Local housing market resilient

The media have been all abuzz over the past year about the softening in the housing market. So much so that in a recent Associated Press survey, U.S. newspaper and broadcast editors voted the slowdown in home sales, home construction and home prices the top business story of 2006.

At the same time, local analysts point out that even though home sales in the greater Puget Sound region have slowed, now is still a good time to buy a home, particularly in our area.

What does this slowdown really mean for consumers? Is it wise to sit back and wait for a home in the hopes that prices may drop? Most real-estate experts in our region say don't bet on it.

One reason we have not experienced the steep decline seen in other markets is that while other parts of the country face an oversupply of housing, we do not. Here in Washington state, the Growth Management Act (GMA) actually limits the supply of new housing entering the market by directing where new development can occur. As long as GMA is in place, we are very unlikely to find ourselves in a housing glut.

Another key factor is that the area in and around Seattle has a healthy supply of jobs and a strong regional economy — factors most experts agree help keep prices from falling.

While it is true housing prices fell nationwide last quarter, median prices are still on the rise throughout our region. In November, prices for all home sales were up 12.7 percent in Snohomish County, 13.6 percent in King County and 10 percent in Pierce County from a year ago. Housing appreciation rates vary significantly from one market to another.

The reality is that in a softer real-estate market, buyers are now in the driver's seat. Prices are competitive and interest rates have held steady at near-record lows. Today's low rates give first-time homebuyers a golden opportunity to begin building household wealth. Not to be overlooked are the tremendous tax benefits received by homeowners as they accumulate equity in their homes.

Of course, no one can accurately predict the peaks and valleys of the housing market. But we do know that, thanks to the GMA, our region will continue to balance housing starts with market demand. Sitting on the fence waiting for the absolute best deal is a gamble that prevents consumers from taking advantage of buying a home, while prices are moderating.

Though local housing markets periodically adjust according to overall economic conditions, over the long term, real estate has consistently appreciated. Nationally, home appreciation has historically risen 5 to 6 percent annually. At that rate, the value of a home doubles every 13 years.

In today's housing market, the real risk is in waiting to buy a home. We know that interest rates are low now. We know that inventory is good, and many builders are offering move-in incentives. Boom real-estate periods tend to be known as seller's markets because inventory is tighter and most of the advantages are with sellers, not buyers. Slower real-estate markets, on the other hand, are buyer's markets.

Here, homes are still selling, but within a more normal range of time. Unlike some cities where the real-estate market is in a slump, the Seattle area is healthy and analysts feel certain it will stay that way. As a result, the deep discounted prices some consumers have been hoping for simply won't be happening here.

For consumers sitting on the sidelines, the bottom line is simple. Homeownership is always attractive. Besides being a stepping-stone to a future of financial security, homeownership provides a sense of community and personal satisfaction. In fact, studies show that homeowners are more content with their lives, enjoying a stronger sense of belonging and increased activity in community groups.

The equation is simple: Since housing is always a smart investment and interest rates are still near 40-year lows, savvy consumers know this is a great time to buy a home.

Samuel L. Anderson is the executive officer of the Master Builders Association of King and Snohomish Counties.