About Seattle Bubble
Seattle Bubble is the Seattle area’s #1 resource for news, analysis, commentary, and community discussion on the local real estate market. This community site is focused on productive discussion of the local housing market, so that everyone involved can work toward a goal of improving understanding and dispelling myths.
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Founded in August 2005 by Timothy Ellis
Editor: Timothy Ellis
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Publisher: Thatch Mound
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Some Thoughts On Today’s Housing Market
So what’s going on with today’s housing market in Seattle? The Bottom Line: Now is not a good time to buy a home in Seattle.
Here’s why:
- Irresponsible, loose lending drove prices to artificial highs, pricing out responsible individuals and families that just want to make a decent down payment and get a traditional loan on a reasonably priced house.
- We are presently seeing a return to responsible lending standards, as the banks experience the consequences of writing loans to people who did not have the ability to pay them off. As lending standards continue to tighten, further downward pressure will be placed on home prices.
- Macro-economic factors drove home prices up, and will in turn bring prices back down (yes, even in Seattle).
- Home prices in Seattle did not rise as fast or as far as other places in the US, and likely will not fall as far. However, they will most likely fall.
- Why will prices fall? Because the current level of local home prices is not supported by any of the fundamentals that drive a healthy housing market:
- Incomes - “Seattle has lots of high-paying jobs!” (See: 1, 2, 3, 4)
- Employment - “Seattle is adding tons of new jobs!” (See:1, 2, 3)
- Population - “Lots of people are moving here, and they’re not making any more land!” (See: 1, 2, 3)
- Rents - “Rents are rising, and you’re throwing away your money if you rent.” (See:1, 2)
All of these factors are indeed positive influences on the Seattle area real estate market, but prices began to rise out of control while Seattle was still recovering from being hit particularly hard by the dot-com recession. Thanks to the aforementioned easy lending, home prices during and since Seattle’s economic recovery have risen much faster and higher than these positive fundamentals support. This is true in Seattle, and it is also true in other markets across the country that have similarly strong fundamentals yet are already experiencing price declines.
There are lots of people (like myself) who have little to no debt, great credit, and a good down payment, but are not willing to buy into an inflated housing market. We are not against home ownership. We are against taking out massive, dangerous loans to finance an otherwise unaffordable and overpriced asset. We are perfectly content to wait out the declining market, and will not be suckered by real estate salespeople who perpetually repeat claims that “now is a great time to buy.” They said that about the national housing market, and they were wrong. Once the home price drops were irrefutable, they began declaring that “the market has hit bottom” every three to four months.
Don’t take anyone’s word when it comes to what will likely be the largest financial decision of your life. Do the research, and determine if the market is right for you. That’s what Seattle Bubble is for: providing a resource where regular people can assess the local housing market on their own.
