Are We in a Housing Bubble?
As home prices in King County have reached record highs, some people are wondering whether we are approaching another housing bubble.
While it’s true that home prices here have surpassed the last peak hit during the housing bubble, that doesn’t mean we are in bubble territory today. The last bubble was fueled by faulty mortgage practices. Today, loans are granted on much more sound principles.
More importantly, the local economy is flourishing. Seattle has the fastest growing population of any major city in the country. The demand for homes, and historically low inventory, have been the catalyst for rising home prices here.
Still not convinced that there is no bubble? Let’s take a look at the statistics.
King County Median Sales Price
According to data from the Northwest Multiple Listing Service, the median home price in King County rose steadily since 1993 (the first year the NWMLS reported median home figures), fell during the crash, and has risen since 2012.
Now, let’s assume there was no housing bubble and crash in the mid-2000s and that home prices appreciated at normal historic levels for King County, which has been an average annual rate of 6 percent for many decades. This graph compares actual home prices (blue bars) with what prices would have been with normal appreciation (orange bars) over the same period.
King County Median Sales Price
Bottom Line: Had there not been a boom and bust, based on historic appreciation rates home values would be close to where they are right now. However, there is no doubt that home prices have risen rapidly the past few years, and that rate of appreciation can’t be sustained over the long term. If you are considering buying a home today, make sure you can afford the payments, and choose a location that will appeal to you for years to come.
The Trump Administration’s Impact on U.S. Housing
Will the Trump administration have an impact on the U.S. housing market? Windermere Chief Economist, Matthew Gardner, weighs in on how mortgage rates, inflation, and the possible repeal of Dodd-Frank could impact housing in the foreseeable future.
This post originally appeared on the Windermere.com blog.
How Much Did Residential Home Prices Rise in 2016?
King County Residential Home Price-Increase in 2016
King County Residential home prices increased an average of 12.7%. Here is the list of median home price-increase in different areas.
Shoreline/Richmond Beach | $439,725–> $503,393 |
Lake Forest Park | $432,250–> $505,350 |
Ballard | $587,000–> $655,000 |
North Seattle | $575,000–> $679,950 |
Queen Anne/Magnolia | $780,500–> $882,500 |
Central Seattle | $689,999–> $774,995 |
SODO/Beacon Hill | $420,000–> $501,975 |
West Seattle | $450,000–> $511,500 |
Southeast Seattle | $441,500–> $500,000 |
Kirkland/Rosehill | $801,000–> $899,500 |
Redmond | $650,000–> $709,793 |
West Bellevue | $1,751,000–> $1,948,000 |
East Bellevue | $638,950–> $730,000 |
East Lake Sammamish | $645,000–> $736,001 |
South Bellevue/Newcastle | $713,000–> $788,888 |
Mercer Island | $1,195,000–> $1,315,000 |
Juanita/Woodinville/Bothell/Duvall | $525,000–> $610,000 |
All data compiled from information supplied by Northwest Multiple Listing Association on 1/01/2017 Accuracy of information herein is not guaranteed.
This information was only taken of single-family homes, and does not include condominiums or vacant land.
This blog post originally appeared on the Bellevue Commons Blog.