I just returned from a road trip to Seattle to visit family and it struck me en route that the real estate market in many parts of the country is entering a new phase. We have survived the downturn with its significant price adjustments, we’ve burned through the distressed property sales phase, seen a comeback in prices — though not to pre-crisis levels in Sedona — and now there is pent-up demand spurring a construction surge in many parts of the country.
This surge was most apparent in the large metro areas that I visited, principally Seattle and San Francisco. In those markets, prices have roared past previous high points and people are buying older homes to tear them down and rebuild on the underlying lot. Does this sound familiar, as in Sedona during 2006?
This time around, however, the new lending and appraisal guidelines introduced to us via the Dodd Frank Act should restrain the more egregious
practices we saw 10 years ago.
Another striking difference from our Sedona real estate market was the buoyant health of the luxury sector. The two communities above that I visited are famous for their high-tech business sector and it must be throwing off a lot of cash because $1 million doesn’t buy you what it does here. In Edmonds, a suburb north of Seattle on Puget Sound, a 2,900 square-foot home from the 1970s was selling for just over $1 million or $360 per square-foot with no views of the water. Our average price for a 10-year-old home is probably about $225 to $250 per square-foot, depending on location.
Across many other metropolitan markets in the USA, the story is the same: Younger, wealthy people with well-paying jobs who are buying expensive homes. The rural markets like ours have yet to see the same trend.
An unrelated question that I’ve been asked about a lot recently is Brexit, Britain’s decision to leave the European Community. Having been born and raised in the U.K., I was as surprised as most people that the referendum was won by the “leave” vote and it doesn’t make much sense from an economic point of view, according
to nearly all economists.
What seems to have driven the voters to opt for “leave” is a feeling that we are also experiencing here in the U.S. — that the elites have benefited from the economic recovery and that many people are worse off than they were 10 years ago; it was a protest vote in other words.
Unfortunately for the people of Britain, they were told by the “leave” politicians that they would be able to retain open access to the European economy/market without having to put up with the other “freedoms,” namely the free movement of labor and people which is seen as having delivered local jobs to outsiders. Most pundits believe that the first is not achievable without the second but only the ensuing negotiations will tell.
Maybe we’ll see a second referendum.
Real Estate Bulletin appears monthly in the Sedona
Red Rock News. Andrew Brearley is the manager of
Coldwell Banker Residential Brokerage in Sedona and
has been practicing real estate since 1981. He welcomes
your comments and questions and can be reached at
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