Housing Bubble?

Not so fast. Four reasons why Seattle is not in a bubble.

Reason 4 and Conclusion

 
 Many in Seattle are nervous that the housing market we’re experiencing is a sign of another bubble about to burst. However, as Windermere’s Chief Economist Matthew Gardner has pointed out, there is little evidence that this is the case. Below are four points you may want to consider when determining if the home values we see are built out of brick or out of straw.

Many in Seattle are nervous that the housing market we’re experiencing is a sign of another bubble about to burst. However, as Windermere’s Chief Economist Matthew Gardner has pointed out, there is little evidence that this is the case. Below are four points you may want to consider when determining if the home values we see are built out of brick or out of straw.

 

Inventroy is Contrained

People aren’t moving and builders are struggling to find opportunity. The lack of inventory means folks who may want to move worry that they won’t have a new home to move into once theirs is sold. The classic chicken and egg dilemma. All the while, here in Seattle, builders are struggling to make projects pencil. The rising cost of land, cost of materials, shortage of labor and increasing regulations make it extremely difficult for builders to create new inventory. Builders simply can’t keep up with the growth of demand. Our local leaders have lots of ideas but few solutions that will make any short term impact. It all comes down to the basics of supply and demand. The medium and small sized builders who contribute to creating the supply that would help alleviate pressure on home prices are struggling. Until we  have more housing the demand will continue to cause existing home prices to climb.

 
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Conclusion

To Fear or Not To Fear

Well it depends on what you’re scared of. If you’re looking to buy a home in Seattle then expect that it will continue to be a challenge. However, I believe you should go forth feeling pretty good about the future value of your home over the long term. Seattle’s economy is strong and diverse. Many believe it would take something on the national or international level to knock it off course. Even so, Seattle weathered the last recession better than almost anywhere in the country. If you currently own a home in Seattle then I think losing any sleep over the potential of a bubble may be wasted energy for now. Rather, sit back and enjoy the market conditions that are padding your equity. 

As we like to say in the real estate industry, non of us have a crystal ball. However, all the points made by our Chief Economist Matthew Gardner point to the same conclusion. The conclusion is that the home values we see now are most likely built out of brick  as opposed to straw. Its going to take one heck of big bad wolf to blow it over.