Although 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 magazine: Home Prices: Now for the Good News
We dug into [the PMI risk index] as well as other forecasts and analysis to determine which markets are in the best shape for a rebound? We also talked with housing experts to learn which kinds of neighborhoods and suburbs are thriving. Our search led us to 25 metropolitan areas that look particularly promising, and there are more than a few surprises. Here, we profile seven of the best-looking markets; for the full list of 25, see November’s issue of SmartMoney magazine.
The Emerald City is that rare major metro area near the coast that is not on a nausea-inducing roller-coaster ride. While home prices in Florida and Southern California are in a free fall, homeowners here are experiencing a gentler landing. Of course, that’s partly because the ride up was not as euphoric—home prices here peaked at 65 percent above January 2003 levels, compared with more than 95 percent in Los Angeles. Thanks to well-paying mega-employers like Microsoft, Amazon.com and Boeing, unemployment remains under 4 percent. That, in turn, has kept median sales prices from falling far. Just as encouraging: Only 11.5 percent of local homeowners who bought within the past five years have negative equity on their property, well below the national average of 29 percent, according to the real estate services firm Zillow. That indicates there won’t be a flood of foreclosures and short sales around the corner.
Among Seattle’s neighborhoods and suburbs, yesteryear’s star performers—affluent areas like the Victorian-studded Queen Anne district or Redmond, home of Microsoft—are beginning to slide back a bit. The most resilient part of the region lies across the Duwamish River from downtown, in West Seattle. The small community is directly accessible by only one bridge. That can lead to traffic snarls, but many residents simply bike 20 minutes to jobs downtown. On weekends the relative seclusion means the 2.5-mile Alki Beach promenade along Elliott Bay doesn’t get too crowded. As long as people like great views of water, mountains and city skylines, “those homes will always maintain their value,” says local broker Febe Cude. Dave and Alison Keith recently sold their two-bedroom townhome in West Seattle for $289,000, up more than 25 percent from their purchase price four years ago. They plowed that windfall into a home in the same neighborhood with twice the living space and a fenced-in yard, for $429,000. “You’re always nervous, but I feel like things are holding up well here,” Alison says.
Wow, where to begin. First off, Seattle metro unemployment hasn’t been “under 4 percent” since April, so apparently this list is based on six-month-old data. Of course, employment is largely irrelevant anyway, since the data shows that job growth was entirely disconnected from price gains in the boom years.
As far as the percentage of homeowners underwater goes, as long as home prices keep dropping (which they have, by 7.5% since April), that number is going to go up, as are foreclosures.
Lastly, when their so-called “expert” has convinced them that the “most resilient part of the region” is West Seattle, it throws pretty much everything they say into question. West Seattle, home of some of the biggest price flops around. West Seattle, where the median price per square foot is off around 17% from the peak, according to Redfin (vs. around 15% for Queen Anne, or 7% in Shoreline).
Sorry SmartMoney, but when compared with the facts, this article comes across as anything but smart.
(Brad Reagan & Elizabeth O’Brien, SmartMoney, 10.17.2008)