It seems like a daily occurrence… another article talking about the housing market. Today’s headline in the Seattle Times Business Section reads… "Seattle market spared the home-price plunge". Click here to read it. The article goes on to describe that the Standard & Poor’s index for the national housing market has dropped 3.2 for the second quarter of 2007 as compared to 2006. During the same time the Seattle area market rose 7.9%
As a Seattle area resident, I view this as good news… we are still bubble proof! The real question is… will we remain so -or- will our market follow the rest of the country?
While there is no "national real estate market" there is a national financing market and it is currently a troubled one. Many buyers who could purchase a few years ago now cannot. For some that is a good thing, for others not so much. Either way, it means there less buyers who can buy. Additionally the current pricing on jumbo loans (those loan amounts over $417,000) are priced significantly higher than they would usually be due to uncertainty in the secondary market for these types of loans.
So as we look into our crystal balls and try to predict the future of the Seattle area market we have to consider the following items:
1. Tightening credit standards which will eliminate some buyers.
2. Rising inventories. As of July – King county had 50% more available homes and condos than in July 2006. Snohomish County had 57% more available homes and condos than in July 2006.
3. Slowing sales. As of July – King County had 6.6% fewer sales year to date sales of homes and condos than in July 2006. Snohomish County had 17.7% fewer sales year to date sales of homes and condos than in July 2006.
4. The Washington economy. This is the shinning star on the list! The regions unemployment rate was down to 4% in King County as of June 2007.
The states strong economy is likely the greatest reason why we have not followed the rest of the country into price stabilization or declines. However, the basic laws of supply and demand are at work in housing just as they are in widgets. If you have rising supply and lowering demand, prices will stop appreciating and potentially drop depending on how far out of alignment the supply and demand become.
The other item that is has been on my list to watch for many years is the "Consumer Confidence Index". It is amazing, but how we feel about the market has as much to do with the market as the markets fundamentals do… supply, demand and available credit. Early in 2006, I saw the warning signs of this. The press had made a decided change towards the negative regarding the national housing market. When I would look into my crystal ball for clients I had frequently mentioned the "X-factor" of consumer confidence. If it turns against real estate, then all bets of appreciation are off. Well things have clearly changed and that impact is beginning to be felt here.
As many of my co-workers begin to express concern for the market and their business, I am not worried. See many of them, (approx 80% of the agents working today) have never witnessed a market like the one we are in, and more importantly the one we may be headed to. As a 19 year veteran I have experienced appreciating markets and depreciating markets. I have the confidence to know that these markets can be successfully and profitably navigated by my clients. This is a true professionals market where the advice and counsel must come from a great depth of knowledge and be made with thought and care, not just for today, but for what the future will likely bring.
So… The real question for Seattle is can credit markets repair themselves and the national market recover before we are pulled into the same boat as the rest of the country? Only time will tell.
Seattle’s Eastside Real Estate Resource
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