A few days ago I got an email from a reporter named Luck Mullins from US News & World Report, telling me about his new housing blog: The Home Front. Then yesterday, a story pops up on his blog specifically about Seattle. Looks like someone really wants to get our attention for some reason. Here’s an excerpt from his post: Next Housing Market to Crash? Seattle
Few American cities have weathered the national housing crisis better than Seattle. According to the recently released S&P/Case-Shiller Home Price Indices, home values in the drizzly gem of the Pacific Northwest have fallen a modest 4.4 percent over the past year—a cakewalk compared with former housing boom hot spots like Las Vegas (-25.9 percent), Miami (-24.6 percent), and Phoenix (-23 percent).
But that may soon change. In a recent interview with U.S. News, ZipRealty CEO Pat Lashinsky predicted that Seattle’s so-far resilient housing market would suffer big losses relatively soon. Excerpts:
What makes you think the Seattle housing market is going to crash?
In Seattle, if you look at it right now, on a year-over-year basis, you will see that inventory levels [of unsold homes] are up between 45 and 50 percent. And then if you looked at prices—in the price report that just came out—it would say that prices are down in Seattle by 4 percent. This is exactly what we saw in the rest of the country six to nine months ago. We saw inventory levels starting to spike [and] properties were taking longer to sell. But the sellers were not willing to [reduce] the price; they were holding the line. And so you get into this scenario where buyers don’t buy, because they have too many choices and they are trying to get a good value, and sellers are trying to hold on to their value. So now, nobody buys a home today, and then more homes go on the market tomorrow. And then all of a sudden, people have to sell or foreclosures come in. And all of a sudden it pops because everyone is competing against a significantly lower price.
This is not really anything new to people that have been paying attention to housing trends here and elsewhere, and have not deluded themselves with the fantasy that Seattle is somehow special and immune.
(Luke Mullins, US News & World Report, 05.29.2008)