Double-Digit Appreciation Returning Soon to Seattle!

The P-I printed a real gem of a story this weekend, with a pretty bold prediction:

The nation is on track to build fewer homes this year than at any time since the end of World War II, adding to the woes of an economy that analysts said Friday has almost certainly entered a recession.

But with builders focused on selling the homes they have, rather than developing new ones, Seattle is headed for a serious shortage that could bring a return to double-digit price appreciation starting in 2012, according to one local analyst.

“We will see one to two years of double-digit appreciation, bringing home prices back to the peak that they were in 2007 or 2006, if not higher,” said Todd Britsch, president and principal of New Home Trends, a Bothell consulting firm.

Okay, first off, prices are currently at about 2006 levels. For prices to be at a point where one to two years of double-digit appreciation will bring them “back” to 2006 levels, they would have to fall another 15% or so from where they’re at now. That doesn’t necessarily seem too unlikely to me, but I somehow doubt that’s what Mr. Britsch meant to predict.

Secondly, why is the P-I turning to Todd Britsch for predictions, anyway? Note this prediction made by Mr. Britsch in November 2007:

Buyers, however, shouldn’t expect those deals to stick around much longer, said Todd Britsch, president of New Home Trends.

For buyers, now may be the best time, he said. Many of the incentives will likely disappear after the first of the year. Sales typically slump in the fall and pick up each spring.

“Right now it’s a buyer’s market and if I were sitting on the fence, today is when I would buy,” he said.

Today’s market is “a bump in the road,” and the market is stabilizing, not collapsing, he said. It’s unlikely the county will return to astronomical double-digit appreciation rates, but a strong economy will keep housing prices going up in this area during the next few years, albeit more slowly.

Let’s see what housing prices have done in the time since Todd made that claim. The latest NWMLS data at that time was October, so let’s compare October 2007 to September 2008 (11 months).

King County SFH: Down 6.5%
Snohomish SFH: Down 11.3%
Pierce SFH: Down 10.7%

Hmm. I think Todd Britsch has a different definition of “prices going up” than I’m accustomed to.

The remainder of the article expands on the spurious idea that the current downturn in construction will lead to an impending shortage of homes in the not-too-distant future a few years from now.  The big problem with this claim is that the data simply does not bear out any kind of a housing shortage in the Seattle area.

New housing supply has been coming online at a rate easily exceeding increases in demand during the last few years (see this post and this post for details).  Today’s slowdown simply gives demand some time to catch back up to supply.  Of course, even this “catch up” hypothesis assumes that demand continues to increase which, given the current economic climate, isn’t exactly a given.

(Aubrey Cohen / AP, Seattle P-I, 10.17.2008)

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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
    Scotsman says:

    Clearly Todd’s reality is different from that experienced by the rest of us. Either his belief system is rooted in the old idea that if you repeat a lie over and over it begins to take on some semblance of truth, or he knows where there’s a really good patch of magic mushrooms. It is the rainy season, after all.

    Why anyone would publish his opinions is the more interesting question. Who does he know at the P.I., and what is their relationship?

  2. 2
    obelus says:

    Why do these RE jokers keep insisting there is a housing shortage? Is that the last card they have to play? Just about every house I see on Redfin or other RE sites shows an empty house or a staged house. People are leaving this town or have left! No shortage of housing for a long time in the Seattle area.

  3. 3
    LoneLibertarian says:

    Don’t these guys understand that the whole “house of cards” was built upon access to cheap money combined with absolutely no lending standards?

    Or did they really drink so much kool aid that they believed they were the worlds best salesmen?

  4. 4
    Jillayne says:

    This is really dissappointing.

    I do see how they could come to the conclusion that the downward trend in permits means that there “might” be a shortage of new construction homes in the future, however, he is partially basing his predictions on an economic rebound in 2009.

    What would have helped this story is a phone call to any decent economist to get their read on an “economic rebound” in 2009. The only one I could imagine this point is a stimulus package.

    Other economists have said that we’ll have a new home backlog of inventory for a long time.

    We have jumbo and conforming loan limits expiring at the end of 2008, underwriting guidelines continue to tighten, and downpayment requirements are growing. All this will effect inventory next year which means prices will continue to drop.

    The builders are afraid. It’s too bad the media didn’t probe deeper.

  5. 5

    “Secondly, why is the P-I turning to Todd Britsch for predictions, anyway?”

    Because Glenn Crellin and J Lennox Scott were unavailable to comment?

  6. 6
    Everett_Tom says:

    There’s more funny over at his website:
    from the 2008 Presentation: (page 23) – Dated 11/01/2007

    2008, 2009, and 2010
    o National regions will no longer be slashing home prices
    o as the markets level off through out the year
    o Boise will experience the same leveling process
    o California, Florida, Las Vegas and area’s like Phoenix will see sales climbing
    o Appreciation of homes will again be a topic source for the media
    o Boise will see sales increase but no real price appreciation UNTIL!!!!!
    o California residents will begin to migrate north for a greater quality of life
    o Home values will appreciate at a high double digit number
    o Investors will flood the market

    It sounds like his group is just tells builders what they want to hear, and they pay large sums for the reports (“insiders advantage” report is only $1,000.00 a year.. for some PDFs….)..

  7. 7
    BanteringBear says:

    “Just about every house I see on Redfin or other RE sites shows an empty house or a staged house. People are leaving this town or have left! No shortage of housing for a long time in the Seattle area.”

    It’s hard to find up to date, accurate information regarding migration trends, but anecdotal evidence such as U-haul, etc. would suggest you’re right. Personally, I’ve heard/read of many people moving, and even know a few. There certainly are many relocating to Seattle as well, but I’m not sure they outnumber those exiting. High housing prices drive people away, as well do many other things.

  8. 8
    BanteringBear says:

    Asking a builder or realtor, or any other industry shill, for an objective opinion or forecast regarding housing prices is akin to asking a drug company if their product is safe and effective. You’re going to get a biased response EVERY SINGLE TIME. This article is a glaring indictment of the Seattle P-I’s piss poor reporting, and underscores how inept they’ve become. I’m surprised they still have readers left.

  9. 9
    The Tim says:

    Everett_Tom @ 6,

    It sounds like his group is just tells builders what they want to hear…

    No, that’s not possible. It says right on their website:

    The New Home Trends team has earned a reputation as “the people who know what’s going on in the industry.” We have also earned the respect of our clients and peers for our honesty and integrity. We don’t always tell them what they want to hear – but we always tell them what they need to hear.

  10. 10
    Everett_Tom says:

    Oh.. well.. if his website says he’s honest.. well

    my bad

    I mean.. I guess they probably REALLY want to hear that it’ll pick up by mid-next year.. not 2010… soo.. yea.. guess I missed that


  11. 11
    victorchai says:

    I’d say don’t laugh at him, if stock market really bottom up last week, and the gov go the credit market going…this make come true…

  12. 12
    buyStocks says:

    I only wished things were so simple… (I really do for my own and others financial security) But I’m guessing that world economies can’t be turned around on the whim of government, and that most of us are in for some serious pain. I bet your logic (note I am not saying is flawed) is also used by many house sellers who are waiting for better days, which in my opinion is at least several years away. That being said, this article would of been much less biased if it also presented an opposing view from another “expert”. Then let the reader decide.

  13. 13
    Everett_Tom says:

    victorchai ,

    Sure. He could be right. But based on the two predictions I’ve seen him make (one listed by Tim in the article, the other for 2008 from his website). He seems to be 0 for 2.

    Also based on statements from from a variety of economist, as well as Fed Chairmen Ben.. I don’t know of anyone who’s expecting 2009 to be a banner year.. the most optimistic I’ve heard is that 2009 will be flat (for stocks / Real Estate / etc).

  14. 14
    Mariner22 says:

    If you believe Todd, I have a few bridges to sell you.

    The only thing that will increase median house prices is increased median household income! The days of borrowing thru NINJA loans are gone – just ask Iceland, Norway, among others…

  15. 15
    slug says:

    Totally off topic of the imminent rise in home prices , ahem…, but was anyone at the rally in seattle this weekend when Biden looked into his crystal ball and proclaimed an attack on the US if Obama became President?

    Am not in the area right now and quite curious about this amazing statement on Bidens’ part.

  16. 16
    SRL says:

    Maybe it’s an attempt to boost the Saturday paper’s real estate ad sales. Nah, they’d never do anything like that.

  17. 17
    darth_z says:

    I don’t know anything about this “local expert!!”. But according to the following WSJ map:

    Home price in Seattle still needs to go down another 37% to come back to the historical affordability.

    Make your own conclusion.

  18. 18
    Harley Lever says:

    I guess before you start beating Todd up I would look a your little ticker on the right hand side of the page. The King County houses and condos for sale have been going down steadily. Why it has is speculation. However The Tim and Deejayoh were commenting on this phenomenon a couple of weeks ago.

    Todd did say “a strong economy will keep housing prices going up”. I do not think anyone here would say this is a strong economy.

    We certainly are not seeing a flood of foreclosure hitting the market as predicted for months now. Based on the way this blog talks about the foreclosures these numbers should be going up, and up. In addition, you can expect more extreme measures to be taken to mitigate further effects of foreclosures. So betting on a tsunami of foreclosures might not come to fruition. The government is scrambling for ways to keep people in their homes.

    The rental market remains extremely tight in Seattle and rates are predicted to rise. There are multiple offers on rentals right now, with one featured home having more than 20 potential tenants showing up. “Analysts predict a 17 percent increase in area rents from April 2008 to December 2010.”

    I have personally seen several real estate listings that I have photographed taken off the market and were rented immediately for surprisingly high rates. Admittedly for some this might be slowing the bleed, but for others it is enough to keep them closer to black and make their debt manageable. Some owners have re-listed the homes after as investment property.

    California sales were up 65% over last September, half of which were from foreclosures. You can nay say all you want, but that is a huge jump considering the current situation. Has California reached a bottom? Maybe. If California reaches a bottom that would be a huge psychological boost for the Nation and could help entice more buyers to jump in.,0,1412933.story

    The biggest determinant is going to be the economy. If the economy stabilizes we could see a bottom for housing and stocks. If it falters you can expect both to fall. Every government on planet Earth is doing everything they can to get in front of this.

    I think builders will be overly gun shy about taking on any new large-scale projects until it becomes painfully obvious that there is an absolute need to do so. It is very feasible that new housing starts will remain in the tank for years.

    Right now we are seeing tight rental market, falling inventories, builders scared to build, a credit market with the entire world trying to revive it, a government scrambling to address foreclosures, and the heartland of the real estate bubble with a 65% increase in sales YOY. Let’s not forget about the potential for an end to the Iraq War. Based on all of the above you could see an over correction in prices and double digit gains…. would they last, DOUBTFUL!

    The Tim, I am surprised that you have not made mention of the 65% increase in California sales YOY in September. Did you not see this?

  19. 19
    Ray Pepper says:

    Good God! All these Seattle predictors everywhere. They are always wrong!

    I was about to show another clip of how I feel about predictors but I stopped myself. I think I made Mr. Tytler mad.

    BTW I saw the show “W”. 2 thumbs up! Whats up with Condoleeza Rice? Is she really that bad?

  20. 20
    what goes up must come down says:

    Harley “builders scared to build” I wonder why??? Hmmm, maybe they know something you seem to miss. Common sense says if they thought they could make money building they would.

    It is amazing you pick cali for comparison or to bolster your argument but months ago when people talked about Seattle following Cali you berated them, funny how things change.

  21. 21

    Things don’t always work the way hey are supposed to. A couple of years ago, inventories started rising, sales slowed, and prices kept going up. At that time some real estate “experts” claimed that prices weren’t going to drop this time, because we were entering a new age of permanent house price increases and ya better buy now…Well they were wrong of course.
    Now, inventories are smaller , although sales are still down, and at some point sales will start increasing and then there will be a lag and then prices will increase.
    This of course could take years. I was telling people in late 2005 that home prices were way to high and would be dropping…I was just too early…but double digit increases??? Here? Soon?
    Yeah, maybe point one five.

  22. 22
    deejayoh says:

    Harley Lever // Oct 20, 2008 at 10:31 pm

    I guess before you start beating Todd up I would look a your little ticker on the right hand side of the page. The King County houses and condos for sale have been going down steadily. Why it has is speculation. However The Tim and Deejayoh were commenting on this phenomenon a couple of weeks ago.

    Harley, if you are going to quote me, please get it right.

    My question to Tim was “is that thing stuck?”

    It sat at 11,854 for KingCo SFH at the end of last month. Right now it sits at 11,734. That’s 120 houses net off the market in the last almost 3 weeks. In a period when the inventory NORMALLY drops like a rock

    I would not say it has been going down steadily. We are still stuck, unlike SoCal where both inventory and prices are dropping like a rock.

  23. 23
    Harley Lever says:

    What Goes Up Must Come Down,

    Once again you miss the entire point… do you know what the post is about?

    I have not compare Cali to any thing. I simply stated that a 65% increase in sales YOY is astounding considering our current circumstances. I have always said that Cali hitting a bottom would have a psychological benefit for the entire Nation considering that California was the poster child for the rise and the fall of the market. If California shows signs of a bottom, the rest of the country will begin to anticipate a bottom in their markets.

    If you go back to the post about the San Diego comparison you will see that I was simply stating that San Diego and Seattle are a terrible comparison and I listed half a dozen reasons why… with facts to back up what I said. That reminds me where are yours?

    I think we should remind everyone about your great insight regarding how the housing boom in the 1980’s caused Boeing’s business to grow.

    I would ask that you reread the entire post, take some notes, study it a little more, and then once you think that you have grasped what I was really saying, come back and comment.

  24. 24
    Harley Lever says:

    I am not making any predictions here.

    I am simply contemplating how you could see double digit gains.

  25. 25
    economist says:

    Todd seems to be Seattle’s answer to San Diego’s Chuck Smiar:

    Fence Sitters Will Be Sorry

  26. 26
    LUC says:


    You call 191 properties posted for rent in Magnolia on craigslist a tight rental market? Last year that number averaged 40- 50.

  27. 27
    Harley Lever says:


    You need to direct your comments to the analysts who determined that Seattle is now seeing some of the lowest vacancy rates in 20 years.

    I am sure they will be interested in your “craigslist analysis”.

  28. 28
  29. 29
    buyStocks says:

    First two articles outdated, and third is just anecdotal at best. It would be interesting though, if The Tim posted and graphed rental value indicators (if they exist) along with everything else. Shouldn’t this help us to predict when were getting close to bottom?(when rental values are in tune with the underlying real estate values)

  30. 30
    Mark says:

    Californias sales increase was up 65% yoy. Half were foreclosures! Strip out the foreclosures and Californias real estate market was extremely weak. The number of real homeowners selling their homes to new homeowners was at historic lows.

    The government is scrambling for ways to keep homeowners in their home. Great, trying to keep an overinflated housing sector overinflated. My bet is that won’t end well. The invisible hand of the market will sort things out if it is allowed to do so. Keeping an underwater homeowner in their home won’t do any good. If the government tries to keep real estate values high it only makes real estate prices unaffordable for potential new buyers. The only way to bring new people into the market in that case is to keep up with the crazy loans that created the mess in the first place.

    The market does work. On the way up the market responded to cheap risk free credit. Buy a house with nothing down, no proof of income, and a not so good credit score. If the market goes up the buyer keeps the profit. If the market goes down the buyer can just walk away and let the bank take the loss. Those loans that drove the market higher are now pretty much gone.

    Credit is money and the amount of credit injected into the economy over the past several years drove real estate up. The cheap easy credit was inflationary to the real estate market. Credit is now going away, not completely, but people need down payments, proof of income, and decent credit scores. When credit is withdrawn from the economy, that is deflationary.

  31. 31
    Thomas B. says:

    This is why I don’t listen to the news. One minute the news is talking about a depression or long recession, the next minute they are talking about double digit growth and the new tech economy or some other lame theory.

    Whatever happen to journalism. It seems like everything on the news is tabloid reporting. It’s either the sky is falling or shoot to the moon. How about some realistic thoughtful journalism. Heck, if The Tim can give thoughtful journalism, why can’t the “professionals”?

  32. 32
    David McManus says:

    Thomas, if you look in the Seattle Times you will see an article about the disappointing holiday sales season and some political commentary from an interviewee at the end of the article. The bias is sickening.

  33. 33
    CCG says:


    You call 191 properties posted for rent in Magnolia on craigslist a tight rental market? Last year that number averaged 40- 50.”


    You need to direct your comments to the analysts who determined that Seattle is now seeing some of the lowest vacancy rates in 20 years.

    I am sure they will be interested in your “craigslist analysis”.”

    LOL! Who are you going to believe, an unbiased source like the P-I, or your lying eyes?

  34. 34
    casey1167 says:

    LUC —

    2306 Viewmont Way W, $1,650 on Craigs list, Zillow has this house valued at $521,000. That is just amazing. If you assume a 6% interest rate, that would put the house value around $300K. There are hundreds of houses in Magnolia like this house valued at the same amount… (Contrary to popular belief, Magnolia is not all mansions.)

    Pull the investment aspect out of that house, and it you just lost $200K in value.

    That is amazing.

  35. 35
    buyStocks says:

    Been following the mercer island rentals and real estate market. I’ve noted trend that casey1167 alludes to. Houses that are both offered for rent and for sale seem to only place the rent at about 60% of the listed value of the home. My strategy is to wait until the rental values and real estate values get close to intersecting before even considering a home purchase.

  36. 36
    DaveyDave says:

    When I first read that article, I just had to shake my head. It’s much more like propaganda than actual reporting. You get through the entire thing only to find out the basis of assumption is an economy set to begin improvement in a couple weeks.

    Here’s a NYT article concerning Seattle commercial real estate that is full of interesting facts and figures — much more enjoyable reading. –I don’t think you have to be a registered user to read it…

  37. 37
    Curtis says:

    Yahoo is laying of 1500 employees – who knows what will happen with Google. MS is freezing hires. I think Todd Britsch is living on his dreams.. Maybe if someone buys his home, he will shut up….

  38. 38
    mikal says:

    The yahoo layoff is because Google is kicking their a$$.

  39. 39
    Interloper says:

    The PI articles are baffling.

    One article says the market is tanking, the next quotes predicted double-digit home price increases three years from now (at a time when most financial experts can’t predict what will happen in three days).

    The PI should know this is not a political campaign — they don’t have to report “both sides” of the story. They can actually reach a point of view, and write stories about what they think is going to happen. What a public service that would be, for a change…

  40. 40
    slippy says:

    After reading Seattle Bubble for the past two years I have decided to jump into the Seattle real estate scrum. We have found a suitable house north of Seattle, with a very motivated seller willing to lower the asking price by about 10%. The house should fit our needs for the next 7-10 years so the strategy will be to wait-out downward trends until its time to move. We are signing the papers tomorrow…

    The advice and responses I have read on this blog have been interesting, valuable, and deeply informed. The best part of the blog is the variety of responses, allowing the casual lurker to make their own informed composite idea or notion about the state of things. I’m glad I started reading SB, or I’d likely have bought two years ago and be upside down now…just like a few people who didn’t listen to the facts I would share that I got from this blog.

    I’m sure a good percentage of folks here will think I’m nuts for buying this year at all, but we all have our reasons for things. I’ll probably be a less frequent lurker, for obvious reasons (self-doubt is something I do naturally).

    Best of luck to all you crazy Bubble-Heads in your living arrangements!

  41. 41
    BQ says:

    What a piece of bunk that article was. I have been so disappointed in the real estate section lately. Either the articles are from the AP – and worthless because they are about North Carolina or some such – or they are locally written and worthless.

  42. 42

    […] the local media can be a pretty good source of amusing overly optimistic predictions, they certainly don’t have the monopoly. Check out this entertaining article from SmartMoney […]

  43. 43

    […] Britsch also makes another appearance in this article to repeat his “double digit appreciation returning soon” prediction. Fun […]

  44. 44

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