Another Positive Period for Northwest Housing Market

by : Michael Sanborn

According to the recent OFHEO report issued May 22, 2008, US housing prices decreased .03% year over year on average. Like all of these housing reports, I think it is important to know what is influencing that number. The most significant point to me is that 36 States had a year-over-year positive increase. Only 15 (includes WA D.C.) had negative numbers and only 5 would be considered substantial negatives. So, once again, take California, Florida and Nevada out of the equation and the overall US housing price would have been positive.

Secondly, the US Housing price index shows average price increases were almost 39% over the last 5 years and almost 300% appreciation since 1980. Again, real estate is a good long-term investment. The problem with the recent 'bubble' was a combination of speculation and fraud. I'm wondering if we might see the same burst in commodities based on the very little amount of cash needed to control those contracts (similar to zero down, no doc investor loans) and the highly speculative nature of those markets. We'll see, but the money has to go somewhere and it ain't housing right now.

Third, as I've mentioned previously, Washington and Idaho added several cities to the Top 20 cities for appreciation - Wenatchee #3, Yakima #17, Idaho Falls #16 and Logan UT - ID #15.

My overall opinion of our housing market is that we might feel some additional softness to the market since national trends do have their affects on our local market - If you can't sell your home in California to move up here, demand for Seattle real estate suffers. As those markets stabilize, more buyers will come out of hiding and thus mornalize our inventories as well.