State's real estate market, check out the following links:
US 10-year Treasury rates have recently fallen to all-time record lows due to the spread of coronavirus driving a risk off sentiment, with other financial rates falling in tandem. Homeowners who buy or refinance at today's low rates may benefit from recent rate volatility.
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