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Monday, August 21, 2006

Picture A Healthy Housing Market: Yakima

This story about the Yakima housing market caught my eye because my wife and I stopped in Yakima yesterday on the way home from our 3-day weekend trip. I thought it would be worth posting here because it's an interesting contrast to the type of piece you find in the Seattle-area papers. Notice the tone of moderation, and the distinct lack of hyperventilated price-gain cheerleading.

Yakima County's housing market is showing signs of bucking a national cooling trend.

It is just one of three counties in the state — along with Grant and Thurston — where second quarter sales activity increased over the year.

Yakima County's home sales jumped 9.3 percent, according to data released last week by the Washington Center for Real Estate Research at Washington State University.

The county's median home price also increased, by 5.4 percent to $133,500, said center director Glenn Crellin, who notes that Yakima missed out on the huge gains that other markets, such as Seattle, have seen in the last few years.
...
Higher rates have not had the same dampening effect in Yakima [as in CA & FL], where median prices are still some of the lowest in the country, [NAR economist Ken] Fears said.

Local real estate agents say there are plenty of ready buyers here — supply is not keeping up with demand.
...
Fears said the county has a solid economy and slower price increases — an ideal environment for a healthy housing market.

Rich, the Prestige Realty broker, said other factors such as the area's proximity to wine regions and recreational activities will also draw people to the area — and create more demand for homes.

"We're in the middle of it," he said. "I don't think it's going to end anytime soon."
In Yakima it actually might not end anytime soon. It sounds like they have been fortunate to miss out on the insanity that the Puget Sound housing market has experienced in the last few years. Moderate appreciation, affordable homes, and strong demand—everyone is a winner. Contrast that with Seattle: Unsustainable appreciation, ridiculously over-priced homes, and weakening demand... You tell me which housing market is healthy and which one is likely to catch the flu.

(Mai Hoang, Yakima Herald-Republic, 08.21.2006)
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8 comments:

biliruben said...

I don't think smallville USA is going to avoid this completely. The problem is that with lower incomes and appreciation, people can get in a lot more trouble with loose credit. Cash-out Refis and poorly understood ARMS are already wreaking havoc with middle America in advance of the burst. That's because they haven't had the opportunity to appreciate their way out of the problem.

There's a post on "Tales..." where Seattle Eric is scouting out the Tri-cities to dive into the slumlord market, btw. Just a matter of time.

meshugy said...

It sounds like they have been fortunate to miss out on the insanity that the Puget Sound housing market has experienced in the last few years.

They're also missing out on a lot of other things too: jobs, nightlife, good schools, etc.

redmondjp said...

Ahhh, yes! Yakima . . . the 'Palm Springs' of Washington! Come on down to 1st Ave on Saturday night and watch the low-riders (keep your eyes peeled for the chrome-plated, welded-chain steering wheels--man dem tings R cool). I will say that they do have the best place to get a hamburger east of the Cascades--Miner's Drive-in.

There's a post on "Tales..." where Seattle Eric is scouting out the Tri-cities to dive into the slumlord market, btw. Just a matter of time.

My dad had rentals in Richland (where I grew up) for four decades--I learned how to fix toilets, replace outlets, change locks, and clean out drains when I was in grade school. They put my siblings and I though college.

I have good friends who just sold their rental properties in Kennewick--they were having too many problems with druggies moving in--the cops can't deal with the enormity of the problem, so often you're on your own to try to deal with the situation. Not enough room in the jails for them either, so they just move around from one place to another. And Yakima is known to be one of the major drug-trafficing centers in the PNW, worse than the Tri-Cities.

The RE market in the Tri-Cities is cyclical and directly tracks with the budget and job situation out at the Hanford site. When things are booming, housing is in short supply and the builders (of both single-family and apts.) go crazy. Then when layoffs happen out on the site and things slow down, there is an overabundance of houses and rentals, and prices drop, sometimes significantly. This has been happening for the past 50 years in the Dri-Tri. There has been some job diversity in the area but contractors on the Hanford site are still the #1 employer (Welfare for the Wealthy--I'm going to trademark this one, Tim).

Strangely enough, retail stores in the area seem somewhat immune from the ups and downs, as (believe it or not), Kennewick is a major shopping destination for many people in SE Washington and NE Oregon--Ranchers come up from Oregon with their Cummins-powered Dodge pickup/trailers and stock up at Costco, Ranch & Home, the Walmart SUPERcenter, Columbia Center Mall, etc.

Yakima's RE market is not tied too closely to Hanford, although there are some site workers who live there.

Anonymous said...

"Strangely enough, retail stores in the area seem somewhat immune from the ups and downs"

I wouldnt say the yakima mall was immune. I remember when it was one of the nicest places to go downtown. Lots of well known stores. I remember getting school clothes at the Squire Shop! Last I heard it was completely closed.

Anonymous said...

that's because the idiot owner of Yakima Mall decided to start charging people to park there. then a bunch of fresh space was coming online in Union Gap. the rest is history.

darth_s said...

Are they kidding? According to the latest data for 2nd quarter of 2006, the YOY price in Yakima has ACTUALLY DECLINED by -3.4%!

http://money.cnn.com/2006/08/15/real_estate/metro_prices_table/


Seattle will join the list soon!

Anonymous said...

Yakima's housing market cannot be compared to Seattle. That is like comparing upstate NY to NYC.

Seattle is an international city - People relocate from the east coast and california. It is still underpriced in my opinion.

The only reason anyone would go to Yakima is to visit a winery.

The Tim said...

Yakima's housing market cannot be compared to Seattle.

Techinically I said to contrast the two, and I most certainly think that you can. Note that I did not say to contrast the lifestyle the entertainment options, the climate, or the general desirability. I didn't even say to contrast the absolute median home prices. No rational person would dispute that it is more desireable to live in Seattle than in Yakima, and that housing prices should rightly be somewhat higher in Seattle.

However, that's not the issue. I'm only interested in how each housing market looks, relative to what a healthy market looks like. It is in that respect that I believe it is totally fair to contrast Seattle and Yakima.