The statistics and charts below from our July Market Update look to me like our housing market may be in the early stages of a recovery. 

Residential Sales Charts       Condominium Sales Charts

Given all the doom and gloom we hear about the housing market, it is fair to ask “How could that be?”  So here’s my take on it: What it looks like to me is that we may be in the early stages of a local housing shortage for single family homes. 

While Seattle and the west side have been built out for decades, Bellevue and the east side communities have been absorbing most of the region’s growth for the past 50 years or so.  But we passed the Growth Management Act in 1990, and then we added the Critical Areas Ordinances.  As a result, it has become harder and harder to get permits for housing developments of any significant size.  In fact it appears that over the last 10 years or so it has become far easier to get a permit for a 100-unit condominium high-rise than for a 100-home residential development.  And the rate of application for new building permits “fell off a cliff” last Fall, to use a phrase I heard recently, and new permits this year are running at less than half the level of this same time last year, and construction employment is continuing to drop.

So now we seem to have more condominiums than we have people who want to live in them.  And we seem to be developing a shortage of single-family homes compared to the number of people who want that suburban neighborhood lifestyle.  We still have a strong economy and a growing population, and if the people who want single family homes have to start competing for them, prices will start to rise again – and it looks like they are. 

It is a somewhat lopsided recovery, but it may be a real one.