Second wave of falling home prices hits Seattle, other cities
Seattle, Portland markets drop back to 2005 levels
A second wave of falling home prices is battering some cities that had escaped the worst of the housing market bust.
Prices in Seattle, Charlotte, N.C., and Portland have hit their lowest points since peaking in 2006 and 2007. Denver and Minneapolis are nearing new lows. High unemployment and rising foreclosures are taking a toll even on markets that never overheated during the boom years.
Home values are dwindling in nearly every American market. Prices fell in November in all but one of the 20 cities in the Standard & Poor’s/Case-Shiller index released Tuesday. Eight of those markets hit their lowest point since the housing bubble burst.
The damage from the real estate bubble has spread well beyond Las Vegas, Phoenix and Miami, which built frantically during the mid-2000s, and is sapping prices from coast to coast. In many places, prices are expected to keep falling for at least the next six months.
In Seattle and Portland, the two largest cities in the Pacific Northwest, prices peaked in the summer of 2007 and have fallen back to 2005 levels.
Foreclosures were uncommon in Seattle until about a year ago. Now they’re dragging prices down, says Jim Conlan, branch manager for Century 21 North Homes Realty Inc. Home prices in Seattle were down nearly 5 percent in November from a year earlier.
“They’re the anchor on the market here that’s keeping it from starting to appreciate,” Conlan said.
As usual after the holidays, customer traffic at open houses is picking up, he says.
The region’s economy grew rapidly from 2002 to 2007 as Boeing rebounded from the post-9/11 drop in aircraft production and tech companies recovered from the dot-com bust. The region expanded at a faster clip than the rest of the country, attracting more people and lifting home prices.
“We had a bubble thing going on like everyone else,” says Dick Conway, an economic consultant based in the city.
The region was damaged by the recession. One in every three construction jobs vanished. Washington Mutual, the nation’s largest thrift, collapsed and took 3,500 jobs with it. Seattle unemployment jumped from 4.1 percent in December 2007, when the recession began, to 9.1 percent in November 2010.
Portland home prices have suffered from historically low timber yields and deep cuts within so-called Silicon Forest high-tech companies.
And while Seattle’s two biggest employers, Boeing and Microsoft, haven’t laid off many workers, they won’t need as many new people as the economy improves, Conway says. During the recovery after the 2001 recession, Boeing was a major job generator, directly or indirectly creating 65,000 jobs.
But in this recovery, “it’s going to be closer to zero,” Conway said.
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