In 1992, I was asked to give a speech by the Appraisal Institute for their regional summer conference held in Seattle - my topic: Residential Value Trends.
During the investigation, I found that historically the Seattle market has 10-year cycles with the slower markets occurring during the first 3 to 4 years of a decade, growth keeping pace with or slightly outpacing inflation during the middle of the
decade, and rapid growth over the last 3+/- years of the 10-year cycle. The 1990s have been no exception to the trend of the past 40 years.
Over the past 10 years, Seattle has shifted from a region dependent on one single base employer to one with a diverse economic make-up. With the strength of the local economy in high tech, biotech,
communications, aircraft manufacturing, and retail, plus the inflow of venture capital, the transition over the past 15 years has changed the face of the community from a small regional city to one of global influences. Due to the economic growth
and diversification of the employment base, the trends of future decades are not likely to follow those of the past.
In the same investigation, I found that the market has yearly cycles as well. The first 3 to 5 months of the year typically set the pinnacle for achieving
seller goals (short marketing times and sales at or close to their asking price). Negotiated sales in March typically outperform every other month of the year. Listing competition is at its lowest during the first quarter of the year, and buyer
activity is at its strongest.
The closing of school, summer vacation and back-to-school markets are slower by comparison. Increased listing volume during this period gives buyers greater choices and reduces the sellerís ability to
achieve appreciable values in negotiating a sale during the summer months. The early fall is upbeat, however, it gives way to the holiday season where both inventory and sales activity decline.
In general, the past year, 1999, was no exception to the annual trends of the past. Appreciating real estate value occurred during the first two quarters of the year giving way to rising inventory,
slightly higher interest rates and the seasonal shift for the summer months. The latter 6 months of the year were lackluster.
When considering the cyclical trend over the past year, home values below $1,000,000 in suburban markets appreciated at a nominal rate to as much as 10% for the year. Most of the gain occurred during
the first 6 months of the year with sale prices cycling back as the year ended.
Close-in urban and high-end communities were quite different, continuing to support a sellerís market and rapidly appreciating home values at 1% to 2% per month. This trend is indicative of the
growing economic wealth of the region. Over the past several years, traffic congestion on our roadways has increased creating a preference to locate in urban and suburban areas in proximity to employment and well-rated public and private schools.
With the wealth distributed over a larger population and the limited availability of estate-quality and waterfront locations that meet the prospective buyer needs, the Seattle market experienced the
negotiation of several high-end homes with multiple offers and sale prices that exceeded seller expectations.
The region continues to experience in-migration into the area facilitated by the growth of new jobs, the quality of life and demand for a highly paid, well-educated work force. The start of the
millennium should experience strong demand for housing, but the appreciation rate may slow when compared to average increases in home values in recent years.
Thus far, January 2000 has been slow; the primary reason may be the limited availability of quality inventory.
The outlook for the region is strong, but areas of concern include transportation (a system that may prove inadequate to handle continued growth), the rising cost of housing, inflation which would
trigger higher lending rates, stock market corrections, and global concerns. These factors could have an effect on continued positive market conditions, which currently exist for the region.
TREND CHARTS - January 1995 through August 2000
vs Net Pending Sales