LOCAL NEWS

Are we in another real estate bubble in Washington?

Aug 29, 2017, 10:43 AM
real estate, king county, inventory, Seattle housing, single-family zoning...
File photo of houses for sale in Seattle's Laurelhurst neighborhood. (A Mclin, Flickr)
LISTEN: Windermere economist discusses Seattle real estate and

Ever since the real estate market took a dive a decade ago, buyers and sellers around Seattle have been wary of the term “housing bubble.”

RELATED: You’ll have to wait for affordable housing around King County

Bubbles burst, after all. It’s what happened in 2007 when prices went through the roof; buyers were flipping homes, and lending was out of control. Fret not, if you’re worried about a repeat 10 years later.

“That is where we were, but that is where we are absolutely not today,” said Windermere Real Estate’s chief economist Matthew Gardner.

So, currently, no “bubble.” This is largely because, unlike 10 years ago, lending has become very “stringent” Gardner said. High credit scores are required to buy a home. Down payments, which often were not required before the last bubble burst, are also a necessity.

“One thing that people aren’t really thinking about is where mortgage rates are today, relative to where they were in 2007,” Gardner said. “They are a full 2 percentage points lower. Which means you can buy 20 percent more house for the same payment. That’s going to drive prices higher, organically.”

Gardner predicts that rates will rise as high as 5 percent by late 2018.

Why Seattle real estate is so expensive

Still, the Seattle region is experiencing quite a unique set of circumstances — old and new — that are creating unattainable prices for many.

  • Topographical: There’s not much land to go around with lakes and Puget Sound in the way. There are also growth management boundaries. This makes what land is available for housing more expensive.
  • Development: Builders aren’t building enough to meet the housing demand because land is expensive. Labor costs are also up and that adds to the price.
  • Mass transit: Infrastructure, or lack thereof, makes it difficult to get around. So living in a convenient location is more expensive. Time is valuable, and commutes are growing. Buyers are moving farther out from Seattle along the freeways to find housing they can afford. More mass transit is coming to bring the region together, but that is decades away.
  • More people: More and more newcomers are moving into the area as Seattle’s economy booms. This places even more demand on the already tight market.

Millennials are another concern, Gardner said. They are the up-and-coming market. But builders are not constructing housing in their price point (which goes back to the previous issue that building is currently very expensive).

Local News

Climate Pledge Arena...
MyNorthwest Staff

Climate Pledge Arena set for grand opening, Seattle Kraken debut

Climate Pledge Arena will open its doors for the first time under its new name this week, with a pair of concerts and the Seattle Kraken's home debut.
11 hours ago
Gadsden flag...
Nick Bowman

Police watchdog to investigate photos of SPD vehicles adorned with Gadsden flags

The Office of Police Accountability is opening an investigation into photos circulated on social media of SPD vehicles adorned with Gadsden flags. 
11 hours ago
religious accommodation...
Nick Bowman

Washington State Patrol terminates 127 employees over vaccine mandate

Washington State Patrol has terminated 127 employees in the wake of the newly-implemented COVID-19 vaccine mandate that took effect on Monday. 
11 hours ago
hospitals...
Nicole Jennings

More staff in hospitals reporting vaccination, but some losses still likely

Reports of vaccination are growing among staff of the state's hospitals, but there will likely still be cuts to services caused by staffing shortages.
1 day ago
school, vaccine...
Stephanie Klein

Seattle school district reports 99% COVID vaccine compliance

Seattle's school district says the "overwhelming majority" of its staff has shown proof that they have been vaccinated against COVID-19.
1 day ago
money, minimum wage...
MyNorthwest Staff

Seattle minimum wage will increase on Jan. 1

Minimum wage in Seattle, and across Washington state, will increase on Jan. 1, 2022. Large companies will pay their employees $17.27/hour.
1 day ago

Sponsored Articles

...

How to Have a Stress-Free Real Estate Experience

The real estate industry has adapted and sellers are taking full advantage of new real estate models. One of which is Every Door Real Estate.
...
IQ Air

How Poor Air Quality Is Affecting Our Future Athletes

You cannot control your child’s breathing environment 100% of the time, but you can make a huge impact.
...
Swedish Health Services

Special Coverage: National Prostate Cancer Awareness Month

There are a wide variety of treatment options available for men with prostate cancer. The most technologically advanced treatment option in the Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform.
...
Marysville Police Department

Police Opportunities in a Growing, Supportive Washington Community

Marysville PD is looking for both lateral and entry level officers. Begin or continue your career in law enforcement for a growing, supportive community.
...
Comcast

Small, Minority-Owned Businesses in King County and Pierce County Can Now Apply For $10,000 Relief Grants Through Comcast RISE

Businesses in King County and Pierce County can apply beginning on October 1, 2021, at www.ComcastRISE.com for a chance to receive a $10,000 relief grant.
Courtesy of JWatch Photography....
Experience Anacortes

Summer Fun Activities in Anacortes

With minimal travel time required and every activity under the sun, Anacortes is the perfect vacation spot for all ages.
Are we in another real estate bubble in Washington?