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Welcome to my Real Estate advice column, “Dear Don,” where I answer all your burning Real Estate questions. Send yours to me at donkoonce@windermere.com, and I’ll try to answer them in future columns.
Dear Don:
Is the housing market crashing?
Nervous Nancy
Dear Nancy:
Of course, no one can predict the future, but based on supply and demand, I don’t see the Seattle market crashing in the near future.
People continue to move to the Seattle area, unemployment is low, interest rates are low, and rents continue to rise. All those people need to live somewhere.
The crash of 2008 – 2009 was caused by sub prime lending. Loans were given to people who couldn’t afford them, with very little down payment. When people were financially stressed, they simply walked away from the houses that they couldn’t afford. Since then, the lending standards are much stricter.
I think that any future crash will be caused by something else, such as a major world event, or the general economy crashing, not housing.
We have had double digit increases in the Seattle area housing prices for the past several years. That is not sustainable. The market is currently correcting itself, with prices leveling or declining, except in the entry level market, where multiple offers and rising prices are common. Although inventory levels have doubled in some areas, we are still in a seller’s market.
Once the market finds itself, I think that we will see flat prices, or small increases. Right now, prices are down 5% year over year. The upcoming presidential election will create uncertainty in the economy, which may cause buyers to pause their home searches for a while.
The thing to remember is that while homes lost value in the 2008-2009 crash, they have now rebounded to well above where they were prior to the crash. When considering buying a home, it is important to plan for the times when prices may decline, making sure that you can make your mortgage payments until prices recover.
Warmly,
Don
Are you ready to take the plunge into the Real Estate market? Don’t do it alone. My mission is to help you achieve your life goals. Contact me today at 206-250-7291 or donkoonce@windermere.com.
