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August 7, 2013 at 5:49 AM
Are house prices in Seattle in a new bubble?
Just yesterday my wife was pointing out a house on our street once again for sale. “Guess how much?” she said. I said $625,000. The answer: $880,000.
The neighborhood is Phinney Ridge, but not on the part with sweeping views of the Olympics. It’s on the other side, close to non-tony Aurora Avenue North, and if the house has any sort of view it is not much. It’s a handsome 1920s house, two full stories and in good shape, but it’s on a small lot. I didn’t go through it, but I did when it was for sale some years ago. But $880,000?
That the owner asked for that much doesn’t mean he’ll get it. Still, he thought he could get it. And maybe he can.
I see in The Times that house prices in King County are up 15 percent over the year, and that closed sales are up 18 percent. What I’m seeing seems to be more than that.
Well, Seattle is booming again. I can see it in the construction cranes and the lines at lunch. Still, I think of that price, $880,000, and other prices I’ve seen in my neighborhood, and I think: Are we back to 2006?
Back then I was hearing about funny mortgages, adjustable rates, no money down, stipulated income, gardeners buying mansions, etc. I don’t hear that stuff now. I have been hearing for several years about the low, low, mortgage rates, which have just gone up a hundred basis points or so. And I think: They had better go up some more. And soon.
A strong market is good. A bubble is not. It has financial consequences. And social consequences.