When The News Gets Old

Newspapers and television keep talking about the housing recovery. Hello? The housing industry has recovered. If you've ever had a serious disease, major surgery, or been significantly injured in an accident, you long for recovery. You endure physical therapy, medication, and rehabilitation processes to, one day, get back to being your old self. But then one day you are old, and you've always been yourself, but you know that where you are now is not the recovery you hoped for. The housing market went through a period of drug induced euphoria between 2002 and 2007. Place the credit or blame where ever you want. I call it financing on crack. Investors wanted to make big money fast. Wall Street was doing anything to get bundles of loans they could then sell to investors. Lenders were going to 70% ratios (the norm always was, and is again 30%) on stated income (not anymore) just to make loans because Wall Street was buying. And the American public just had to buy a bigger and better home because next week it would be worth 50% or 80% or 100% more and we would have money to spend, spend, spend. Granted: Not everyone thought his way. But in retrospect, it should be obvious to all that the values reached in the real estate industry were not sustainable. They were not true values. In Seattle we have drifted back to the prices of 2005, and we linger at this point. That seems like a good thing to me. Prices on well kept homes are inching up. Prices on fixers are still trickling down. Why down? Because there is little upside for most DIYers in this market. The "it's fast money, honey" days are over for now. Look at any graph and you will see that we are in a stable market. For example the second and third graphs on the SeattleBubble Website show the decline percentage from the peak in many areas of the country has stopped. In Seattle, the price of homes sold over the past 36 months has changed only 3%, while in the 20 months before that it fell 23%. Lenders are being extra cautious to only make loans to people who can

• Pay them back
• Avoid default in the event of unexpected expenses
• Demonstrate financial stability

This is the market. The recovery is here and we are living it. Throw away that crack pipe, you're not addicted any more. Buying a home is not for everyone. Only do so if you want to, and if you are able to. You don't need to wait for verification from all of your friends. You don't need to wait for the newspaper to tell you that it is okay. You only need to see value, and move forward.

Also published on Seattle Real Estate with Glenn and Marjie