State of the Industry: What to Expect From West Coast Home Markets This Fall
The Northwest Housing Market Rules the Fall Forecast
This fall is expected to bring some changes to the housing market that might take potential home buyers by surprise. Traditional market heavyweights like California’s Bay Area and South Florida are expected to have softer housing markets this fall, with the Northwest gradually moving into the top position as we see Washington and Oregon taking over.
Contributing to California’s dip in housing market supremacy is the fact that high numbers of lower-income families are leaving the Golden State due to the state’s skyrocketing home prices and extremely competitive job market. This has been happening since 2005, according to the Sacramento Bee, which recently published a data analysis of this exodus. The data showed that approximately 293,000 low-income families left California between 2005 and 2015 for the state of Texas.
According to Texas demographer Lloyd Potter, Texas’ economic growth and income and housing opportunities are the leading factors attracting Californians to relocate.
So Where Will the Top Housing Markets Be This Fall?
Forecast experts, including Eric Fox, vice president of statistical and economic modeling at Veros, are predicting Washington and Oregon to have four out of the top five housing markets this fall. They include Seattle, Washington (1), Bend, Oregon (3), Portland, Oregon (4), and Bremerton, Washington (5). Only Denver, Colorado (2) breaks the pattern.
Other Northwest cities found within the Top 25 Hottest Markets include Bellingham, Wwashington (6), Mount Vernon, Washington (8), Salem, Oregon (10), Eugene, Oregon (13), Kenniwick, Washington (17), and Medford, Oregon (19). So, 10 out of the Top 25 Hottest Markets this fall can be found in the greater Northwest.
“Although we expect to see interest rates increasing and inflation ramping up, the overall labor market is expected to remain strong,” said Fox. “These effects will essentially offset each other, and allow the overall national forecast to remain strong, and consistent with what has been predicted and observed in previous forecast updates,” he added.
What’s Driving the Northwest’s Home Appreciation?
There are three identifying drivers that are contributing to home appreciation in the above five markets – they each have high population numbers, they each have low unemployment, and they each have low housing inventories. The result is a home appreciation rate between 9.2% and 10.9% in these cities over a forecasted period of 12 months, from December 2016 to December 2017, as determined by VeroProjects.
Of course, the accelerated rate at which the Northwest’s appreciation is rising leads some experts to be concerned that home prices will escalate well above the income growth in these areas.
“I expect that the rate of home price appreciation will soften in some areas. This doesn’t mean prices will drop, but rather, the rate of growth will begin to slow,” reports Matthew Gardener, Chief Economist for Windermere Real Estate in his 2017 Economic & Housing Forecast.