Some experts say the Seattle housing market is ready for a turnaround.
Tuesday, November 1, 2011 at 5:00PM
Bonnie Beddall

The Seattle housing market has gone through some very difficult times as well as the rest of country. Seattle however has faired well above average, depending on which side you are on, that is.

For sellers, it’s been hard, with prices falling by as much as 30% starting in early 2008. Seattle however was one of the very last markets in the US to experience falling home prices. Some predicted that because we were last to fall we would be last to recover. That doesn’t seem to be the case however. From all indications it looks like Seattle has hit the bottom and is starting to rebound.

For buyers, falling prices mixed with historically low mortgage rates has been a bonanza. It is much harder to get a mortgage these days, however the solid buyer has made out quite well. What will the next few years bring however?

Lets look at some of the data from the National Association of realtors. Today it is 2.5 Times cheaper to purchase home than is was 30 years ago! Taking the numbers from the *Affordability Housing Index, maintained by the National Association Of Realtors, June 30th, 2011 the Affordability Index Composite was 182.7 (the higher the composite number the more affordable purchasing a home is). For 1981, it was 68.9! So you say, “1981′s market isn’t relative to toady’s market.” OK good point, well then lets look at 2006. Even in 2006 the Affordability Index Composite was 107.1, which 1.7 Times more expensive than where we are at right now.

For those of you who want to wait until we hit bottom before purchasing a new home, January & February of 2010 was it! According to the numbers, and the numbers don’t lie, we hit 192.2 & 193.2 respectively. Since then, we have been on a steady decline to where we sit today. It’s slow but Seattle is moving in the direction “up” from the bottom.

It’s always very interesting how perception may not always run parallel to reality. Seattle is unique, yes we have had a lousy year for weather but Seattle economy is one of the strongest in the country. Seattle also has a very diverse economy and our population is among the best educated in the US. And it has been predicted by the so-called experts that Seattle’s population will continue to grow and grow and grow.

Here is some more interesting information just released this past week by the Commerce Department: “U.S. home builders sharply increased construction in June. Housing starts rose 14.6 percent to a seasonally adjusted annual rate of 629,000, the highest level since January.” Details underlying the June figures were also strong. The report says there was a large increase in starts of multifamily units and a smaller gain in starts of single-family homes. Economists debated how seriously to take the increase however. Gee what else is new!

Some welcomed the good news, however.

“We have been trying to call the bottom in the home construction sector for quite some time, and I think we finally have one,” said Joel Naroff, president of Naroff Economic Advisors.

Others Economists are being more cautious, questioning whether the increase was the start of a sustained increase in new home starts.

However the report was much better than most expert’s thought. Economists surveyed by MarketWatch had been looking for a 3.6 percent increase to 580,000. May’s starts, however, were revised lower to a 549,000 annual rate from 560,000.

“Housing starts may continue to creep gradually higher from their still-depressed levels. But the low rate of household formation, the high supply of existing homes and tough competition from foreclosed homes will mean that starts are unlikely to return to a normal level of around 1 million for another four years yet,” said Paul Dales, senior U.S. economist at Capital Economics.

Housing starts at a rate of 1 million to 1.5 million units would be considered a healthy market.

Starts of multifamily units surged much faster than starts of single-family homes. Analysts said this will be the new trend in home building, as there are more renters than buyers in the market.

One of the local factors that substantiate this news and making it very creditable and pertinent to Seattle is the huge increase in apartment buildings being built here since 2010. Developers were and still are predicting that there will be a housing shortage in the Greater Seattle area over the next several years. This they say will be fueled by the increase on population and the massive slow down of new homes being built over the past several years, and more stringent lending requirements.

In the past 12 months, housing starts are up 16.7 percent nationally.

Permits for single-family homes rose 0.2 percent from May to a 407,000 rate. Many economists consider single-family permits to be the most important number in the government’s release.

Now, in a recent article in the WALL STREET JOURNAL here is some great news again for Seattle and Tacoma homebuyers and home sellers.

According to financial-data firm Fiserv Inc. despite the gloomy picture for the national economy and housing market, residents of Tacoma are expected to see a 25% increase in home prices by spring 2013, and in Seattle that number is projected at a 10% increase. Other strong housing markets are expected to be the Palm Bay and Melbourne area on Florida’s eastern coast (up 18%). Gains of about 10% are expected in Tucson, Ariz. and Memphis.

David Stiff, Fiserv’s chief economist, says cities like Tacoma and Seattle have strong, diverse economies and should fare well over the next two years. Areas like Palm Bay-Melbourne, Tucson and Memphis were hammered by price declines but now are seeing strong interest from investors.

The Seattle/Bellevue real estate market has steadily improved now for the past year. Even with uncertain economic news our area has stabilized. We are seeing good homes that are priced well selling quickly, sometimes even with multiple offers. As the total number of buyers in the market has dropped significantly over the past few years, people still need to buy homes. The next two years should continue to offer buyers some great deals with some fantastic financing opportunities.

As someone that has traveled this country extensively, Seattle is a tough place to beat in terms of life style, natural beauty, ease of living, outdoor activities, the economic strength, and yes you may think that I’m nuts, but weather as well.

Article originally appeared on Seattle's Best Real Estate (
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