ZipRealty’s CEO predicted the Seattle market is the next to crash, according to Seattle Bubble Blog. That prediction would be scarier if he had cited data that supported it. He cited the amount of inventory that’s on the market, which is high. And… and… and that’s all the data he cited.
Apparently Seattle’s market will go the way of San Diego and Miami. But isn’t real estate the most truly local market there is? Don’t all trendlines have variance around the median? So let’s do what this fellow failed to do: look at the data.
Yup, inventory IS high. (see Inventory, Inventory, Inventory.) According to Redfin , there are 203 homes for sale on Mercer Island. In the last three months, only 60 homes sold here. So inventory is pretty high. It’s interesting to compare the average statistics across those groups:
|Last 3 Months’ Sales||Current Listings|
|$/ Sq ft||$488||$499|
So the houses on the market are pretty close to recent sales in terms of price per square foot, but it’s generally smaller and less expensive homes that have been selling. It’s a slow market; volume is down about 40% year-over-year; and inventory is high.
California’s seen a rate of 517 foreclosures per day. But it also has a much higher rate of subprime lending, according to an interactive map by The New York Times. In the Seattle area, less than 9% of the loans made were subprime. EVERY subprime loan in the area could default and Seattle still wouldn’t be in the same position as Sacramento, CA or Ft. Meyers, FL.
Foreclosures in a neighborhood can drag down home sale prices, and if not maintained, become a public nuisance . But Redfin shows only 219 homes currently in foreclosure in all of King County. We’re not immune, but it’s not that bad here. Getting even more local: no Mercer Island homes are in foreclosure. Not to say it can’t happen; it’s just not a problem right now in our ‘hood. If the data change, we’ll look at it again.
The national unemployment rate in April 2008 was 5.0%; in Washington State it was 4.7%; in Seattle-Bellevue-Tacoma, it was 3.7%, according to the Bureau of Labor Statistics. Job growth in the area was fourth-highest in the US in the past year. Seattle’s population also continues to grow. Things can change. But right now, they’re ok.
So are we in for more of a sluggish market and some price drops? Probably. Are we in for a San-Diego style crash? Probably not.