Home price growth in Seattle, Washington, 1990-2018. Graphic: The Seattle Times

By Mike Rosenberg
24 April 2018

(The Seattle Times) – As the Seattle area continues its run as the nation’s hottest real-estate market, it has now seen home prices surge upward for a full six years — with more growth in home values during the current boom than during last decade’s bubble. [cf. How the 2008 financial crash made cities unaffordable worldwide – Property markets in the world’s major cities have “synchronised”, leaving behind nations and citizens. –Des]

Single-family home costs across the metro area grew 12.7 percent in February from a year earlier, the biggest increase in the nation for the 18th month in a row, according to the monthly Case-Shiller home price index, released Tuesday.

The report marked six years since home values bottomed out in February 2012. Since then, values have increased 85 percent — nearly triple the region’s historical average for a typical six-year span. Only San Francisco and Las Vegas had bigger gains during that period.

Even during the housing bubble last decade, prices didn’t rise this much. In the six years leading up to the peak of the bubble in 2007, Seattle-area prices grew a total of 73 percent before the bubble burst.

(During the bubble, home prices rocketed up quickly — fueled by lax and sometimes fraudulent mortgage lending that sowed the seeds for the Great Recession — but the peak surge only lasted a few years; this time, the growth has been steadier and keeps going and going.)

The recent boom locally has completely wiped out the effects of the recession on the housing market, when prices sank.

Local home values are now a bit higher than they were at the height of the bubble in 2007, even after accounting for inflation since then. In other words, if the recession had never happened and prices had just grown at the rate of inflation since 2007, homes would actually be cheaper now than they are today.

Seattle-area home prices, February 2017 - February 2018, compared with the U.S. national average. Graphic: The Seattle Times

Only Denver and Dallas have had price growth greater than Seattle’s since the old 2007 high.

There are no clear signs that we’re in another bubble. At the least, the elements that created last decade’s housing collapse — like homebuyers getting mortgages they couldn’t afford and rampant subprime lending — aren’t present this time around. The number of people defaulting on their mortgages locally is minuscule, for instance, and lenders are only issuing mortgages to people with good credit scores and financial assets. [more]

Seattle-area home-price growth from current boom has surpassed last decade’s bubble

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