Seattle 2008 Real Estate Recap

To sum up 2008...challenging at best, but with some great potential in 2009. Here are the highlights of an article in the Seattle Times on 12/28/2008

Click here to see article

• Home/condos prices down through Oct. 2008 2.2%, with new home prices down 4.3%.



• 2008 was predicted to drop about 5% a year ago by Matthew Gardner.



• Prediction- first half of 2009 we will continue to see prices going down, last half we'll start to see an upward trend, due to good interest rates and available money for loans.



• Home sales down for 2008 due to several factors. It had been predicted that 2008 would be about the same as 2007, which didn't happen.



• Foreclosures - home price declines are the biggest driver of foreclosures, not resetting mortgage interest rates. Tough call to know when it will end. When supply and demand are in equilibrium then that will help.



• Renting - rates climbed 7% in 2008. Vacancy rates are expected to climb to 6% as new apartments come on the market and some renters decide to co-habitate. Rent rates predicted to stay the same or increase.

Call or email if you want more information of if I can be of service.

Great buys can be had. 12/24/2008

A client of mine is in the process of buying a 3-bedroom condo, which will close early January 2009. We just received the appraisal back from the lender and it appraised at 12.5% HIGHER than our purchase price. Most appraisals are coming in very conservatively priced due to the concerns lenders have with the value of properties currently being financed. I wouldn't be surprised if the condo could sell for even more than the appraised value. My client has instant equity in this condo and as the market continues to firm up he will be able to capitalize on that equity.

Why the bubble burst? Are some markets undervalued?

Two interesting articles in the paper today; one discusses why there was a real estate bubble burst. It says through the first half of this decade median household incomes dropped, the poverty rate/unemployment and house values increased causing the average worker to get further behind. Americans financed their spending habits by treating their houses like giant ATM's. I had read another article in the NY Times stating the same thing but using statistics instead. Once home prices rise above a certain percentage then homeowners stop buying.

Second article says some markets are now way undervalued; Modesto CA, Naples FL, Las Vegas NV and Des Moines IO are all undervalued between 11-23%. The study considered interest rates, household incomes, population densities and historic data to determine fair value.

Unemployment on the rise...

The news of over half a million people losing their jobs last month was not good news. Unemployment is the same as it was in 1974. I was alive back then but to young to remember what the climate was like. I did hear a follow up on NPR about the unemployment figures. The overall unemployment rate is 6.7% but of those that have a college degree that figure drops to 3.1%. It pays to be educated.