An increasing destabilization of the Washington real estate economy triggered by the credit crisis is sending the majority of housing markets in the state to lower price levels, which are forecast to worsen over the remainder of the year.
The cooler housing market has sent Washington’s economy, once one of the strongest in the nation, on a road to real estate deflation in the majority of markets, but not all. In western Washington, along the I-5 corridor home prices are deflating. While in a few isolated communities on the east side of the state, markets remain some what stable.
With one of the strongest statewide economies in the country, Washington is better off than most. In Seattle, homes coming on the market for sale are adding to an over abundance of inventory. A handful of commercial projects downtown have been put on hold or cancelled, further indicating the area’s growth has slowed from the boom.
Seattle housing prices have only begun to decline from record highs, and it will take at least another full year for the market to realize yesteryears high prices are history. The devastating impact of the national credit crisis, lack of consumer confidence and fear in the market place coupled with other factors are forecast to send housing prices lower at 5.7% for the year.
 |
| City |
Forecast |
| Seattle |
− 5.7% |
| Bellingham |
− 6.3% |
| Tacoma |
− 6.9% |
| Spokane |
4.4% |
| Tri-Cities |
2.0% |
| Yakima |
4.1% |
In Bellingham, where home prices are declining at a faster rate, an onslaught on homes listed for sale and increasing foreclosures attribute to the markets downfall. The once over-heated Bellingham market has come to an end and is projected to see a deflating market develop into a worse scenario, averaging deflation of 6.3% in 2008.
Tacoma is witnessing a slower housing market turn even slower, and will finish the year with average home values on the downside at 6.9%.
However, on the eastern side of the Cascade Mountains, Californians are still pouring into Spokane to buy more house for their money. Although the market experiences seasonal slowdowns during winter months, prices are still attractive to many newcomers, and Spokane is forecast to see a relatively healthy market through the remainder of the year.
The national real estate frenzy sent prices higher for more than two years in Spokane, leaving locals grumbling about the lack of affordable housing. More homes are hitting the market for sale these days, and in the city that has attracted new high tech industry and revitalized itself the average home will see appreciation forecast at 4.4% in 2008.
The median price of a home has increased at double digit levels in Yakima, but is slipping for the first time in at least three years as subprime borrowers are beginning to walk away from homes they can no longer afford. However, the market won’t feel the entire impact of the subprime crisis until late in 2008, providing a fairly healthy pace of sales until then.
Home prices will be relatively weak on a comparative scale to the real estate boom in many markets else where, but will climb a healthy forecast 4.1% in appreciation for the year.
Richland, Pasco and Kennewick are in the south-east corner of the state, comprising the Tri-Cities area. All three witnessed their markets weaken on the heels of higher interest rates and fall out from the mortgage melt down. The area has had an erratic history in real estate cycles, coming to a standstill at times while other markets moved upward.
