By Matt Matayoshi
Special thanks to Joe Robertson, President/ CEO of Our Community Credit Union, for his contribution to this article
National news is covered with headlines about the burst of the housing bubble and the implications that this has in communities across the nation. It is fascinating to see that there are a few markets in this country that have defied this national trend of huge decreases in new home sales. One of these markets, which include Mason County, is the Seattle market. Overall, the State of Washington has faired this change very well. Economists and so called experts can debate why we have been less impacted than other areas of the county. The why is not as important as knowing that we are in better shape then most of the nation.
Some background on this situation may assist in providing insight into the problem. How can we summarize what has happened in the national housing market? Succinctly put, it was lending to the wrong borrower and lending the wrong type of loan to stable borrowers. Most of this type of lending activity occurred between 2005 and 2007.
What led to this type of activity? It was the “Perfect Storm” of ingredients. The first element was interest rates falling to an historic low. The second element was a demand that drove prices up. Third, new money in this portion of the market grew and new mortgage brokerages increased at a rate never seen before.
The outcome of this mortgage mess is foreclosures spiking at a historical high in some areas across the Country. Out of all the homes on the market today you will find that 70% of homes in San Bernadino/Riverside are in foreclosure, in Sacramento 71%, North Las Vegas has 63%, and Denver is at 50%. This trend is creating uncertainty in communities across the Country.
In this post mortgage bubble bursting world, there are a few markets that have emerged as virtual islands that have withstood this sweeping trend of foreclosures. Of these markets the Seattle regional market has defied the trend. In Mason County we are continuing to see steady real-estate activity. It is not the “Hot” market that we experienced during 2005-2006 but it is still a respectable market with which most of the country would love to trade. In this case, when speaking of the market, one would agree that “What happens in Vegas stays in Vegas” when it comes to their housing market problems. They can keep their foreclosure trend.
In the market here in Mason County, we are still experiencing prices of homes that are only about 4% less then what they were a year ago. The average price of a home is down from $206,000 to $197,900. One could come to the conclusion that home prices are strong because, unlike other pockets around the country, our prices never spiked artificially as high and demand in the market place has remained steady.
The good news is there is still a good amount of demand in our area for homes. Through this year and next, the key will be to hold on to our optimism and see if we continue to defy national market trends.
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