For many of us, 2008 doesn't seem all that long ago and the bottom falling out of the real estate market is still fresh in our minds. Now, several years into the recovery, we are experiencing a surge in pricing and very low inventory levels, at least in the Seattle and surrounding markets. The Puget Sound Business Journal, among other media sources, are publishing concerns of another possible housing bubble. Certainly there are markets that are headed there and it takes a trained eye to see the all of the factors that create such a thing. One such person is Matthew Gardner, Chief economist at Windermere Real Estate headquartered in Seattle WA. In a recent article from the Puget Sound Business Journal dated Dec. 10, 2015, Mr. Gardner sees no obvious signs of a housing bubble, particularly in Seattle. When asked why there is so much talk of a bubble looming, Mr. Gardner had this to say; "I don't know. For it to burst, something bizarre would have to happen that is external to housing values. That said, I do have concerns about certain markets, which are clearly getting priced above the longer-term trend. If we're talking specifically about Seattle, I do not expect to see a collapse in housing prices going forward. The median home price (here) is now about 500K. We will see quite reasonable wage growth to compensate". He goes on to say, "I don't like to see markets that grow double-digit percentage wise annually, because the people in those markets aren't making enough money to service that debt. However, (in Seattle) we are in an economy that will continue to grow more than the national average". Any concerns Mr. Gardner has, involve rising interest rates that decreases purchasing power. With that said, the Seattle market consists of more demand than supply by a long shot. Should that change, price growth will naturally slow.
something
As a broker in the surrounding Seattle market, I have noticed a critical difference in how buyers approach a multiple offer situation of late vs pre-housing collapse of 2008-2011. Buyers are much more conservative in their incremental increase and maximum purchase price to beat the highest offer. In conjunction with that, appraisals are far more conservative along with more strict lending guidelines, resulting in fewer defaults which fueled the last housing crisis.
When asked if he felt a national bubble was forming, Gardner responded saying, "I don't see how it can be. But if you look at some markets--Denver, Dallas & Boston---that are above their long-term averages in terms of price growth, you can say they are not necessarily bubble markets, but they are getting a bit frothy". It is further pointed out how important it is to factor incomes relative to pricing, specifically the San Francisco and San Jose areas with average sales prices over 1 million.
*Link to full article quoted above:
If you wish to reach me for comment or questions please feel free to drop me a message.
Matt Klewin
Designated Broker
Windermere R.E. South Inc.
206-909-8500
Comments(1)