by Dr. Patrick Jones
Watching housing prices has become an American pastime. Websites like Zillow and Realtor.com offer often irresistible temptations to check the latest estimate of our and our neighbors’ houses. I doubt that Walla Walla homeowners are immune to this urge.
Beyond an innocent pastime, housing prices play a fundamental role in the local economy. For owners, the value of their home is a bankable asset, and for most Americans the largest asset that they possess. For businesses that have plans to expand or are considering relocating, housing prices factor heavily in their ability to attract new staff and workers. For local and state governments in Washington, property tax revenue figures prominently in their ability to offer a full breadth of public services.
If the average house price goes up, there are winners and losers. Winners are sellers and local jurisdictions; losers are would-be buyers and many businesses. But assessing whether an increase in housing prices is, on balance, positive or negative for a local community depends on key contextual item: any change in income. Obviously, if housing prices rise by 25% over a five-year period but local incomes climb only 10%, buyers will worse off, even perhaps sellers who may not be able to complete plans to move if unable to sell.
However, if the average housing price rises by 25% while the average family income also increases by 25%, the average home purchaser is not worse off.
What has been the recent experience in Walla Walla County, say, over the past four years. Income data for 2025 are not yet available, so let’s consider the period 2021-2024. During this period, heavily impacted by the pandemic, the median resale price rose from an average of $376,500 to $430,450, or cumulatively 14%. (Median is used to arrive at a better estimate of the “middle” of the range of sales; resale obviously excludes new construction.)
And income? As in home prices, let’s also use a more representative view of the “middle” of an income distribution, the median; averages, or means, can be strongly affected by a few high values (outliers). And let’s use household income, since very often a family, or household more generally, will have two members receiving income and contributing to the payment of a mortgage.
In the metro area (Walla Walla and Columbia Counties) over the same period, median household income rose from $65,217 to $72,892, or cumulatively about 12%. (Given the large population difference between the two counties, the value largely reflects Walla Walla’s values.)
In this case, housing prices have certainly risen, but median household income has as well, by nearly the same percentage. So affordability has slipped but not by much.
Yet, if we take a longer view, say, starting in 2016, the conclusion is different. The median resale price in the county in that year was $207,400. The cumulative percentage increase through 2024: 108%, slightly more than a doubling. And median household income over the same time period? An increase of 33%.
Clearly, affordability dramatically worsened over this longer span of time, as price gains outpaced income gains by more than 3:1.
The Trends offers a similar measure of (re-sale) housing affordability in this indicator. It is currently produced by the Center for Real Estate Research at the University of Washington. The measure generally is a ratio of income to housing costs. In the numerator is the quarterly equivalent of (annual) median household income. In the denominator is the quarterly mortgage cost of the median-priced resale house. The denominator then reflects both the purchase price as well as the financing costs, here assumed to be based on conventional 30-year mortgage.
The ratio is expressed as an index, where 100 is the “balanced” value, reflecting that a household doesn’t spend more than 25% of its income on the mortgage. If it spends more, the value slips below 100; if it spends less, the index value lies above 100.
Where is Walla Walla County currently? For the third quarter of 2025, the ratio was 77.5 While an improvement from 2022, it wasn’t long ago, 2021, that the index lay consistently above 100. For several years now, this ratio has been less than 100.
Consequently, it seems safe to conclude that for the median buyer, housing in the county has become unaffordable. Will the index climb back to 100 anytime soon? Unless a dramatic change occurs to the housing stock, such as the construction of much smaller units or even condos, or unless “middle” incomes go up substantially, this prospect is not in the offing. And re-gaining the affordability levels of a decade ago, when the index was greater than 150, seems very remote.