Are You Waiting For The Seattle Real Estate Market To Cool Off? (We’ve Been Saying That For 40 Years!)

Are you waiting for the Seattle Real Estate market to “cool off?”

Some buyers who were hoping to buy a million-dollar home in Bothell just texted my assistant and said they were pulling out of the market for a year to see if things would “cool off.”

Inflation

I can’t blame them.  It’s incredibly competitive buying a house in that location and price point right now.

But… will things cool off.  I doubt it.

A long, long time ago, when dinosaurs roamed the earth and I was a little child, my parents owned a small apartment building in Ballard that they had purchased with another couple from church.

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Each evening after working all day, they would run by Dick’s Hamburgers for a take-out dinner, and then take their adorable baby Emily in her playpen to the apartment building where they would do fun after-work activities like painting the walls and stripping the hardwood floors.  

My parents were ambitious, but their older business partners from church were even more ambitious … one of them broke his arm falling out of a tree with a chainsaw while trying to trim some wayward branches.

They improved the units as they turned over and raised the rents, in true “William Nickerson” style! (He’s one of the original authors on how to invest in real estate writing back in the ’70s, I think…)  They were a textbook example of how to do everything right.

Unfortunately, some law changed and they were going to have to put in a big fire sprinkler system which they didn’t want to fund, so they ended up selling the building, going their separate ways from their broken-armed partners, and pocketing a nice chunk of cash.

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So they set about looking for another building to invest in, but it was hard to find something where the numbers would work.  In fact, that typical “cash flow real estate” model you read about in books is actually pretty hard to implement here in the Seattle real estate market. 

This is more of an “appreciation market” than a “cash flow market.” 

You have to be willing to take a loss month to month, while the paper value of your asset goes up, or you have to put down a huge down payment to keep your cash flow in the black.

Hard as my Dad looked, he was not able to find another building to invest in that met his criteria.

In fact, the “bubble” that seemed to be apparent then – four decades ago – has pretty much been in effect my whole life.

Except for those soft few years after the whole real estate market blew up nationwide in 2008, the Seattle market has never had more than a 5% loss in the last 38 years for which I have data.

So no, Victoria, there is no Santa Clause.

And no, discouraged buyers, I don’t see a big market correction coming in which prices are likely to become more affordable.

With prices forecast to go up for the rest of the year, and interest rates also forecast to go up for the rest of the year, we can really only hope that your income goes up at a relatively faster pace if you want to increase your buying power.

The Seattle Real Estate Bubble seems here to stay.

Emily Cressey

Emily Cressey is a real estate broker residing in Lake Forest Park, WA who services the Greater Seattle area including Shoreline, Mountlake Terrace, Brier, Lynnwood, Kenmore, Bothell and Edmonds, WA.

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