Secrets of Seattle’s Subprime Mortgage Mess
Here’s a recent paper on the housing crisis and the related Wall Street Journal article. A few figures from the paper are interesting. They show the movement of home prices by low, middle, and high tiers. The ones for Seattle and Portland are below, look at the paper for the rest.
Read the long paper for a complete understanding of these graphs, but in a nutshell: the greatest flow of money was to the lower-value tier of Seattle area housing, so the greatest appreciation took place there. When no more sub-prime buyers were available to bid house prices up, prices then dropped the most in the lower tier. Therefore, that is currently where all the “deals” are to be had, a fact recognized by the federal government’s $8000 first-time home-buyer credit: real value is to be found, for the moment, at the cheaper end of the market.