TALKING
TALKING ABOUT. RUS RUS IS TAKING A DEEP DIVE
INTO THE STATE OF THE ECONOMY
WHEN IT COMES TO HOUSING.
>> HOUSING IS ALWAYS A BIG TOPIC
AROUND HERE.
AROUND HERE. WHEN WILL IT BECOME AFFORDABLE?
WILL IT EVER BECOME AFFORDABLE?
ARE WE IN THE MIDDLE OF A BUBBLE
THAT'S ABOUT TO BURST?
I TURNED TO A TEAM OF ECONOMISTS
TO GET THEIR TAKE ON THE STATE
OF OUR LOCAL ECONOMY AS IT
PERTAINS TO HOUSING.
SO TAKE A LOOK.
>> Reporter: MATTHEW GARDNER IS
THE ECONOMIST WIND MERE TURNS TO
TO MAKE SENSE OF DATA AND
PREDICT TRENDS.
PREDICT TRENDS. SKYLAR OLSEN, WORKS FOR ZILLOW,
AND TAYLOR MARCH, REDFIN'S
ECONOMIST.
ECONOMIST. THOSE REELING FROM THE HOUSING
CRASH OF 2007 WANT TO NO ARE WE
IN A BUBBLE?
>> FOR ECONOMISTS, BUBBLE A
STRONG WORD.
STRONG WORD. I THINK WHEN PEOPLE FOCUS ON THE
BUBBLE, THE IDEA IS WILL WE HAVE
A POP?
A POP?
A POP? >>
A POP? >> WE SAW IN 2008 WHAT
PRECIPITATED THE RECESSION, THE
BURSTING OF THE HOUSING BUBBLE
IN THE FIRST PLACE.
THAT WAS IRRESPONSIBLE LENDING.
ANYONE THAT HAD A HEARTBEAT
COULD GET A MORTGAGE.
ANYONE COULD QUALIFY TO THE
RIDICULOUS NO ONE QUALIFYING.
WE'RE REMARKABLY OVERQUALIFIED
RIGHT NOW.
RIGHT NOW. >> Reporter: WHAT MADE THE
HOUSING COLLAPSE NOTICEABLE IS
THAT THE LENDING PRACTICES
CAUSED IT WHICH LED TO
RECESSION.
RECESSION. GARDNER SAYS THAT'S NOT AN ISSUE
SINCE STANDARDS TO BUY ARE
HIGHER.
HIGHER.
HIGHER. SO TO DETERMINE IF NEAR A BUBBLE
AGAIN, WE MUST UNDERSTAND WHAT
CAUSED THE LATEST PRICE SURGE.
>> WHY IS IT THAT PRICES GREW AT
THE RATE THEY DID?
AND WE HAD STRONG ECONOMIC
GROWTH IN SEATTLE WHERE A LOT OF
THE TECH COMPANIES, THEIR STOCKS
WERE ALSO GROWING.
THAT WEALTH DID PASS THROUGH
INTO HOUSING.
INTO HOUSING. THERE'S A LOT OF FOREIGN
INVESTMENT FROM CHINESE PEOPLE
BIEG REAL ESTATE.
THAT PUSHED UP PRICES.
MORTGAGE RATES WERE ALSO LOW.
THERE WERE A LOT OF REASONS WHY
WE SAW THE PRICE GROWTH WE DID.
>> IT'S A VERY DIFFERENT WORLD
NOW THAN '07 OR '08.
IT'S AN INPALPABLE CORRECTION IN
PRICE?
PRICE?
PRICE? NO, A SLOWING DOWN TO LET
INCOMES CATCH UP.
GIVEN WE'RE SMART AND HAVE A
GREAT SET OF COMPANIES HERE, I'M
LOOKING AT 4.5% TO 7% WAGE
GROWTH THIS YEAR.
>> I REMEMBER REALTORS TELLING
US THAT IN 2006.
BUT I GET YOUR REASONING.
YOU'RE SAYING THE LENDING IS
DIFFERENT NOW.
DIFFERENT NOW. >> MY ALL TIME FAVORITE, 0 DOWN
WITH CASH BACK AT CLOSING.
SO PUT NO MONEY DOWN, TOOK OUT A
105% MOR DAMAGE.
IF YOU COULDN'T AFFORD TO PAY,
THAT'S OKAY.
THAT'S OKAY. THEY PUT IT ON THE END OF YOUR
DEBT.
DEBT.
DEBT. WHAT COULD GO WRONG?
AND THAT'S WHAT WE ENDED UP WITH
THAT WE HAVE NOT SEEN TODAY.
>> FROM MY PERSPECTIVE, THINGS
ARE CERTAINLY SLOWING DOWN IN
SEATTLE.
SEATTLE.
SEATTLE. HOME VALUES ARE COMING DOWN.
DO I THINK THEY'LL COME DOWN IN
THE SAME WAY AS THEY DID BACK
IN 2007?
IN 2007?
IN 2007? NO.
NO.
NO. >>
NO. >> Reporter: SPECIFICALLY,
ZILLOW RESEARCH SHOWS HOMES WITH
A MEDIAN VALUE OF $857,000, THE
TOP THIRD OF THE MARKET, SAW
VALUES DROP 1.7% SINCE THE SAME
TIME A YEAR AGO.
HOMES STILL CONSIDERED
AFFORDABLE IN THE BOTTOM THIRD
OF THE MARKET WITH A MEDIAN
VALUE OF $304,000 SAW GROWTH BY
3.4%.
3.4%.
3.4%. >>
3.4%. >> KIND OF JUST DEPENDS ON WHAT
SEGMENT OF THE MARKET YOU'RE
LOOKING AT.
LOOKING AT. KING COUNTY, HOME VALUES ARE
DROPPING.
DROPPING.
DROPPING. PIERCE COUNTY AND TACOMA --
>> THEY'RE NOT.
>> SO TACOMA'S A REALLY
INTERESTING PLACE TO WATCH RIGHT
NOW.
NOW.
NOW. IT'S
NOW. IT'S WHERE SEATTLE'S HEAT WENT.
>> I WOULD BE SURPRISED TO SEE
US GET DOWN TO THAT POINT.
I THINK WE'RE GOING TO GET BACK
TO BALANCED, EQUILL LIB YUM.
WHEN WAS THE LAST TIME WE SAW A
BALANCED HOUSING MARKET?
I WOULD ARGUE 1999.
IT'S BEEN 20 YEARS, 2000
THROUGH 2008 PRICES ROCKETING.
'08 THROUGH '12, PRICES ON THE
DOWNSIDE.
DOWNSIDE.
DOWNSIDE. '12 THROUGH MOST OF '18, BUMPING
UP AGAIN.
UP AGAIN.
UP AGAIN. WE'VE BEEN 20 YEARS.
I THINK GETTING BACK TO BALANCE
IS THE BIGGEST STORY RATHER THAN
A DROP AND A MOVE TOWARDS A
BIASSED MARKET.
BIASSED MARKET. >> IT'S UNLIKELY WE'LL SWITCH TO
A BUYER'S MARKET ANY TIME SOON.
THE TRUTH IS IN SEATTLE WE'RE
CONSTRAINED BY LAND.
THERE'S ZONING REGULATION THAT
IS MAKE IT DIFFICULT FOR
BUILDERS TO MEET THE EXTRA
HOUSING NEEDS OF ALL THE PEOPLE
MOVING HERE FROM THE BAY AREA.
WE TRACK MIGRATION AT REDFIN AND
SEE TONS OF PEOPLE MOVING HERE
FROM THE BAY AREA AND OTHER
CITIES.
CITIES.
CITIES. THAT TREND IS GOING TO CONTINUE
AS LONG AS THERE'S STRONG JOB
GROWTH.
GROWTH.
GROWTH. >> FINDING THE MATCH AS A BUYER
BETWEEN THE HOME I WANT AND I
NEED AND IT ACTUALLY BEING THERE
PROBABLY STILL IS AS DOIF CULT
AS IT WAS IN THE PAST, BUT
COMPETITION FOR THE STUFF THAT
IS THERE IS A LITTLE BIT LESS.
IT'S A LITTLE BIT MORE MODEST.
>> OKAY.
>> OKAY.
>> OKAY. SO THE BOTTOM LINE, IF YOU'RE
WAITING FOR THE HOUSING MARKET
TO BECOME SUPER AFFORDABLE, NOT
LIKELY.
LIKELY.
LIKELY. IT'S KIND OF THE NEW NORMAL.
SINCE THOSE ECONOMISTS ARE
AFFILIATED WITH REAL ESTATE
COMPANIES WE THOUGHT WE'D GET A
DIFFERENT PERSPECTIVE.
DIFFERENT PERSPECTIVE. QUESTIONS FROM THOSE OUTSIDE
THAT INDUSTRY.
THAT INDUSTRY. BUT IT IS THEIR JOB TO STUDY IT.
I TURNED TO TWO ECONOMISTS TO
ASK THEM THE SAME QUESTION.
>> THE TECH SALARIES ARE VERY
HIGH.
HIGH.
HIGH. IF
HIGH. IF YOU'RE LOOKING FOR A HOME AND
YOU DON'T HAVE A TWO -INCOME
TECH SALARY, YOU'RE HURTING.
THAT DOESN'T MEAN IT'S A BUBBLE.
THAT MEANS PRICES ARE HIGH.
THE HOMES ARE PLAIN EXPENSIVE.
THERE'S NOT BIDDING WARS
BREAKING OUT ON HOMES.
THEY'RE NOT RISING RAPIDLY IN
PRICES ANYMORE.
PRICES ANYMORE. IT'S NOT A BUBBLE, SIMPLY AN
EXPENSIVE MARKET.
EXPENSIVE MARKET. >> THE OTHER ECONOMIST WE SPOKE
TO AT SEATTLE U POINTS OUT THAT
BAD NEWS, THAT'S WHAT HE CALLS
IT, SUCH AS TALKS OF TRADE WARS
CAN IMPACT DEMAND AND PRICES.
>> AS LONG AS BAD NEWS KEEP
COMING IN, BUYERS WILL HAVE MORE
POWER.
POWER.
POWER. BUT TO ONLY CERTAIN EXTENT,
UNTIL DAY START LOSING JOBS
BECAUSE OF THE BAD NEWS.
BECAUSE THEY WILL NOT BE IN THE
POSITION TO PULL OUT MORTGAGES.
>> YEAH, SO THERE YOU HAVE IT.
IT WAS INTERESTING TO TALK TO
FIVE DIFFERENT ECONOMISTS AND TO
REALLY GET A SENSE FOR WHAT'S
HAPPENING.
HAPPENING. AND I THINK WHAT I TAKE AWAY
FROM THIS -- BECAUSE PEOPLE
ALWAYS ASK, HOW ARE PEOPLE
AFFORDING THIS?
AFFORDING THIS? THERE ARE MORE PEOPLE IN OUR
AREA MAKING $200,000 THAN THOSE
MAKING UNDER $50,000.
>> THERE ARE MORE PEOPLE IN THIS
AREA MAKING $200 AND LESS MAKING
$50,000.
$50,000.
$50,000. >> YES.
>> YES.
>> YES. >> SO WHAT DO YOU SAY TO THOSE
PEOPLE MAKING UNDER $75,000?
>> MOVE TO TACOMA?
I DON'T KNOW.
I JUST WANTED TO GET INSIGHTS ON
WHAT'S HAPPENING.
WHAT'S HAPPENING. I DON'T HAVE GREAT ADVICE,
HONESTLY.
HONESTLY.
HONESTLY. MAYBE THAT'LL BE PART TWO OF TO
STORY.
STORY.
STORY. BUT THERE ARE STILL DEALS TO BE
HAD.
HAD.
HAD. YOU
HAD. YOU MAY HAVE TO GO IN SOME
UNTAPPED AREAS.
UNTAPPED AREAS. BECAUSE WE ARE SEEING GROWTH.
>> I'M SURE PEOPLE ARE LOOK AT
THIS AND GOING WHAT IS THAT
INDIVIDUALLY OR HOUSEHOLD?
>> HOUSEHOLD.
>> HOUSEHOLD. THAT WAS FROM THE U.S. CENSUS
BUREAU.
BUREAU.
BUREAU. >> I APPRECIATE YOU DRILLING
INTO THEM.
INTO THEM. >> I DID DRILL INTO THIS TOO.
I FOUND OUT THAT TO AFFORD A
HOME IN THIS AREA, THEY SAY