Housing Outlook for 2007, The US and Seattle
The National Market
The 2006 housing market in the US had it's peaks and valleys. Here in Seattle the market slowed down somewhat but overall remained strong. According to leading industry analysts the housing market nationally in 2007 should be more consistent and positive. Alan Greenspan who retired as chairman of the Federal Reserve last year concurred that housing sales should pick up steam in 2007.
"Most of the negatives in housing are probably behind us," Greenspan said. "The fourth quarter should be reasonably good, certainly better than the third period." Others, including Steve Murry, publisher of Real Trends, a real estate research and information company, are saying that the desire for a home as a residence, or a recreation or retirement investment will remain strong for the next ten years. "We believe that housing consumers will purchase more homes in the next 10 years than they did in the last 10 years," Murry said.
David Lereah, chief economist for the National Association of Realtors, said 2006 was a different market because past declines were associated with the traditional factors of employment losses and rapidly increasing interest rates. However the 2006 slump occurred while jobs were being created, sound economic fundamentals were in place, and mortgage interest rates were at near historic lows.
"The 2006 declines came from affordability problems because prices were too high, forcing consumers to borrow too much," Lereah said. " We also experienced investors leaving the market, the perception that real estate was no longer a favorable investment, and the scare provided by some members of the media that the national bubble was bursting."
"Overall home-price gains will be modest, Lereah said of 2007's national outlook. "Home sellers are becoming realistic about current market conditions and are now offering more competitive pricing, in addition to some incentives or concessions."
"We now have the most favorable market for home buyers in several years, and most sellers who've been in their homes for a normal period of home ownership are still seeing very healthy returns on their investment, Lereah goes on to say. "Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced between buyers and sellers by early spring, supporting future price growth."
The Seattle Market in 2007
Seattle was just 1 of about 5 market areas in the country that didn't experience a real turndown in homes sales and prices in 2006. This positive trend appears to be continuing now in early 2007. Lack of inventories has remained the same now for the past 3 years and home prices are continuing to increase but at varying rates depending on prices range and locations.
While the total number of homes and condos sold decreased from 2005 to 2006; prices were up. In 2005, there were 31,939 homes sold and in 2006 there were 27,834 homes sold for a decline of 12.9%. Condos went from 9,984 in 2005 to 9,694 in 2006 for a decrease of 2.9%.
The under $500,000 prices range continues to be the biggest market in the Seattle area where we are seeing the fastest appreciation, but that depends on location. The closer you are to the "major job hubs" of Seattle and Bellevue the higher the appreciation will be. Closer-in neighborhoods may see another 10% increase in prices by the end of the year and neighborhoods farther out will be less, about 3% to 7% depending on location.
In 2006 there were 4,181 homes sold between $300,000 and $500,000 as compared to 3,103 homes that sold between $500,000 and $6,000,000. The average price for a home in Seattle in 2006 was $536,701 with the median price being $449,950. The lowest price was $140,000 and the highest price was $6,000,000. Homes between $600,000 and $800,000 are seeing the next fastest appreciation and so on. The average price of a Seattle home in 2000 was slightly over $300,000, in 2003 it was about $350,000 and then on 2004 it went up to $400,000, in 2005 it was $450,000 and now it's $536,000.
The local economy continues to be robust and we are experiencing a shortage of local people to fill those jobs. It has been estimated that Seattle will see an additional 100,000 workers being moved to Seattle by the end of the decade. That along with historically low inventories will continue to push prices upwards but at a more modest rate than in the past 3 years.
2007 has started out with very low inventories and a reasonable demand. Properties are selling if they are priced correctly in less than 30 days in most prices ranges under 1.5 million. Investors and builders have been backing off paying premium prices however for projects now for about 6 months as we have seen a surge in new townhomes on the market. There is some concern that the condo market will be effected in the short term by how many new buildings are being built at this time and slated to open by the end of the year. Seattle is a great real estate market and the long term outlook is very positive indeed.
The 2006 housing market in the US had it's peaks and valleys. Here in Seattle the market slowed down somewhat but overall remained strong. According to leading industry analysts the housing market nationally in 2007 should be more consistent and positive. Alan Greenspan who retired as chairman of the Federal Reserve last year concurred that housing sales should pick up steam in 2007.
"Most of the negatives in housing are probably behind us," Greenspan said. "The fourth quarter should be reasonably good, certainly better than the third period." Others, including Steve Murry, publisher of Real Trends, a real estate research and information company, are saying that the desire for a home as a residence, or a recreation or retirement investment will remain strong for the next ten years. "We believe that housing consumers will purchase more homes in the next 10 years than they did in the last 10 years," Murry said.
David Lereah, chief economist for the National Association of Realtors, said 2006 was a different market because past declines were associated with the traditional factors of employment losses and rapidly increasing interest rates. However the 2006 slump occurred while jobs were being created, sound economic fundamentals were in place, and mortgage interest rates were at near historic lows.
"The 2006 declines came from affordability problems because prices were too high, forcing consumers to borrow too much," Lereah said. " We also experienced investors leaving the market, the perception that real estate was no longer a favorable investment, and the scare provided by some members of the media that the national bubble was bursting."
"Overall home-price gains will be modest, Lereah said of 2007's national outlook. "Home sellers are becoming realistic about current market conditions and are now offering more competitive pricing, in addition to some incentives or concessions."
"We now have the most favorable market for home buyers in several years, and most sellers who've been in their homes for a normal period of home ownership are still seeing very healthy returns on their investment, Lereah goes on to say. "Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced between buyers and sellers by early spring, supporting future price growth."
The Seattle Market in 2007
Seattle was just 1 of about 5 market areas in the country that didn't experience a real turndown in homes sales and prices in 2006. This positive trend appears to be continuing now in early 2007. Lack of inventories has remained the same now for the past 3 years and home prices are continuing to increase but at varying rates depending on prices range and locations.
While the total number of homes and condos sold decreased from 2005 to 2006; prices were up. In 2005, there were 31,939 homes sold and in 2006 there were 27,834 homes sold for a decline of 12.9%. Condos went from 9,984 in 2005 to 9,694 in 2006 for a decrease of 2.9%.
The under $500,000 prices range continues to be the biggest market in the Seattle area where we are seeing the fastest appreciation, but that depends on location. The closer you are to the "major job hubs" of Seattle and Bellevue the higher the appreciation will be. Closer-in neighborhoods may see another 10% increase in prices by the end of the year and neighborhoods farther out will be less, about 3% to 7% depending on location.
In 2006 there were 4,181 homes sold between $300,000 and $500,000 as compared to 3,103 homes that sold between $500,000 and $6,000,000. The average price for a home in Seattle in 2006 was $536,701 with the median price being $449,950. The lowest price was $140,000 and the highest price was $6,000,000. Homes between $600,000 and $800,000 are seeing the next fastest appreciation and so on. The average price of a Seattle home in 2000 was slightly over $300,000, in 2003 it was about $350,000 and then on 2004 it went up to $400,000, in 2005 it was $450,000 and now it's $536,000.
The local economy continues to be robust and we are experiencing a shortage of local people to fill those jobs. It has been estimated that Seattle will see an additional 100,000 workers being moved to Seattle by the end of the decade. That along with historically low inventories will continue to push prices upwards but at a more modest rate than in the past 3 years.
2007 has started out with very low inventories and a reasonable demand. Properties are selling if they are priced correctly in less than 30 days in most prices ranges under 1.5 million. Investors and builders have been backing off paying premium prices however for projects now for about 6 months as we have seen a surge in new townhomes on the market. There is some concern that the condo market will be effected in the short term by how many new buildings are being built at this time and slated to open by the end of the year. Seattle is a great real estate market and the long term outlook is very positive indeed.
posted by David & Karen Bell at 9:40 AM
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