A new survey found 71 percent of Washington adults think a housing bubble is coming. New York, Florida and California residents were the next most likely to fear a housing bubble.
By Mike Rosenberg - Seattle Times business reporter
If there’s one word that comes up more than any other in the Seattle-area housing market, it’s probably “bubble.”
George Moorhead, owner of Bentley Properties in Bothell, said the b-word comes up with just about every buyer he represents.
“They’re getting very wary about a bubble,” Moorhead said. “It is very much a huge concern. The perception is: how long can this go?”
Now a new national survey finds that 71 percent of adults across Washington are worried about a housing bubble and think prices are overvalued and unsustainable. That’s the highest rate of any state in the nation.
The finding may not be surprising, since home prices both in the Puget Sound region and across the state have been rising faster than anywhere in the country for about a year now.
In the Seattle metro area, single-family home costs are up 13.3 percent from a year ago, and are rising at the fastest clipsince the 2006 housing bubble, according to the Case-Shiller index. Compare that to 5.6 percent home price growth nationally.
Across Washington, home values are up 12.7 percent from a year ago, also easily tops in the nation, according to CoreLogic. Even cheaper places like Spokane and Bellingham have become less affordable.
The bubble survey was released by ValueInsured, a company that sells insurance to protect against declining home values. That presumably gives it an interest in propping up bubble fears.
Nevertheless, any such bias wouldn’t explain why Washington residents were more likely to predict a bubble than anywhere else. Next was New York, where 68 percent predicted an impending market correction, followed by Florida (63 percent), California (59 percent) and Texas (58 percent).
One more note on the survey: It looked at a representative sample of 1,079 people across the country in July. But the sample sizes in individual states was relatively small.
We should note that the vast majority of local real estate agents do not believe a bubble is coming (though not everyone will trust them, either).
One thing is for sure: The problems that led to the last bubble before the recession, like underqualified buyers egged on by unscrupulous lenders, aren’t present this time around. Home loan data shows local buyers are getting good credit scores, forking over big down payments and paying their mortgages on time.
It’s unclear what could even cause housing prices to drop right now. Layoffs at Amazon and Microsoft? A sudden flooding of the market with homes for sale? The smoke overhead sticking around for good?
There’s also a third, less talked about and more boring scenario for the market’s future: Somewhere between a bubble and continued exuberance. Moorhead, for instance, expects 2018 to be a “flattening market,” with prices rising at a more normal rate — like 3 percent or so.