Matthew Gardner: “It’s not a housing bubble”

I’m still not really sure whether or not we’re in the midst of another housing bubble in the Seattle area, but here’s a strong sign that we might be: Local real estate cheerleader and permabull Matthew Gardner is loudly proclaiming that “No, it’s not a housing bubble.

Matthew Gardner
Matthew Gardner (LinkedIn)
No, we’re not in a housing bubble. Now is a good time to ask your boss for a pay raise. And we need to forget about the recession — it was a long time ago.

Those are the conclusions of economist Matthew Gardner.

“I’m an economist, it’s my job to worry and find bad things, that’s why it’s a dismal science,” said Gardner, who works for Windermere Real Estate in Seattle. “I’m trying to find bad things and I’m having a problem with it.”

Try not to laugh out loud at that last bit.

Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them - by David Lereah, National Association of Realtors Chief EconomistWhile Gardner used to at least maintain the illusion of impartiality, working as an independent economist with his own firm Gardner Economics, since 2015 he has been on staff at Windermere as their chief economist. And we all know how impartial economists are when they’re directly employed by real estate salespeople. Exhibit A: The book “Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade – And How to Profit From Them,” written by David Lereah in 2005 when he was Chief Economist for the National Association of Realtors.

In order to have proper context for Gardner’s current prediction, let’s take a look at his track record when it comes to predicting the Seattle-area housing market.

According to an over-the-top positive February 2007 Seattle Times article headlined “The year of the condo in downtown Seattle,” he told “an audience of about 700 that demand for new places to live downtown will remain ‘very positive.'” As we know, that didn’t turn out to be very accurate.

Here’s an excerpt from a May 2007 Seattle Times real estate Q&A:

Q: I expect to see an actual drop in the market sometime around the end of summer. Now taking into account that many of the advertisers in your section of the paper are builders and real estate agents, what is your opinion, why, and when do you expect the present trend to actually start dropping?

A: I believe that we are in a situation where we are seeing a more-rational market and one that is returning to the more-moderate pace that we saw earlier in the decade. This is not a bad thing. I do not think that we are going to see price declines, rather we will see slowing price increases with well-located, well-priced and well-marketed houses still selling well.

This was just two months before home prices in the Seattle area peaked, eventually falling over thirty percent.

In October 2007 Gardner was predicting “a leveling off — with increases of roughly 3 percent — for a couple of years.”

Even after prices started falling sharply, Gardner remained unrealistically optimistic, claiming in early 2009 that home price appreciation would return in 2010. Of course, prices did not bottom out until early 2012.

So perhaps you can understand why, when I read something like this from Matthew Gardner today, I’m more likely to believe exactly the opposite:

The dynamics that led to the last housing collapse aren’t in play, locally or nationally, he said. Borrowers are more sound. Home building is slow. And more first-time buyers are looking for a home.

“So we have limited supply, we have good demand, we have great credit and we’re not over-leveraged and the interest rates are staying low,” Gardner said. “Housing prospects across America look pretty good as far as I can see.”

“As far as I can see” is the important qualifier there. All that Matthew Gardner ever sees is a rosy outlook for real estate.

September Stats Preview: The Last Gasp of Inventory in 2017

Let’s take a look at regular monthly “preview” charts. Now that September is in the past let’s take a look at the local housing market stats for the month. Short story: Inventory hit the highest point since a year ago in King County and were just slightly below last month’s high in Snohomish. Sales are still strong, and foreclosures are nearly non-existent.

Sadly I have nothing particularly new or interesting to share about what happened in the market in September. It’s more of the same cruddy market for buyers: Listings are scarce and sales are still strong…

Case-Shiller: Everybody get on board the Seattle real estate rocket ship!

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to July data that was released this morning, Seattle-area home prices were:

Up 0.6 percent June to July
Up 13.5 percent year-over-year.
Up 20.2 percent from the July 2007 peak

Over the same period last year prices were up 0.6 percent month-over-month and year-over-year prices were up 11.2 percent.

To get a sense of just how nuts it is here in Seattle compared to pretty much everywhere else, consider this chart of year-over-year home price changes in all twenty Case-Shiller cities over the past year and a half…

Amazon, Go

Okay, okay, let’s talk about Amazon HQ2

Everybody is talking about it, and it’s definitely going to have some kind of effect on the local economy in Seattle, so even though it’s a bit late, let’s talk about Amazon’s HQ2.

Unless you’ve been living under a rock, you’ve no doubt seen the news that Amazon is seeking to build a second headquarters somewhere “in North America” that “will be a full equal to our current campus in Seattle.” GeekWire has been covering the story extensively (including a data-based city analysis by yours truly), so if you need to catch up on the facts, head over there. For the discussion here, let’s focus on the possible impact this development will have on the Seattle-area real estate market.

Cool: $140k “Micro-Home” packed with smart home features

The video is packed with quite a few obnoxious buzzwords (and some NSFW language) but I do appreciate the concept of this 352-square-foot home. It’s produced on an assembly line and can be “installed” in a wide variety of locations and configurations, plus it’s loaded with smart home tech and modular designs…

NWMLS: Seattle housing market shows no signs of slowing in August

Every month I hope to see some good news for buyers in the numbers. Every month I am disappointed. Listings are still in short supply, sales are strong, and prices just keep going up at a breakneck pace. Sorry, buyers…