Local housing market slumps in third quarter

The number of homes sold in Whitman County dropped sharply in the third quarter of 2010, coinciding with the expiration of the federal home buyers tax credits.

According to the Washington Center for Real Estate Research, only 260 homes sold between July and October in Whitman County. That number is a 32 percent drop from the same period in 2009 and a 28 percent off the real estate pace of the second quarter 2010.

Glenn Crellin, a WSU professor and director of the center, said the expiration of the federal homebuyer tax credits was directly responsible for the drop.

ÒYeah, it really is. I donÕt see any other significant reason for that type of decline,Ó said Crellin.

Whitman CountyÕs real estate drop was decidedly steeper than the statewide average. Across the state, home sales were 20 percent lower in the third quarter 2010 than the third quarter 2009. Sale activity was also down 27 percent from the second quarter of 2010.

Potential home buyers now waiting for prices to drop even further may lead to a corresponding drop in real estate activity next quarter, according to Crellin.

ÒThat seems to be the expectation of a lot of people,Ó he said. ÒI think they have to be very careful. Interest rates canÕt stay as low as they are forever.Ó

While home prices may fall, an increase in interest rates may offset those potential savings. Crellin said a one point increase in interest rates would need a ten percent drop in home prices to equalize mortgage payments.

Prices for homes sold in Whitman County during the third quarter increased 23 percent. Crellin said that hike was the result of buyers taking a step up in the market. Sellers of higher end properties, primarily in Pullman, had to drop their price to attract buyers. That helped push up the number of sales, but flattened out the median price.

Foreclosures picked up on Whitman County homes during the third quarter, though Crellin noted the number was insignificant when compared to the massive foreclosure rates in more urban areas.