According to the latest S&P/Case-Shiller, home values rose 10.8% year-over-year and 2.4% from February to March 2016, setting a new benchmark in home values and surpassing the previous peak in the summer of 2007. The significant growth has caught some by surprise but for those close to the industry, Seattle is simply catching up to other West Coast gateway cities such as San Francisco or Vancouver, BC. In fact, a recent Seattle Times articlehighlights that Seattle had the second highest metro area home price increase year-over-year, rising 10.8% in March (only Portland exceeded Seattle, which rose 12.3%). Seattle, however, was actually the fastest rising market month-over-month in March, increasing 2.4%.
So is this a bubble? Probably not, suggests Jon Talton of The Seattle Times. He takes into consideration that the Great Recession and the housing market decline that began in 2008 were caused by a glut of subprime mortgages and too many unqualified homebuyers speculating in the market. This along with eager mezzanine financing led to a misread of demand by many developers that oversupplied the market with inventory. Nowadays the opposite effect is playing out where there is anemic inventory, especially in downtown Seattle, according to Dean Jones, President & CEO of Realogics Sotheby’s International Realty. He suggests the market may have “overcorrected.”
Jones made some predictions about the state of the in-city housing market a year ago when he participated in the article “Manhattanziation of Seattle” by Cynthia Flash of the Puget Sound Business Journal.
For the most part the upward pressure on pricing has occurred and the ongoing comparisons to Seattle becoming more and more like San Francisco was best summed up in a recent interview with Gregg Lynn, a top-producing condominium broker in California based in San Francisco at Sotheby’s International Realty. So, will Seattle end up like San Francisco over the next few years? Check out why Lynn says he “can’t see it not happening” and more, in the full video.
“It looks like at least two of the planned developments in the pipeline we’ve been monitoring will not be condominiums after all, but will arrive as more apartment inventory for rent,” said Jones. “This makes the arrival of NEXUS even more anticipated.”