Eastern Washington SFR prices - bubble also?

dls

Curious as to whether or not real estate in eastern Washington (Yakima, Spokane, tri-sities areas), particularly single family homes, experienced a bubble similar to that seen in the Seattle metro area. Thanks.

rose-colored-coolaid

Yes they did...kind of. Wenatchee for instance has been one of the decades hottest locals. I think there are three reasons the other side of the mountain participated in the housing boom despite wide swaths of open flat land.

Long-range commuters - why live in Seattle when you can painfully commute from Wenatchee instead (yes, some people do this).

Cost of construction - with prices for everything from copper to wood to granite countertops to labor increasing due to high demand, the replacement cost of housing skyrocketed. I think the significant price increases in some eastern Washington areas was mostly due to this aspect.

Vacation homes - sure there aren't any jobs out there, but it's a nice place to visit in April if you would like to see the sun. Besides, real estate always goes up, so it's cheaper to buy a second house than it is to rent a motel room (yeah right).

Kittitas

I agree there was a bubble over here, and a lot of overbuilding (at least in Kittitas county). For October, there were 617 SFR on the market, with 22 closed sales for a MOS of 28. Condos are even worse, with 66 units on the market and one closed sale in October. Prices are still way too high over here in my opinion, since there are few jobs locally that pay enough to qualify for a median price home.

rose-colored-coolaid

I think if you look at historical data, you'll find there are exactly two things that drive real estate prices: inflation and population density.

Which of those two thing has increased 50% in Eastern WA in the last 5 years? The prices out there might look cheap at say $180k for a nice house, but that same house would likely have been $120k in 2002.

They have our problem, just on a smaller scale. That said, buying out there is probably less risky. Lose 20% on a Seattle purchase and you're out $80k. Lose 20% in Yakima and maybe you're out $35k.

perfectfire

Really? Housing supply and loan availability don't drive prices at all?

rose-colored-coolaid

I'm talking long term, say over the course of a few hundred years. On that time frame, loan availability is mostly just noise, and supply is not really a constraint. Sure, in a 5-year time frame what you say is true, and one can certainly make an argument that more generous lending between 1950 and 1995 drove up prices at a rate faster than inflation/density but I think that might have been a one time blip and that this last bubble has exposed the limits of greater loan availability.