Seattle No Longer Immune From Real Estate Market Downturn – But Opportunity Knocks!

For years, Seattle has been viewed as largely immune to downturns in the economy. Historically, Seattle has  shown itself remarkably resilient to the ebbs and flows of the national economy by often being the last city to experience impacts from the economic strife and the first city to begin leading the country out of its decline. Dating back to the 1960's, Seattle battled postwar economic downturn by hosting the Century 21 and the World's Fair in 1962 whose futuristic theme provided Seattle with many of its iconic structures like the Space Needle, Monorail and Seattle Center. The 1970's brought with it the Global Energy Crisis and the economic downturn that followed. Seattle, due to its heavy reliance on Boeing as one of its primary employers suffered a tremendous economic setback and had the worst post-depression employment of any US city to date. However, Seattle quickly rebounded due primarily to its highly educated workforce and active port.  Every subsequent decade brought with it new economic problems to which Seattle always responded swiftly to begin its economic recovery process.
This time, the pace of our recovery has been very different. According to Zillow calculations, the Seattle Real Estate Market is down 31% from its mid-2007 peak and could have as much as 10% more to fall. In 2010, Seattle had a larger home price decline than Las Vegas, one of the hardest hit cities in the country during the real estate decline. The median home price is at a six-year low. Last year, the Seattle-Bellevue-Tacoma metro area also showed the largest annual increase in foreclosure activity nationwide with a 71% annual increase in foreclosure filings, to one out of every 129 houses. This increasing pace of distressed real estate in our local economy will have a continued and sustained price depressing effect on home prices of non-distressed real estate inventory for the next few years.
In the midst of this unprecedented uncertainty, real estate investors will find one of the greatest opportunities to build wealth that we have ever seen. Historically, Seattle has had a tremendous track record of being able to overcome economic difficulty. This recovery will just take some time. While overall sales activity has been slowing, the increased activity in the foreclosure arena has left the real estate investor with ample opportunity to acquire real estate at tremendous values. Because of the deep discounts, often 30-40% below market, that can be found in REOs (Bank Owned Homes) and Foreclosures, investors with both short and long term time horizons can profit tremendously. Investors looking to pick up properties that are in need of renovation can do so and still resale the properties for a healthy profit, so long as they are priced reasonably and competitively based on comparable inventory. There are still some pockets of strength in our region that have low market times and price strength, but it is finding those gems that lead to real profit. Additionally, because prices have declined so drastically from previous market highs coupled with historically low interest rates, the market for the "first time homeowner" and real estate investor looking to acquire rentals has never been greater. Those with a time horizon of 3-5 years will be able to profit greatly by allowing the market time to work off its excess inventory and get back to normalized appreciation rates. The price a particular property was able to be secured at will provide the investor ample financial offset for the holding period the market needs to recover. Analysts across the country rank the Seattle-Bellevue-Tacoma market as the two of the "Top-10" best bets for recovery in the real estate market. By using past history as a strong indicator of future results, I would say that investing in Seattle would be a safe and worthy bet.

Pending sales, widely considered the best indicator of market activity, were up 19.58% in January compared with December, although they were down 6.57% year-over-year. In Seattle, pending sales of single-family homes were up 23% from December and down just 1.92% from last year. The median price of $390,000 was unchanged from December, but down 6.02% from last year. We still have a great deal of work to do for the recovery to have lasting and reverberating effects throughout our economy, but you need to see past all the negative rhetoric and projections to grasp the opportunity before you. The greatest amounts of wealth were built during the worst of economic times. Have the courage to allow this to be your opportunity to accumulate generational wealth through investing in real estate. Just put your money to work in the right places. REOs and Foreclosures provide the investor the opportunity to obtain the highest amount of return while taking the least amount of risk on their capital investment. My bet is on Seattle being the place to invest your money.
We encourage you to contact us at any time via our website at www.jamesregroup.com to learn how you can get started investing in REOs, via phone at 206-300-2693 or contact me via email at terryj@jamesregroup.com to learn how to get access to our exclusive REO inventory. All information is private and confidential. We want to be a part of your success.