Misdirection Master Strikes Again

In what is becoming a bit of a regular occurrence, Seattle’s #1 real estate cheerleader yet again wields her powers of misdirection in response to a probing reader question.

Q: There is an entire group of people today who’ve never gone through a major recession. How will home prices be affected if we do have a recession like the pullback of 1974?

A: The recession of 1974, caused by high inflation and an oil crisis, took the wind out of the housing market. Homebuilding dropped 33 percent, according to Time magazine’s Dec. 9, 1974 cover story. The Federal Reserve clamped down on the money supply. Mortgages became harder to afford.

But if we were to have a repeat of 1974, much more would happen because recessions cause widespread economic damage.

Exactly what that meant for house prices is hard to know because data from that decade is sketchy.

We can say, however, what the local fallout was from two milder, more recent recessions: 1990-91 and 2001-2003. The rate of appreciation fell, but house prices in general didn’t. Here are the numbers:

After rising 28.9 percent in 1990, King County single-family home prices basically flat-lined for the next three years, rising just 1.2 percent in 1991, 0.1 percent in 1992 and 1.7 percent in 1993. Then they began rebounding, culminating with 10.1 percent appreciation in 1999.

It would appear that whenever the answer to a question is a bit too difficult for Ms. Rhodes to swallow, she decides to answer a completely different question that wasn’t even asked. In this case, the question she appeared to be answering was actually “what is a recession, and how would Seattle be affected in a very mild one?”

Of course, the answer to that question is both reassuring and ultimately useless.

(Elizabeth Rhodes, Seattle Times, 04.14.2007)

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    Matthew says:

    Lizzie Lizzie Lizzie, can’t you see? Sometimes your words just hypnotize me!

  2. 2
    Deejayoh says:

    She is a real-estate fluffer.

    Anything worth reading about real estate in the Times is in the Business section

  3. 3
    Rommel says:

    hey there’s a great rush to buy waterfront condos along the NILE…

    The NILE (pronounced de-ni’al)is a great river… and it’s going to make every condo with a water view rise higher in value every year even all the way here in Seattle…


  4. 4
    Eleua says:

    Let’s see how long X-Cal equity locusts can last under this trend.

    When California sneezes, Washington catches the flu. In this case, California catches Ebola…

  5. 5
    Mike says:

    Eleua, as people have pointed out, the cali defaults are still 60% below those at the trough of the last cycle. Nothing to see here, we’ve got a ways to go before this bottoms out

  6. 6
    Eleua says:

    True, but irrelevant. It is the rate of change set against the backdrop of insane lending that has my interest. We have many, many moons to go before we are even 1/3 of the way through all these mortgage adjustments.

    As you said, this is being compared to the trough. We are just off the peak (and a big one at that).

    If California gets sick, Washington will really suffer. We absolutely need a high equity buy-down to keep prices aloft.

    Two things keep PNW real estate afloat at these levels: X-Cal equity locusts and kinky financing.

    Both are under serious attack.

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