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Friday, August 19, 2005

"Seattle...likely not facing a housing bubble."

There's nothing quite like optimism:

Despite soaring home prices here, the greater Seattle area is likely not facing a housing bubble, a new study indicates.
The study they're referring to was reported earlier in the week. Though Seattle did not reach the arbitrary "30% overvalued" threshold for being "vulnerable to price correction," it still ranked #86 out of the 299 cities listed, coming in at 20% overvalued.
The Seattle area housing market had the 86th highest valuation of the 299 markets surveyed, with average home prices only 20 percent higher than the report's estimate of what they should be worth.
Heh, "only" 20 percent.
None of the housing markets in Washington state that were included in the report -- Seattle, Tacoma, Bremerton, Bellingham, Longview, Yakima and Spokane -- have had a price correction in the past 20 years, according to the report.
So that means we're immune! Hurrah, lucky us! Yes, I'm being sarcastic. One thing the article fails to mention is that never in the past 20 years have lending standards been so loose and personal savings so low. I think we're in a precarious position that is largely being ignored by the local media. But hey, I could be wrong.

(Clayton Park, King County Journal, 08.19.2005)


marin_explorer said...

I read the report, and found it to be a conservative assesment. What's hidden in the report is that distinct locations have most likely appreciated much higher. The same goes for housing segments with more investor activity. While I don't live in Seattle any more, I visited it recently, and it seems that certain areas are definitely affected. This "there is no bubble" nonsense is a common theme in areas that consider themselves "unique" to the market. Just take a look at how a Santa Barbara realtor sees her town, which incidentally is the named the most overvalued in that report:

Marinite said...

On the other hand, just to play Devil's advocate for a moment, Microsoft is hiring like mad recently. That should bolster demand, at least for a while

Anonymous said...

It would appear from all indications that we are close to the edge. The question is what deflates the bubble in this region and how fast.

Will it be when California deflates and does damage to the US economy? The result of oil prices that keep rising? Slowdown in international shipping through the Puget Sound due to the rising Yuan? How about a sudden exogenous event-- AQ suicide bombers in shopping malls, a large earthquake, Mt. Rainier popping its cork.

When everything is going up, it's hard to remember that trees don't grow to the sky--even in paradise.

marin_explorer said...

Will it be when California deflates and does damage to the US economy?

Say, let's not hang this problem on California. I know it's easy to do, but it's happening everywhere in the US--and CA investors are not only to blame. The causes are global, but we'll all feel it locally.

Anonymous said...

Well it is certainly true that California is just another "victim" of Greenspan's easy money. I was using it due to the size of its economy, proximity and ties with Washington and yes, its role as a trend setter.