Let’s Talk About Seattle Real Estate

MARKET FACTORS TO CONSIDER/ NATIONAL STATISTICS: IMPROVEMENT!
Below is this month’s statistical snapshot of the top 20 U.S. real estate markets, based on Standard and Poor’s Case-Shiller Home Price Indices, comparing value changes between November of 2008 and November 2009. Good news: the statistics below show that the amount of loss of home value has improved compared to the same time last year in all 20 metro areas covered by the survey. Even Las Vegas and Detroit improved their value levels compared to a year ago. Here are the comparisons between November of last year and November of this year (the latest reporting month):

Atlanta/-6.2% Detroit/-13% Portland, OR/-7.5%
Boston/-.68% Las Vegas/-24.5% San Diego/+.4%
Charlotte/-5.5% Los Angeles/-3.5% San Francisco+1.0%
Chicago/-8.5% Miami/-12.1% ***SEATTLE/-10.6%***
Cleveland/-2.5% Minneapolis/-6.8% Tampa/-13.2%
Dallas/+1.4% New York/-7.1% Washington, D.C./-.6%
Denver/+.49% Phoenix/-14.23%

Note that there are now only 5 other markets with worse losses than Seattle’s, so this means that most other American cities are improving at a better rate than Seattle (Seattle is where I live). Although four of the cities (Denver, San Diego, San Francisco and Dallas) are actually in positive territory (It’s true, look at the chart above) and higher than they were a year ago, all the rest of them, even though still negative, are doing better than they were a year ago as well.

I’m just trying to provide positive empirical evidence that there really is improvement. But we all know the brutal fact that from the peak in 2006 and 2007 every one of the 20 markets is down significantly. Las Vegas and Phoenix, for example, are still down over 50% from their peaks.

It is interesting that one of the topics that has come up recently in our office meetings is whether agents should be telling some clients not to buy real estate at all right now. Realtors giving advice like that! Can you believe such a thing?

And what do we say when clients ask whether they should do a “strategic default,” otherwise known as “unbuying” a house? It works like this: owners can have perfect credit, a good job and no problems making mortgage payments. They live in a house that cost $500,000 three years ago, but an identical house across the street is now selling for $350,000, in a neighborhood where it will be years before values recover. Should they buy that now-cheaper house and just walk away from the one they own?

Twenty-five years of real estate experience has given me a tried-and-true answer to these questions: do what is safe. The money in our bank accounts and the equity in our homes didn’t get there overnight: it got there partly because we have enjoyed a 50-year economic expansion in the U.S. that will not repeat itself. More to the point, if the money and the equity are still there, it means we were hardworking and had common sense, because so many people went through the same 50 years and came out with very little.

If the equity is not there because the house was recently purchased or refinanced, then there are ways to deal with that too. But, we should do what is safe.

And if you want to buy real estate now and have questions about what is going on, ask an expert: he might have helpful answers. But, you should do what is safe.

I don’t promote real estate fads: dedication to slow and steady progress has worked before and it works now. Keeping clients and friends safe has always been most important in the handling of my transactions. Then and now.