A couple presidential administrations ago, the notion of an “ownership society” grabbed headlines. The “compassionate conservatism” of George W. Bush was fond of promoting individual responsibility and government assistance, especially in the arena of home ownership. But home ownership has never been an issue that cleaved along party lines. The Clinton administration also promoted home ownership, supporting programs at the Department of Housing & Urban Development to maximize the rate. Since housing is the largest source of wealth for most American households, encouraging home ownership promoted weather creation, in both administrations’ eyes.
Beyond presidential policies, most Americans would likely agree that home ownership is a significant part of the “American Dream”
By this standard, the Walla Walla metro area stands out as an exemplar. For 2021, Census estimated that the home ownership rate in Columbia and Walla Walla Counties (the metro area) stood at nearly 71%. This is viewable in Trends indicator 5.1.5 and below. In the eight years for which we have estimates, the rate has risen from 61%, or nearly 10 percentage points.
As the graph makes clear, the metro area has departed from the averages of the U.S. and state of Washington over the past three years. The 2021 shares of these benchmarks stood at 65% and 64% respectively. Furthermore, the metro area now sports a home ownership rate that is among the highest, if not the highest, among Eastern Washington metros. The counties with the rates closest in 2021 were Benton and Franklin, with an estimate of 68%.
Some readers might wonder how home ownership in the area can be so high when housing prices have risen so steeply. Indeed, as Trends indicator 5.1.1 tracks, the local median resale price has more than doubled since 2015. In the fourth quarter of 2022, it stood at nearly $411,000, up from nearly $179,000 in the same quarter of 2015.
The simple answer is: despite rising prices, people are still purchasing homes. Equivalently, in the choice of dwelling type – single family resident versus renting – the former is winning market share.
According to estimates from the Washington State Center for Real Estate Research (WRECR), at the University of Washington, the cumulative growth of multi-family units over the 2015-2021 interval was 2.9% For single-family, 5.3%.
Both growth rates are much lower than those of the state. But cumulative population growth in the two counties over the same period has been quite low: 2.2%. This is far lower than the state’s experience.
And the near-term future of home ownership in the two counties? When the 2022 estimates arrive, don’t expect a large change. Housing supply simply didn’t grow that much in the metro area.
If the local market mirrors the national one, this year won’t depart from the weak trend of the construction of single-family homes. Notably, the November Outlook of last year from the National Association of Realtors (NAR) forecasted a continuing decline in sales nation-wide. When Census estimates arrive for this year, the result also shouldn’t be much different from the current rate, given market conditions.
Over time, home ownership rates in the two counties are likely to remain elevated, if only because of demographics. The area is increasingly attractive to the “near old” age segment and they are home purchasers. On the other hand, as Trends indicator 0.1.3 displays, the share of the 18-34 year old demographic isn’t likely to reverse course and grow. It is this segment of the population that provides the largest pool of renters.
Of course, discrete plans matter. If a large project or two succeeds, either in the city or the western part of Walla Walla County, home ownership rates in 2024 will likely climb further. NAR, by the way, has projected a double-digit recovery in housing sales in 2024.
Still, price and more specifically, affordability will remain a wild card. For the near-term, the odds of a continuing decline in local home prices are high, with corresponding increases in affordability. Longer-term, affordability will largely depend on the ability to construct homes in the price ranges of middle-class residents in the metro area.
For now, Walla Walla and Columbia Counties can count themselves as strong members of the ownership society. Odds are that this membership will slightly strengthen over time.