2019 – There are a lot of opinions trying to answer the question, “What’s going on in the real estate market?” When few agree, it’s not the facts that confuse them, it’s determined by which facts they consider.
For example, if you are a stock broker, you might use the “inverted yield curve” (an interest rate indicator). When long-term debt has a lower yield than short-term debt, a stock broker will predict a recession. It doesn’t happen often, but that’s the case in this scenario.
The National Assoc of Realtors (NAR) uses the national market as a predictor. They say, “the lights turned off in the second half of the year, sales tumbled and inventory rose.” To be clear, this was said by NAR’s chief economic advisor, not a WA real estate broker. I’m sure he’s right about some areas of the country, but maybe not here.
If you are managing the S&P Dow Jones Indices, you might say something else, “The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a home.” Clearly this does not apply to Puget Sound waterfront property.
My point: Good news or bad, it depends upon where you stand. Why? All real estate is local and depends on where you live. The times are always changing, but the real questions are, By how much? and In what way?
From my perspective, what’s going on?
Before freaking out at all the pessimistic opinions, keep this in perspective. Interest rates remain under 5% and 30-year Treasury rates are the lowest since the Viet Nam War. Money is cheap… and we aren’t making any more waterfront.
Ralph McLaughlin, chief deputy economist for Core Logic, which operates the NW Multiple Listing Svc says, “My best guess is the housing market comes into a soft landing.”
Why is that true here in NW Washington?
Families continue to move west. On average, 55,000 are moving into King County each year and they need a place to live. Baby boomers are retiring to the south, making more homes available. These are big trends affected much less by a slowing general economy. In other words, the digital revolution will continue, and the region will continue to prosper. Real estate continues to be a good investment, especially waterfront, and the most protected waterway in North America is right here.
The fact is that home prices are 54% above the bottom 6 years ago or 40% adjusted for inflation. Yes, we are slowing down. Our hair is no longer on fire. This is what returning to “normal” looks like, where buyers and sellers are more in equilibrium. Price-growth is slower and mortgage rates will be more stable. What is happening here may not happen everywhere but until further, it’s back to normal.