Seattle Housing Bubble - Unusual Surge in Homes Inventory

Seattle Housing Bubble – Unusual Surge in Homes Inventory

well Jason here and this is Bobo and bear bust thank you for joining me we've got the Seattle housing bubble video finally I know people have been talking about it in comments quite a bit and we're going to get to the reason why it's getting interesting in my opinion all right but first we're gonna talk about the run-up in home prices that Seattle has seen I'm gonna look at some charts some graphs and go through a lot of information so let's get into it shall we all right so Seattle has been the fastest growing city as far as home prices increasing and we see a recent breakdown here based on the Case Shiller index put out by the Seattle Times and Seattle is at the top here number one followed by Las Vegas San Francisco Denver in Detroit surprised to see Detroit I guess home prices was so low they had to start buying him up eventually so while nearly 13% in a year that is really good that's really strong especially since recently in the last year we've seen nationwide home price growth start to level out and even dip in some areas as we've talked about in this channel ok so first let's look at the Seattle home price growth from a six-year perspective here we see 73% growth in the 6 years prior to the 2007-2008 peak this would have been mid 2007 this peak right here in July and the 6 years prior we saw 73% growth in the housing prices now in the most recent six years we actually saw 85% growth and because home prices came from a higher low compared to where they came from before the run-up to the previous housing bubble we see prices now definitely exceeding way past where they were at the peak of the previous bubble so they went up higher and faster in Seattle okay with 85% growth and now in the last six years okay this article out of geek wire talks about a population boom that pushes Seattle to 19 straight months as the nation's hottest housing market so it's even been more than just the last year it's been the housing the hottest market it's been going on for closer to two years now we're going to talk about what we think the population is increasing there why obviously is because more people are moving there but why are they moving there so first of all how many people are moving there well a recent US census data report came out and it shows a almost a 20 percent increase in population growth since 2010 now to put that into perspective that is the same growth that Seattle had seen in the previous three decades in the previous 30 years so in 30 years they saw 20 percent growth but now just in the last eight years since 2010 another 20% growth so that's huge all right so let's talk about that we know a lot of people that left California and we talked about this in a different video that Seattle and in Washington in general is one of the hottest destinations for Californians leaving looking for lower cost of living and also looking for jobs and I think most of us know that Seattle is one of the hottest cities for the tech industry it actually accounted for 93% of Seattle office jobs added in the last two years so that's gonna definitely be probably the main factor as far as the population growth people moving there for jobs of course leaving California is also a big factor and also for the home price growth that we've been seeing here recently in Seattle all right so for this one let's go back to our wolf street comm chart because this shows us the percentage increase since the peak of the prior bubble here and we see that it took a 31% dip from the peak but then now we have reached the peak again we had reached the peak back in about 2015 and now we're up about 24% beyond the previous peak and this is the median home price as put out by Case Shiller and again the charts Wolfe Street comm we're going to link to that article there and what's interesting is we used to see seasonal dips here starting in 2013 fall in winter dip 2014 fall winter dip but then starting in 2015 it just kept going and going no dips not even a big slowdown okay there's also a report put out by the Seattle observer that nine out of every ten office jobs created over the last two years came from the tech sector all right now the number one City for tech is still San Francisco and of course we see even higher home prices in San Francisco okay but Seattle one of the fastest growing cities for tech as we can see here all right so we've got a map view here of the Seattle area and tech headquarter locations and if we just highlight a couple of these here let's see what we have we have smart technologies we have facebook we have BestBuy office and two minutes to go through but I'll link to this article as well to another article out of geek wire and comparing it to the national home price increase and just like we talked about we're seeing a leveling out nationwide on a national level but not in Seattle we're seeing a major surge and just way beyond what we're seeing nationally now okay that's not only home prices it's also causing housing shortages and therefore really surging prices and rentals as well and we see Seattle here in red and what that's telling us is that the minimum hourly wage needed to afford a two-bedroom apartment there in Seattle is between 26 and 30 dollars so we're going to see people working in the tech industry start to push people out of that area that are not in the tech industry themselves the people that are going to be most likely to be able to stay are the people that have been there for a long time and maybe bought their home a decade or more ago or maybe on the dip here in 2012-2013 before we started seeing the big run-up there all right now just to put this into perspective the Seattle there in red we have to go all the way down to California to see as expensive rental we have San Diego of course LA area San Francisco San Jose also in the dark red there so just major major leaps in the cost of renting a home or apartment there okay now if you ask real estate professionals and people connected to the industry they'll tell you that it's a supply and demand issue what definitely is based on the population growth and the number of jobs that are available there in Seattle now combine that demand activity with over the past few years several years ultra-low interest rates like we talked about quite a lot here in this channel continually continuing loosening of the lending in real estate which has also led to historic levels of household debt in Washington and Seattle is actually no exception to that so very limited supply of housing very strong demand but something interesting happened recently and I first saw this on this nice little blog here called Seattle bubble we're gonna link to it and actually while I'm at that I need to think one of our viewers here can I know a lot of you leave comments and links and things like that and I appreciate it but I want to thank our output here for Lincoln to this the Seattle bubble dot-com blog and I'll put it in in his words here our reader here our viewer our Alfred so we may be seeing the Seattle market peeking as the number of new listings for the month of May is the highest since July 2007 and he points out the month that home prices peaked in Seattle during the previous housing bubble so very interesting and again thank you our Alpert for that comment in that link we also want to thank the Tim there at Seattle bubble comm for putting this data out there and putting this chart out here and his headline also states it here new listings at the highest point since 2007 as inventory finally grows and he breaks it down based on the entire King County area there and we see this massive median home price there 726 thousand all right we see months of supply taking a big jump year-over-year numbers here 41% and 17% just in the last month here month over month numbers okay with active listings jumping 35 percent year-over-year and 37 percent month-over-month and all these categories here that are now favoring buyers right now people ask me would I be buying in this city or that city well Seattle it depends if you've got a hundred thousand dollar a year job or something that's going to still let you live comfortably even though you're paying a big hefty price for a home then it may be and that's up to each individual to look at it's not something that I can say yes or no and all the factors are too complicated to lay out but a couple things would be your commute are you going to be able to live near the headquarters of where you're working at or you're gonna have to live and have a very long commute to work how easy it is for you to pick up and move family other obligations health all those things you want to factor in there okay now the Tim also points out here the publisher there of Seattle Bolcom that it's still too early to call an inflection point in the bubble and I do share his opinion but it's definitely interesting to see this big of a jump in listings all right and obviously with just the name of his block here the Seattle bubble you know his view shares our view here on this channel that this is a housing bubble and of course it is supply and demand based combined with the reasons I laid out earlier the lower interest rates the loose lending that are creating the storm that led up to these high home prices in many cities including Seattle but what made this possible what made these jobs possible was a large run-up in debt and people spending and we know that tech companies including Amazon which has several headquarters also in Seattle have seen massive growth but we also know that when people jump in over their heads there are consequences okay higher taxes based on the higher home prices can come back to bite an owner there's altum Utley going to be a recession and people are going to have to slow or decrease their spending at some point it's simply inevitable it's going to happen it's not a matter of if it's a matter of when and there's still two camps in this I guess debate if you want to call it that about the housing bubble in general and what I see from people commenting on our videos here is that the very small percentage of people think that this is simply gonna go on forever that there's no pullback there's no reckoning day so to speak that the Federal Reserve can keep on backing up the banks they can keep out lending they can keep lending out as much money as they want to without any consequences because because they're too big to fail and I can definitely see how people can come to that view especially when you know fiat currency there's nothing back in it it's unlimited on how much they can create and it all goes back to the central banks okay so there's a lot of theories there's bound to be a lot of theories on what the actual cause of this surge in inventory or surge in listings is well I haven't heard about any massive tech layoffs and I doubt that people are now leaving Seattle that rapidly maybe the people that are already priced out of the market they are leaving but as we talked about in the population growth a lot more people are moving there than leaving all right so what is causes it and what do you guys think maybe put it on the comments I think the slowdown and spending is people reach max debt and defaults now starting to increase in certain sectors of consumer spending in debt especially the auto loans that are increasing the rising defaults now in credit cards so I think people even in Seattle are starting to feel the pinch okay now also we've got some interesting news as far as investors who have actually for a while now begin to have started to back out of certain areas we're going to look at Washington again in that video so keep your eye on the channel so we could see investors maybe starting to sell that's why the increase in inventory combined with just people that are feeling the pinch like I said okay or maybe there's some things brewing in the tech industry especially with the fire that Facebook has been under for sharing data and evening even not leaking but sharing information with China tech companies as far as user data so there's some very interesting things happening right now we're seeing a lot of censorship on the internet and Facebook included and I've noticed it on my personal Facebook posts I've noticed posts I put out have much less likes and that indicates much less people are being able to are able to see these posts and I think it's part of this whole censorship thing that's going around the internet where they don't like what's happened they don't like Trump being elected and I know there's people thinking that he's just part of the elite but if he was why would all the 90% of the news about him be negative okay they did not like it when Hillary lost I know I'm gonna get some some doubters on that but something big is happening in the political world and lots going on behind the scenes that were not really able to talk about in this channel so I think it's a combination of people trusting these tech companies a lot less now that all this information is coming out about the data being shared and it's also censorship and even before this whole leaked news came out of this leak scandal her data sharing scandal even before that there was a big decline in in facebook users and I think that also had to do with censorship there's some people here on YouTube that have been talking about that they personally have also seen their posts get less and less likes as time goes on here in 2018 and we're seeing a lot of censorship against people that don't have a far left or globalist agenda okay so I won't lie have too much more into politics but again thanks everybody for watching and hope you like and subscribe and hopefully we'll see you here next time bye you