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posted 06/08/10 11:40 AM | updated 06/08/10 11:40 AM
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Seattle Home Prices Predicted to Drop Over 20 Percent Next 2 Years

By Michael van Baker
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Windermere has a Capitol Hill condo selling for $149,000 down the street from The SunBreak offices, at 1125 E Olive (at 12th Avenue). It's 436 sq. ft., hardwood floors, forced air, HOA is $200. It's the lowest-priced condo on my email update by far, with $40,000 between that and the next listed price. But if it's snapped up before you can put down an offer, stay cool.

Whether you call it depreciation or affordability, Goldman Sachs says the next two years should bring more of it; Seattle Bubble (naturally) spotted their prediction that Seattle home prices would lead other major U.S. urban areas with a 22 percent decline over the next two years.

Goldman Sachs calls our situation a "back-loaded price decline," which has a familiar ring to anyone familiar with Seattle Bubble's time-adjusting housing price graphs. Las Vegas and Portland join us in home devaluation "due to high homeowner vacancy rates and/or rising mortgage delinquencies," but Seattle is way out down in front, losing ten percent more in value than Portland over the next eight quarters.

In this case, Goldman Sachs' bearish take on the Seattle housing market exceeds even the Bubble's notorious insistence that affordability would return. "[M]y estimates have been for only another 10-15% decline in Seattle area home prices, so I was a bit surprised to see such a dramatic call from Goldman," writes the Bubble's Tim.

The expiration of the housing credit has already had a stomach-churning effect on pending sales in King County, and as the Seattle Weekly reports, 186,000 Washington residents could be without income by year's end, if unemployment benefits are not extended. That would mean even more foreclosures, added to the increase in Puget Sound foreclosures earlier this year, further damaging values.

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oooh, I trust them
GS - Come on. They've hustled us every step of the way. Why in the world would we believe their estimates in this case are unbiased by financial interests?
Comment by bilco
1 day ago
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RE: oooh, I trust them
I can understand if they'd like populist Seattle and Portland to go down in flames, but what has GS got against Las Vegas? Sibling rivalry?
Comment by Michael van Baker
1 day ago
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RE: oooh, I trust them
MVB, I think Bilco is referring to the apolitical reality that Goldman Sachs likes to stack the deck in their favor so they can make money.
Comment by Steve Winwood
1 day ago
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RE: oooh, I trust them
Thanks for bailing me out on this one, Steve - that's exactly what I was trying say with my clumsy fingers
Comment by bilco
1 day ago
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