Last week when Bill Virgin snuck an uncomfortable Seattle real estate truth into a sports opinion column, I was surprised. Today, when I read a P-I editorial titled 'Easy credit driving housing prices?' I just about fell out of my seat.
Deep in the Commerce Department's report are even more troubling concerns: The personal savings rate of Americans continues to decline; we essentially are spending $141 billion more than we earn. (For those who care, the personal savings rate is now a minus 1.5 percent, dropping from minus 1 percent last quarter.)Yes, 'what if' indeed. But don't worry your little head. While all the other big coastal cities around the country had their prices driven up by speculation, suicide loans, and general mania, Seattle is different. We've reached a new plateau. Right? Right?
Our lack of savings has been a big deal for a while, but we've been able to mask that problem because the housing market has been so strong. But that is changing, too.
Mark Zandi, chief economist at Moody's Economy.com, told The Associated Press last week that the housing peak was a year ago and we are now seeing a slow decline.
The routine spin on the housing slowdown is that there will be a moderate weakening in prices, returning housing costs to more normal levels.
Yeah, my friends say, but not in Seattle. We're different. The thinking goes like this: The cost of single-family houses in King County continues to increase at double-digit rates and as long as the housing supply remains tight, our investments will be safe.
And may it always be so.
But what if the driving factor in housing prices is not land, new jobs or even an extraordinary community? What if the key element in housing prices is the ease of access to credit?
The [New York] Times said the areas of the country most at risk are California, Denver, Washington, Phoenix and Seattle, where a variety of new creative financing packages range from interest-only to adjustable mortgages.Although the real estate reporters still may not be capable of seeing anything beyond what is right in front of their noses, let alone the storm looming on the horizon, at least the opinion columnists are finally coming around.
(Mark Trahant, Seattle P-I, 07.30.2006)