Washington, DC, February 22, 2012

Existing-home sales rose in January, marking three gains in the past four months, while inventories continued to improve, according to the National Association of Realtors®.

Total existing-home sales¹, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.3 percent to a seasonally adjusted annual rate of 4.57 million in January from a downwardly revised 4.38 million-unit pace in December and are 0.7 percent above a spike to 4.54 million in January 2011.

Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favorable market conditions. “The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents.”

Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, which represents a 6.1-month supply² at the current sales pace, down from a 6.4-month supply in December.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun said. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said buying power is enticing more potential home buyers. “Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” he said. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record low 3.92 percent in January, down from 3.96 percent in December; the rate was 4.76 percent in January 2011; recordkeeping began in 1971.

The national median existing-home price³ for all housing types was $154,700 in January, down 2.0 percent from January 2011. Distressed homes⁴ – foreclosures and short sales which sell at deep discounts – accounted for 35 percent of January sales (22 percent were foreclosures and 13 percent were short sales), up from 32 percent in December; they were 37 percent in January 2011.

“Home buyers over the past three years have had some of the lowest default rates in history,” Yun said. “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”

All-cash sales were unchanged at 31 percent in January; they were 32 percent in January 2011. Investors account for the bulk of cash transactions.

Investors purchased 23 percent of homes in January, up from 21 percent in December; they were 23 percent in January 2011. First-time buyers rose to 33 percent of transactions in January from 31 percent in December; they were 29 percent in January 2011.

Forty-seven percent of NAR members report that contracts settled on time in January; 21 percent had delays and 33 percent experienced contract failures. Contract cancellations are unchanged from December but were only 9 percent in January 2011; they are caused largely by declined mortgage applications and failures in loan underwriting from appraisals coming in below the negotiated price.

Single-family home sales rose 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December, and are 2.3 percent above the 3.96 million-unit pace a year ago. The median existing single-family home price was $154,400 in January, down 2.6 percent from January 2011.

Existing condominium and co-op sales increased 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December but are 10.3 percent lower than the 580,000-unit level in January 2011. The median existing condo price was $156,600 in January, up 2.0 percent from a year ago.

Regionally, existing-home sales in the Northeast rose 3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. The median price in the Northeast was $225,700, which is 4.2 percent below January 2011.

Existing-home sales in the Midwest increased 1.0 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. The median price in the Midwest was $122,000, down 3.9 percent from a year ago.

In the South, existing-home sales rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. The median price in the South was $134,800, which is 0.3 percent below January 2011.

Existing-home sales in the West jumped 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. The median price in the West was $187,100, down 1.8 percent from a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Sales rose on a seasonal basis more than 10% in the Northeast, 8.3% in the Midwest, 2.9% in the South and 2.6% in the West.

The third straight monthly sales increase was encouraging. And economists noted that conditions are in place for further gains this year: Prices have declined. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might be open to buying this year. And home construction picked up in the final quarter last year.

“There’s no denying that home sales are still very low,” said Paul Dales, an economist with Capital Economics. “But after having risen in each of the last three months … it is clear that a housing recovery is now well under way.”

“With layoffs slowing sharply, hiring rising and consumers’ confidence rebounding, the pre-conditions for a sustained recovery are falling into place,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

– “Home Sales Pace Increases in December,” by Derek Kravitz, USA Today, Jan. 20, 2012.

Signs of Possible Housing Market Improvement in 2012

Mortgage rates will remain very low [in 2012], Freddie Mac predicts, at least in the beginning of 2012, and for all of 2012, it expects home sales to grow between 2% and 5% from 2011 sales.

“With the new year comes a sense of cautious optimism,” said Freddie Mac chief economist Frank Nothaft. “There are some positive signs in the job market and consumer confidence [and] housing is starting to raise hopes for continued gradual economic recovery.”

– “Home Sales Up as Much as 5% in 2012,” by Jeff Clabaugh, Washington Business Journal, Jan. 18, 2012.

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit. Market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability. Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

– “Housing Crisis to End in 2012 as Banks Loosen Credit Standards,” by Krista Franks, DSNews.com,
Jan. 24, 2012.
According to the CoreLogic MarketPulse report, which provides insight into the current and future health of the U.S. economic climate with particular focus on housing and mortgage metrics, there is anticipation for improvement in both the broad economy and the housing market in 2012. “While 2011 was clearly a challenging year, there is a lot to be positive about looking ahead to 2012,” said Mark Fleming, CoreLogic Chief Economist.

– “CoreLogic Releases New MarketPulse Report,” PR Newswire, Jan. 18, 2012.

According to an analysis of home price trends in more than 380 U.S. markets based on the Fiserv Case-Shiller Indexes, housing affordability continues to improve, with the ratio of monthly mortgage payment to median family income the lowest since 1994. Almost half of U.S. metro markets are projected to see modest home price gains by Q3 2012.

David Stiff, chief economist at Fiserv, pointed to encouraging trends in the U.S. housing market. “We stand by our projection that average U.S. home prices will move sideways in 2012. But we do anticipate that increasing sales activity will begin to drive small increases in prices in as many as half of U.S. metro areas,” Stiff said.

– “Home Prices Reach New Low, but Stabilization and Recovery Are in Sight,” BusinessWire, Jan. 30, 2012.

Fannie Mae Survey: 71% Say that it’s a Good Time to Buy a House

A majority of Americans recently surveyed say now is a good time to buy a home. That’s no surprise, given that record-low mortgage interest rates and bargain home prices are boosting affordability. According to 71% of the 1,000 people surveyed by Fannie Mae in December, now is a good time to buy a house. But only 11% think it’s a good time to sell.

“For people to start buying in larger volume, they need to see home prices go up a bit,” says Ingo Winzer, president of Local Market Monitor, a firm that analyzes housing markets for bankers.

– “Housing Remains a Buyer’s Market,” by Amy Hoak, MarketWatch, Jan. 30, 2012.

Housing affordability conditions improved in most metropolitan areas from softer existing-home prices and record-low mortgage interest rates in the fourth quarter, with rising sales and lower inventory creating more balanced conditions, according to the latest quarterly report by the National Association of Realtors®.

Introduced with this release is a new annual metro-level housing affordability index, with historically favorable conditions dominating across the country.

The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas1 (MSAs) in the fourth quarter from a year earlier; two were unchanged and 118 areas had price declines.

Lawrence Yun, NAR chief economist, said the figures reflect greater home sales activity at lower price points. “Sales have risen strongly in lower price ranges from one year ago, while sales at the upper end remain sluggish,” he said. “More importantly, we’re seeing a consistent trend of declining inventory, which means supply and demand conditions are becoming more balanced in more areas, which will help stabilize home prices.”

The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2 percent from $170,600 in the fourth quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes2 – foreclosures and short sales which sold at discounts averaging 15 to 20 percent – accounted for 30 percent of fourth quarter sales; they were 34 percent a year earlier.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times because the level of distressed sales, which artificially depress median prices, can vary notably in given markets. Annual price measures, also reported today, generally smooth out any quarterly swings.

“Broadly speaking, the very middle of the country, from the Dakotas and Nebraska to Oklahoma and Texas, has experienced very stable home price trends because of stronger job creation in those areas,” Yun said.

Total existing-home sales,3 including single-family and condo, increased 5.9 percent to a seasonally adjusted annual rate of 4.42 million in the fourth quarter from 4.17 million in the third quarter, and were 9.2 percent above the 4.04 million pace during the fourth quarter of 2010. All regions rose from the third quarter and from a year ago.

At the end of the fourth quarter there were 2.38 million existing homes available for sale, which is 21.2 percent lower than the close of the fourth quarter of 2010 when there were 3.02 million homes on the market.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said market conditions vary widely around the country. “Even with record high housing affordability conditions, all real estate is local,” he said. Both buyers and sellers need to be aware of what works in their local market, and Realtors® are the best resource because they have unparalleled knowledge of local market conditions and options.”

NAR’s national Housing Affordability Index rose to a record high 184.5 in 2011, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power; recordkeeping began in 1970.

An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small downpayments, the affordability levels are relatively lower.

Metro areas with the greatest housing affordability conditions in 2011 include the Detroit-Warren-Livonia area of Michigan, with an index of 383.4; Toledo, Ohio, at 242.9; and Decatur, Ill., at 236.8. Only 24 out of 152 metros measured had an affordability index below 100 in 2011.

“Clearly, the Midwest has the greatest concentration of areas where home buyers have the strongest purchasing power, followed by the South,” Yun said. “Metros on the West Coast and along the Northeastern seaboard have generally higher-priced homes, which account for lower affordability.”

Between 2010 and 2011, in markets where comparisons are available, all but 2 out of 148 areas showed improvement in housing affordability, and 69 MSAs had double-digit increases in affordability conditions.

The share of all-cash home purchases in the fourth quarter was 29 percent, unchanged from the third quarter; they were 30 percent in the fourth quarter of 2010. Investors, who are drawn by bargain prices and account for the bulk of cash purchases, accounted for 19 percent of transactions in the third quarter; they were 20 percent in the third quarter and 19 percent a year ago.

First-time buyers purchased 33 percent of homes in the fourth quarter; they were 32 percent in both the third quarter and the fourth quarter of 2010.

In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $160,800 in the fourth quarter, which is 1.7 percent below the fourth quarter of 2010. Ten metros showed increases in their median condo price from a year ago, one was unchanged and 43 areas had declines.

Regionally, existing-home sales in the Northeast rose 6.3 percent in the fourth quarter and are 3.7 percent above the fourth quarter of 2010. The median existing single-family home price in the Northeast fell 4.6 percent to $229,200 in the fourth quarter from a year ago.

In the Midwest, existing-home sales increased 7.0 percent in the fourth quarter and are 14.1 percent higher than a year ago. The median existing single-family home price in the Midwest declined 3.3 percent to $134,100 in the fourth quarter from the fourth quarter in 2010.

Existing-home sales in the South rose 3.8 percent in the fourth quarter and are 9.1 percent above the same quarter in 2010. The median existing single-family home price in the South was $146,500 in the fourth quarter, down 3.8 percent from a year earlier.

Existing-home sales in the West increased 8.1 percent in the fourth quarter and are 8.4 percent higher than a year ago. The median existing single-family home price in the West declined 4.2 percent to $205,200 in the fourth quarter from the fourth quarter of 2010.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Anyone in the real estate industry for any length of time realizes that the education required and the resources necessary to be a true industry professional have dramatically increased over the last two decades. In today’s volatile market, it is necessary to have a true real estate professional if you want to sell your home for the best possible price in the shortest amount of time – and make sure the deal gets to the closing table!

The National Association of Realtors (NAR) explained in a recent Existing Sales Report that 18% of all contracts were cancelled in the previous month. This compares to 16% the prior month and 9% in August of 2010.

The good news is homeowners have realized that attempting to sell their home on their own is an arduous process best left to an industry expert. According to NAR’s 2011 Profile of Home Buyers and Sellers, the percentage of sellers selling on their own, known as For Sale By Owners (FSBOs), has dropped almost in half over the last 20 years:

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If you are selling a home in today’s confusing real estate market, it is best to take on the services of a local real estate expert. He/she will guide you through each step of the transaction thereby increasing the likelihood that there will be fewer inconveniences for you and your family.

Here are the five main areas of confusion the survey revealed:

•Appreciation: About 42 percent of home buyers believe home values will appreciate by 7 percent a year. Reality: Historically, home values in a normal market appreciate by 2 to 5 percent in a year.
•Mortgage insurance: 41 percent of buyers think they will have to purchase private mortgage insurance, regardless of the amount of their downpayment. Reality: Buyers only need to purchase PMI if their downpayment is less than 20 percent of the home’s purchase price.
•Appraisals: 56 percent of the buyers said the purpose of the appraisal was to determine if a home was in good condition. Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value.
•Home owner’s insurance: 37 percent of home buyers said that buying home owner’s insurance is optional. Reality: Lenders require homebuyers to purchase homeowner’s insurance.
•Ownership: 47 percent of home buyers said a prospective buyer owns a home after the purchase contract is signed. Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership.
Source: Zillow Inc.

By Kristi Pihl, Tri-City Herald

The Tri-Cities is expected to have one of the top 20 healthiest housing markets in the nation next year.

The Tri-Cities, at No. 17, was the only metropolitan area in the Northwest to make the list created by Builder Magazine and Hanley Wood Market Intelligence.

The healthiest of the 100 largest markets nationwide were determined using home prices, employment, population projections, unemployment rates and median household incomes, said Jonathan Smoke, executive director of research for the real estate research firm.

The Tri-Cities does well in all categories, and each is expected to improve in 2012, he said. For example, the area’s home prices are expected to grow by about 3.8 percent next year.

The Tri-Cities might be one of the smaller markets to make the top 20 list, but the area’s economy has been relatively strong during the national housing downturn and recession, Smoke said.

Already, construction permits in the Tri-Cities have been rebounding for more than a year.

The area also has an above-average number of high paying jobs, combined with relatively affordable housing, Smoke said.

And the Tri-City home ownership rate is higher than the national average, he said. It increased to 69.5 percent in July, while nationally the rate is 66 percent and has been declining each year.

The Tri-Cities is the most affordable metropolitan area in the state, said Paul Roy, president of the Tri-City Association of Realtors.

Housing affordability means it has made more sense for families moving to the Tri-Cities in the past decade to buy homes rather than to rent, he said.

An increasing home ownership rate combined with a growing number of households creates a demand for homes, Storm said.

Roy said August and September were disappointing in terms of home sales in the Tri-Cities. Consumer confidence is low, but he expects that confidence to improve.

Through September this year, 2,145 homes were sold in the Tri-Cities, according to a report by Coldwell Banker Tomlinson Associated Brokers of Kennewick.

An average of almost eight homes were sold each day so far in 2011, compared with about nine homes sold a day on average in 2009 and 2010, according to the report.

Roy said October sales should end up better than the same month last year.

There is about eight months of inventory for sale because of fewer sales and more listings, he said. But he expects that anomaly will correct itself after winter.

Inventory is based on the sales pace in the past, he said. And if things pick up to 2008, 2009 or 2010 levels, the housing inventory will be just right.

The Tri-Cities is estimated to have 1,244 new homes issued building permits this year and 1,099 in 2012, according to Builder Magazine’s report.

Rene Dahlgren, director of government affairs for the Home Builders Association of Tri-Cities, said builders expect to see a similar number of permits for new single-family homes next year as this year.

As of September, 1,089 permits for new single-family homes were issued in the Tri-Cities, and about 1,300 total are expected by the end of the year, according to the association.

Dahlgren said that is sustainable and keeps builders relatively busy. But they would like to see some growth.

Unlike the rest of the state, the Tri-City home market has maintained its stability, she said.

– Kristi Pihl:

Read more: http://www.tri-cityherald.com/2011/10/28/1696277/tri-city-housing-market-rated.html#ixzz1c6BZJuFk

October 2011 – Handford has always been an integral part of the Tri-City economy but officials say the region never has been better prepared for another round of job cuts.

Residents are in the process of being weaned off Hanford jobs, thanks in part to the growth of Pacific Northwest National Laboratory, food processing, health care and other services.

Tri-City leaders say this diversified economy will help the area weather the layoffs of 2,000 people at Hanford so far this year and up to another 1,060 more by next fall.

While Benton and Franklin counties’ population has leapt 48 percent to nearly 254,000 in 15 years, the number of Hanford jobs has remained relatively unchanged, said C. Mark Smith, who retired as Richland’s economic development manager in 2005.

The area’s labor force has increased by 42 percent in that time, for about 2.4 percent growth each year, said Ajsa Suljic, regional labor economist for the state Employment Security Department.

And those workers are employed in non-Hanford jobs, including construction, retail and wholesale trade, agribusiness and tourism, Smith said.

The non-Hanford economy has three main parts, agribusiness, which includes food processing and traditional agriculture, retail and wholesale trade, and services, including health care, he said.

Economy better today

The Tri-Cities’ economic situation is better than it was 20 years ago, Suljic said.

But it may not be apparent to the average person.

For example, there are more manufacturers in the Tri-Cities than most people realize, said Carl Adrian, president and CEO of the Tri-City Development Council.

The area has seen growth in manufacturing jobs with companies such as Pasco wheelchair-maker TiLite and Pasco hydraulic jacks manufacturer Bogert Group, he said.

About 10 percent of the state’s food processing happens here, said Dean Schau, Columbia Basin College assistant professor of economics.

ConAgra Foods Lamb Weston, which makes french fries and other frozen potato products, is the fifth largest employer in the area, with about 2,500 employees.

“This is the frozen french fry capital of the world,” Adrian said.

Lamb Weston’s headquarters have been in the Tri-Cities since 1989, said Becky Niiya, communication director for ConAgra Foods. The company expects to keep its headquarters in the area and its employee base stable.

Their Tri-City facilities make frozen french fries and potato products from potatoes grown in the Columbia Basin that are sold at restaurants worldwide, as well as offered at national grocery stores under the Alexia brand, she said.

The market value of the agricultural products produced in Benton and Franklin counties was $993 million, with almost 15 percent of that value sold in the state, according to a 2007 agriculture census, Suljic said.

Tech businesses growing

It isn’t just industries such as agriculture that show promise in the Tri-Cities.

A firm called &yet is a company Gary Ballew, Richland’s economic development manager, points to when he talks about Tri-City job diversity.

Three years ago, Adam Brault started the company, which makes web software and is a consultant for companies outside the Tri-Cities. It now has grown to 15 employees.

Brault said it’s hard to imagine a better place to build a technology business. The Tri-Cities’ high quality of family life makes it easier to recruit talent.

And software is a growing part of the international economy.

“The web is not going to become a smaller part of our lives any time soon,” said the Richland company’s president Henrik Joreteg.

There are quite a number of tech and software start-ups already in the Tri-Cities, Brault said.

&yet started a group called about a year ago for people working with the web, and Brault said it has more than 95 registered members already. It’s important to have a way for those working in technology to collaborate, he said.

Technology is one area that could draw higher-wage jobs, like some of those being lost at Hanford, Adrian said.

Health care growing

Gains in the health care industry also are helping offset the difference between the average Tri-City wage with Hanford jobs and the average wage without, said Schau, who was the area’s state regional labor economist for about 30 years.

And the Tri-Cities has grown more into a retirement community with its weather, amenities, light traffic and relatively low cost of living, he said.

All three Tri-City hospitals make the list of top 20 employers. And there are places in Richland where someone can stand and all they can see are health care providers, Schau said.

Kadlec Regional Medical Center has grown 200 percent in 11 years to about 2,240 employees, said Jeff Clark, Kadlec’s vice president of human resources and planning.

The hospital has expanded services and draws patients from the region with its cardiac services, Neonatal Intensive Care Unit, neuroscience and neurosurgery and a full range of medical specialists, Clark said.

The growing community and aging population are two reasons for the increasing demand for medical care, he said.

Some still go outside the community for medical services, but Clark estimated that the three Tri-City hospitals provide 85 percent to 95 percent of the care the community needs.

Partnerships at work

The region has been working to diversify the economy since 1965, although no one called it that then, Ballew said.

One of the things the Tri-Cities has done well is in understanding that jobs at Hanford are temporary, Smith said.

Effective partnerships in economic development have been created with a level of cooperation that Smith said is unusual.

For example, the Tri-Cities Research District may be in Richland, but Pasco and Kennewick are among the many partners participating in that project.

The research district’s goal is to draw in jobs that will help retain the current work force, said Diahann Howard, Port of Benton director of economic development and governmental affairs.

That means recruiting new companies to the area and supporting startup firms, said Howard, who serves as the district’s executive director.

She said the district is doing better than expected, with a private developer, Innovation Center, that has scheduled $165 million in investments in the research district this year and next. One building is done, and another should be finished this month. The open space in the finished building should help with recruitment.

PNNL and Washington State University Tri-Cities are anchor partners with the district. That will help when leveraging the community’s strengths in agriculture and energy, she said.

Another avenue for future jobs is an energy park on about 1,341 acres of Hanford land that TRIDEC has requested from the Department of Energy.

Adrian said the park could include businesses that generate energy and related companies, such as manufacturers of equipment used in the energy industry.

It’s a unique opportunity because most communities don’t have that much available land for industrial development, he said.

Adrian said TRIDEC has been focusing on attracting value-added agriculture, research and development companies and advanced manufacturing, which includes energy.

They hope to attract businesses that export their products outside of the community, which brings capital back in, Adrian said.

Much of that work is networking, by attending trade shows, gatherings of corporate real estate executives and site selectors and visiting companies in other communities, he said.

“We are trying to plant seeds so that when and if a company does have a project, they know that we are open for business,” he said.

Contractors diversifying too

And it isn’t just the area that has been adding variety.

Even Hanford contractors have diversified.

Lockheed Martin, which provides information technology services at Hanford, also provides data center and information technology services to other government agencies, said Adrian.

And PNNL — the community’s top local employer with nearly 4,500 employees in Richland — has lessened its dependence on Hanford contracts. Less than 7 percent of its current work is tied to Hanford, Howard said.

And new companies have spun out of PNNL, taking research developed there and putting it into practice, Adrian said.

“Hanford is still a big gorilla … but there are a lot of little monkeys too,” Ballew said.

Top 10 industries for jobs in Benton and Franklin counties

* Public administration (includes local and state education and health services), 16 percent.

* Professional, scientific and technical services, 11 percent.

* Administrative and support and waste management andremediation services, nearly 11 percent.

* Retail trade, 10 percent.

* Agriculture, forestry, fishing and hunting (mainly agriculture), 10 percent.

* Health care and social assistance (private ownership), 9 percent.

* Accommodation and Food Services, 7 percent.

* Manufacturing, 6 percent.

* Construction, 5 percent.

* Other services (except public administration), 4 percent.

– Source: Bureau of Labor Statistics and WA Labor Market Information, courtesy of the state Employment Security Department

Major Mid-Columbia employers

Battelle/PNNL, research and development, 4,890

URS, government, 3,400

CH2M Hill, government, 3,096

Bechtel National, government, 2,897

ConAgra, food processing, 2,498

Kadlec Medical Center, health services, 2,242

WA River Protection Solutions, government, 1,670

Washington Closure Hanford, government, 1,600

Mission Support Alliance, government, 1,405

Tyson Foods, food processing, 1,300

Energy Northwest, utilities, 1,198

Kennewick General Hospital, health services, 1,104

Broetje Orchards, food processing, 1,000

Lourdes Health Network, health services, 740

AREVA, manufacturing, 685

Boise Cascade, manufacturing, 572

Lockheed Martin, IT/government, 500

Fluor Federal Services, government, 474

Department of Energy (DOE), U.S. government, 414

Pasco Processing, food processing, 400

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it’s an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation’s ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter “throws money down the drain.” Whether buying is a better deal than renting isn’t a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers’ favor. Stock-oriented folks can think of a house’s price/rent ratio as akin to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody’s Analytics. The average from 1989 to 2003 was about 10, so valuations aren’t quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren’t hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or “points.”) The latest rate is still less than half the average since 1971.

As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index’s historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today’s buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer’s monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. “If you have good credit, a job and a down payment, you can get a mortgage,” Mr. Humphries says. “There’s more paperwork and scrutiny than five years ago, but things are pretty much like they were in the ’80s and ’90s.”

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent “yield.” The median market’s rent yield is 9.3% and Detroit’s is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor’s 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody’s Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. “If the economy slips back into recession, however, we could easily see a 10% drop,” Ms. Chen says.

And property “flipping” can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren’t that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

—Jack Hough is a columnist at SmartMoney.com. Email: jack.hough@dowjones.com

We are enjoying extremely low interest rates, for sure. With the global economy, the national economy and unemployment where they are, no one is predicting a dramatic change in rates any time soon. BUT, on Monday, the Obama Administration floated out some interesting proposals they are considering through the Acting Director of the Federal Housing Finance Agency (FHFA), Edward DeMarco. It appears that two significant changes in housing financing are on the table.

You should know that FHFA is the new regulator that is overseeing the restoration of viability of Fannie Mae and Freddie Mac. They are charged with reducing the risk on loans delivered to the GSEs in order to protect the U.S. taxpayer.

In a speech this past Monday, Mr. DeMarco mentioned two potential changes:

Increasing the role of the private sector to lessen the risk held by the public sector.

The method mentioned was increasing the insurance coverages assumed by the PMI (Private Mortgage Insurance) companies. One result could be higher insurance rates for loans where customers put less than 20% down. The second wrinkle is potentially more damaging…the idea that PMI coverage may be required on loans with 21%-25% (maybe even 30%) down! Clearly, this is an attempt to get more fee income to the MI companies to entice them to remain viable and continue to serve those with less than 20% down. Regardless, the net result is that more people will have to pay more money for private mortgage insurance. “How much?” and “To what extent?” is yet to be defined; however, more costs to more people is bad.

Adjusting fees.

Recognize that the GSEs charge fees. Explaining what they are and why they exist is a topic for a different day. Suffice to say, today, fees are fairly standard geographically speaking. Mr. DeMarco is talking about adjusting the fees (i.e., increasing them) for areas that have proven more risky. This proposal means the hardest hit areas will have the most difficult time recovering because the increased fees always get passed on to the consumer. Rather than “spread the risk”, FHFA is talking about punishing the defenseless.

The predictable outcome of these “strategies” is higher costs to the consumer which makes buying a home more expensive. As costs go up, desire to buy goes down (as does the borrower’s ability to be approved for a mortgage).

Message: Buy sooner rather than later!

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Foreclosure activity in the first half of 2011 dropped in 84% of the 211 metropolitan areas surveyed by foreclosure data firm RealtyTrac.

Despite foreclosure rates improving in most major markets, RealtyTrac analysts believe the slowdown is a side effect of numerous legislative and judicial decisions that are slowing the process as opposed to a genuine clearing of excess inventory.

Cities located in California, Nevada and Arizona dominated RealtyTrac’s list of top ten metro areas with the highest foreclosure rates.

Florida, another market known for taking a hit in the real estate downturn, experienced a slow down in foreclosure activity in the first half, with only one state metro area — Cape Coral-Fort Myers — showing up on RealtyTrac’s list of top-20 cities with the highest foreclosure rates. In the first half of 2010, Florida cities held nine spots on the list.

“Foreclosure activity continued to slow in the first half of 2011, especially in the most foreclosure-saturated markets and in markets where the judicial foreclosure process is used,” said James J. Saccacio, chief executive officer of RealtyTrac. “The 20 metro areas with the biggest year-over-year decreases in foreclosure activity were all in states with judicial foreclosure processes — New York, Maryland, Florida, New Jersey, Connecticut, Massachusetts, and Illinois.

The Las Vegas-Paradise metro area continued to possess the nation’s highest metro foreclosure rate with one in every 19 housing units, or 5.36% of the market, becoming the subject of a foreclosure filing in the first half of the year. That rate is about six times higher than the national average, according to RealtyTrac.

The Reno-Sparks area also ranked high with a 2.96% foreclosure rate.

The Phoenix-Mesa-Scottsdale, Ariz. area, which has the second highest foreclosure rate in the nation, saw 60,985 properties receive a foreclosure filing in the first half. That is down 8% from the previous six-month period and a drop of nearly 17% from a year ago.

Write to Kerri Panchuk.