Seattle: Hybrid Cars & Hybrid Real Estate

Is the Seattle real estate market "cyclic," "linear," or "hybrid"? According to the analyst of the day, Seattle is a "hybrid market."

Could the real estate action be shifting to the heartland, the vast swath of middle America that wasn't really touched by the hyperinflationary housing boom?

That's what a new statistical analysis of housing price cycles in 100 major metropolitan areas suggests could be over the horizon. Its author, Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, examined historical housing price movements and concluded that metropolitan real estate markets can be classified into three behavioral categories
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Hybrid markets, which have linear, slow-growth characteristics for periods, followed by periods of moderate cyclic-style appreciation. They never boom quite like Florida or California, but they also never need to correct like the more volatile markets either. Cagan includes Chicago, Seattle, Minneapolis-St. Paul, Detroit and Phoenix in this category.
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Most of the cyclic markets "are at, or have already passed, the peak" of their cycles, he says. Absent unseen economic shocks, the shooting-star markets aren't likely to crash or burn. They're just not likely to see anywhere near the price growth they have gotten used to in the recent past.
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...if you're in a linear or hybrid market where the local economy is adding jobs and population, who knows? If Cagan is correct, you just might be poised for higher-than-average price gains over the coming few years. Make the most of it.

The unbridled optimism of some of these "analysts" is almost enviable. None of the "shooting-star markets" are "likely to crash or burn"? Nice. I also love how this analyst had to perform a complex "statistical analysis" to place cities into three categories that basically equate to mild, hot, and hot HOT HOT—a task most of us could probably have done just by sitting down with a paper and pencil. Seattle isn't as hot as South Florida or the San Francisco Bay? You don't say.

(Kenneth R. Harney, Washington Post, 05.27.2006)