Pacific NW a "Rare Exception" (for now...)

I'm surprised that neither the Times nor the P-I chose to reprint this Associated Press article from yesterday: With few exceptions, Western real estate expected to stagnate. Why would they print an article with such a sullen headline? Because the Pacific Northwest is heralded as the "rare exception," of course.

Although few experts predict home values will fall dramatically in 2007, many economists say prices throughout the West - particularly California and the Southwest - won't improve for 12 to 18 months. The Pacific Northwest, where home prices are enjoying double-digit appreciation, is a rare exception.

Building booms in many markets over the past half-decade, combined with mortgage interest rates that have increased about 1 percent in the past year, have resulted in residential real estate stagnation in most markets.
...
One of the few exceptions to the nationwide slowdown is the Pacific Northwest.

In Washington, the number of houses sold in the third quarter of 2006 dropped 16 percent - but the median price surged nearly 12 percent from the same period last year, to $300,900, according to the Washington Center for Real Estate Research. In Seattle's King County, the median price surged 14 percent to $432,600.

The dot-com bust of 2000 hammered the region, which shed a disproportionate number of manufacturing and technology jobs in the following half-decade. Homeowners there haven't enjoyed the same run-up as investors elsewhere, said Glenn Crellin, director of the WCRER at Washington State University.

"Our real estate market essentially came to the party a little late. As a result, we're going to be able to have a softer landing than many of the other communities nationwide," Crellin said.

Speaking of the WCRER, while their latest report (pdf) shows building permits down across much of the state, King County is the glaring exception, with the number of units that building permits have been issued for up sixty-two percent. What was that they said about building booms leading to stagnation? Hmm...

I just love how skyrocketing real estate prices are always described in such positive terms in the media. "Home prices are enjoying double-digit appreciation," and our market "came to the party a little late." It's always so fun when the price of goods increase faster than the consumers' ability to pay!

We may have come late to the "party," but apparently we're not going to learn any lessons from the markets that were first to the party, and first to experience the hangover.

I also loved this little gem in the article:

About 97,000 Californians moved to Washington in 2005, making it the fourth most popular destination for Californians after Texas, Arizona and Nevada. Oregon was fifth, with more than 83,000 ex-Californians, the department reported.

California's departing homeowners typically use their substantial equity to fund their next real estate investment. Although some Seattle and Portland residents grumble about "Californication," the trend has helped keep home prices there rising, said Brian Kreick, broker for Lynnwood, Wash.-based Kreick Realty Group.

"I have clients from southern California who can't believe what they can get up here for the money," Kreick said. "I showed one guy a house in Redmond that was $830,000 and still needed a new kitchen. He thought it was a great deal."

Oh yeah, that sounds like a great deal... What's that saying about a fool and his money?

(Rachel Konrad, Associated Press, 12.11.2006)
(WCRER, Housing Market Snapshot, 11.2006)