As the housing crisis hits numerous markets across the country, there have been a few markets that have been able to happily continue rising home values and selling quite quickly. There is some evidence that the housing market crash is finally beginning to penetrate those markets; However. That is certainly the case in cities like Provo, Utah. Even homes that seem to be quickly snatched up are on the market with no buyers. This has come as a great surprise to the owners of these markets.
Most homeowners were affected by the market crash in 2006. Other markets; however, it continued to experience price increases. In Provo, for example, median home prices jumped a staggering 14% in a short period of time, compared to previous home values.
Homeowners in previously hot markets are finding that they must now resort to creative sales tactics and offer concessions to try to get their homes off the market. Just a year ago, these houses would have sold in a matter of weeks. Today, these houses are on the market for months. In desperate offers to sell their homes, sellers are slashing prices by thousands of dollars and even offering discounts to buyers who can close quickly or are willing to work without an agent; Giving sellers the opportunity to save on commissions.
The message is certainly clear. While these markets were once hot, no market is immune from a housing collapse. Even markets that are still experiencing price increases are finding that prices are not rising as much as in the past. Clearly, these markets are starting to lose steam. Additionally, the rapid pace of sales that once marked these areas is starting to slow as well. Tighter lending restrictions as a result of the subprime crisis are likely affecting many of these markets. It’s just hard to sell houses when buyers can’t get loans.
In most cases, the economy is the only factor that does not affect these markets. This is certainly the case in Utah, where the economy has managed to stay strong. Despite this fact, the housing market is stagnating.
Seattle is another previously hot market that also appears to be stagnant. While Seattle certainly isn’t close to the frenzied free fall of many other markets yet, prices just aren’t rising as fast as they once were. Like many other markets, homes aren’t selling as fast as they were last year, either. Foreclosure rates have also started to rise in Seattle in recent months.
Despite this fact, experts are quick to point out that Seattle should be able to overlook the collapse that has hit many other markets across the country. The Seattle apartment market, in particular, looks set to remain strong in Seattle even as home prices begin to settle somewhere closer to reality. In general, inventory quantities are higher than last year; however, sales volumes continue to outperform other states.
One of the reasons Seattle and most of Washington state have been able to avoid the housing market collapse that has affected the rest of the country is the Growth Management Act enacted by the state. This law prevented the development of construction projects in the state at the same rate that occurred in many other states. While other states were being built at a rapid pace, Washington was reigning.
This turned out to be an advantage for Seattle and other areas of Washington. In markets that experienced a sudden build wave, once those projects were completed, the market had already started to collapse. As a result, newly completed construction projects were suddenly vacant with no buyers in sight. Suddenly, construction loans began to add to the multitude of non-performing loans that clogged the market.