2009 Market Trends and Outlook
We had our 2009 Market Trends and Outlook meeting by local economist Matthew Gardner yesterday. For the most part, Gardner has been right on with his predictions over the years and we really enjoy attending his speeches, since he’s also very good at presenting both the good and bad sides. Gardner usually presents the bad, then the good and that’s important to know. A lot of his slides that we’ll be posting will agree with those who might prefer to trust in the gloom of the market, but will also show that comparably, the Seattle market fares extremely well over the rest.
Before jumping into how resilient Seattle is, lets first look at the positive side of the recession. The U.S. is currently seeing a steep decline in revolving debt.
So, we’re saving money, which is good. The flip side is that we can expect to see more Chapter 11’s filed in the retail sector.
National Home Sales
In addition, national home sale prices have in fact hit bottom back in January (almost half a year ago now). Predicting that the market will pick up can no longer be assumed as a prediction considering that the last three months has shown positive appreciation in prices.
Over the last four months, we’ve continued to see an establishment of a base, but we feel pretty safe in saying that prices have shown they’re stabilizing. Most importantly, they’re not going down. Gardner is predicting the flatlining of prices will get a lot more first-time home buyers off the fence, which in turn will allow those selling to move up themselves.
Unfortunately we will start to see a lot of our builders closing their doors due to the lack of funding and high construction costs. As a result, we should start to see much more of our current inventory taken up. Like we’ve said before, if it’s not under construction, it won’t get built–especially when referring to the downtown market where we more than likely will not see any new inventory break ground other than that that are already under construction.
SF = Single Family
In 2008, we saw 31.2% declines in San Francisco, 26.4% in Los Angeles, 24.8% in San Diego, 28.8% Miami, 33% in Las Vegas, and a whopping 34% decline in Phoenix. Whose to say Seattle won’t see up-and-coming declines similar to those markets? Our highest decline so far has been 17.1%. Seattle has only experienced an appreciation of 17.1% in 2005 (during our local condo boom) while the other major markets in mention have seen 30%, 24.9%, 26.6%, 31.5%, 45.5% and 44.9% appreciation rates which are simply unsustainable!
But what about all those lost jobs? Microsoft, Boeing, Starbucks… ? Unemployment in Seattle is still lower than what it was during the dot com bust in 2001/02.
…not by much, but we still ended up on top when it came time to create more jobs.
To those who might worry the jobs just won’t be able to be created, consider the huge amount of upcoming city improvements. The rapid transit/light rail is well underway and has already begun testing. The amount of road construction for 2009 alone makes it impossible to even make out what’s even going on when attempting to look at the City-Wide Planning Transportation Construction page on Seattle.gov. The Pike Place Market is undergoing $68 million of renovations which is expected to be completed in 2012. Another very exciting improvement adding to the thousands of jobs we can expect to see over the next couple of years is the Alaskan Way Viaduct’s cremation and burial. Although Gardner didn’t address all these new jobs, it is very much of a contributing factor to our city being the most likely to rebound as already mentioned in Forbes.
Unemployment is a lagging indicator rather than a leading indicator. -Gardner
With all those “yeah, but’s,” we’re finding it really difficult of find any real data that our market has not shown a positive trend since the 1st quarter. It does seem as though the hard climb we’ve had to make getting to somewhat of a level ground is over, and we can begin to get on with our lives during the final half of the year just as Gardner had predicted.
What’s your confidence level?
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