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Seattle on edge as housing gloom looms

Economists expect city to be caught in national slump

(SEATTLE) It’s the kind of house that a year or two ago would have been snapped up in days: a refurbished rambler in a woodsy residential neighbourhood minutes from downtown. The asking price: US$559,000.

But after seven weeks, Kristen and Al Dittmaier have not received a single offer on their Wedgwood home.

‘I really believed there would be no problem selling,’ Kristen Dittmaier said. ‘But the whole feel of the market has changed. We might have to drop the price.’ The Dittmaiers, along with local real-estate agents and economists, wonder whether sluggish sales are part of the usual winter slump or a sign that Seattle – a perennial most-livablecity contender – is joining the rest of the country in declining home sales.

The question has put many locals on edge.

‘Right now there’s not that urgency among buyers to pull the trigger,’ said Renee Menti Ruhl of Windermere Real Estate. Ms Ruhl, agent for the Dittmaiers, said that the true test will come in the next few months.

If sales are sluggish during the traditionally hot-selling months of February through April, she said, then people will have a better idea whether Seattle has joined the national trend.

Of 20 major US metropolitan areas, all but three – Seattle; Portland, Oregon, and Charlotte, North Carolina – experienced a decline in real-estate values in October compared with last October, according to the Standard & Poor’s/Case- Shiller composite price index, released last week.

Home prices have fallen most in the Midwest, Southwest, Florida and California. In Los Angeles, prices fell 8.8 per cent; in New York, 4.1 per cent.

Seattle prices increased 3.3 per cent, but that was the smallest year-to-year rise for the city in more than a decade.

The annual appreciation in Seattle has been slowing for more than a year and a half.

Some economists say it’s only a matter of time before Seattle joins the national slump. Although the city experienced a year-to-year increase, October prices fell 0.9 per cent from September, the third consecutive monthly decline.

Democratic governor Chris Gregoire told residents not to be affected by the gloom. Bad news elsewhere, she said, doesn’t have to translate into bad news here.

Seattle, Portland and Charlotte have bucked the trend partly because each has a relatively healthy local economy and all three continue to draw newcomers, which keeps demand steady.

Seattle has three ingredients that work together to keep home prices high, according to Seattle-area real-estate blogger Larry Cragun: ‘lakes, mountains and liberals.’ The lakes and mountains don’t need explaining. The liberals, Mr Cragun said, have created such an anti-development atmosphere that available land for building homes is extremely limited.

As for the Dittmaiers, they continue to hold their front door open to prospective buyers.

 

Source: LAT-WP (Business Times 3 Jan 08)

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