I attended a fabulous luncheon today at the Rainier Club to hear a talk by Spencer Rascoff, CEO and one of the founders of Zillow.com. He gave a fascinating talk about his work in starting two successful internet companies, Hotwire and Zillow; and then focused on his prognosis for the future of the housing market in the Seattle area.
Housing prices in our area are down 28% from their peak. Most of the rest of the country has experienced an average decline of about 33% peak to trough. If Seattle follows suit, then prices will roll back to approximately the April 2004 level. Mr. Rascoff expects the Seattle market to continue to decline through the 3rd quarter of 2011, and then remain flat for the next two years or so.
Reasons for his forecast are that vacancy rates remain high; their is a shadow inventory of foreclosures yet to hit the market (currently at 17% of all sales in our area); there is a pent-up supply of houses from individuals who would like to put their houses on the market, but have been waiting; and he also expects mortgage rates to increase.
I have a copy of the real estate market overview from December 2010, put together by Zillow's chief economist Stan Humphries, and will try to include excerpts in future blogs.