I was in a conversation with someone today asking about the future of real estate. There is so many horror stories that it is easy to get lost in the negative emotions, and miss the fundamentals of what constitutes a healthy real estate market.
Here’s what is going on in the greater Seattle area as it pertains to real estate. 4 reasons to have a positive outlook on our market.
Inventory levels are as low as they have been in 7 years. Though there are a variety of reasons for this, the amount of homes impacts prices and consumer action.
Due to the recession, there has been very little new construction over the past 5 years. Thought builders are coming back into the market, it takes time for the homes to be built. In the areas with quality new construction, builders are raising prices.
Local economy is healthy and improving. Jobs (tech and others – Boeing has 32 years worth of planes to build) and migration (Washington is #5 in the Nation in migration rates) point to a pent-up demand and lack of inventory.
There’s been a lot of talk about “Shadow Inventory” (homes that haven’t been foreclosed yet but will eventually be sold at auction). Lenders aren’t going to hurt their own best interests by “flooding the market”, it’s not going to happen. In most cases, the investors who purchase foreclosed properties are holding the properties as rentals. There will always be foreclosures; the smart money is on a balanced drip of homes into the marketplace.
A graph of Seattle for the past 7 years (by quarter).