Yesterday morning we told you home prices in the Seattle metropolitan area continue to fall, while apartment vacancies have decreased and rents are likely to rise in the next six months. This morning the Seattle Times, citing a freshly-released study from the Brookings Institute, reports that Seattle's economic recovery from recession has been mediocre, not surprisingly slowed by a less than robust housing market.
The middle of the road economic showing for Seattle is largely blamed on the city's housing market, which the Times describes as "frail."
... (T)he Seattle area's frail housing market -- the S&P/Case-Shiller house-price index fell in January for the sixth straight month, hitting a new post-bubble low -- remains the biggest drag on the local economy.
Seattle ranked 81st in terms of house-price change, according to the Brookings report -- in the same range as Bakersfield and Modesto, Calif., Chicago and Nashville. Boise, by contrast, experienced the nation's strongest growth in house prices, and Portland ranked 27th.
Even better: It may get worse.
... (T)he Brookings analysis (which used an index of house prices produced by the Federal Housing Finance Agency, not the Case-Shiller numbers) only runs through the end of 2011, and subsequent events may darken the picture it paints.
The Brookings report points out that state and local government layoffs have also made economic recovery difficult in Seattle. The Times notes, "State employment in the Seattle area at the end of 2011 was 3.8 percent below the overall jobs peak in the third quarter of 2008, and local-government employment was down 2.4 percent; that placed the metro area 64th and 56th, respectively."
The good news is there is some good news. The Brookings report points out that Seattle ranked 26th among the 100 urban areas studied in job growth since 2007-09, and employment in Seattle grew 2.89 percent between the first quarter of 2010 and the end of 2011. Nationally, employment grew by 1.6 percent over the same period of time.
Output of goods and services also increased in our neck of the woods, with the area's gross metropolitan product (GMP) notching up 6.75 percent between the third quarter of 2009 and the end of last year - booming enough for a 34th ranking out of 100.
Brightest of all, manufacturing jobs, powered by Boeing and the aerospace sector, grew 8.7 percent between the beginning of 2010 and the end of 2011 - good enough for a top ten finish, with Seattle scoring the eighth-strongest growth among the 100 metro areas the Brookings Institute studied.
But back to the Seattle area's flailing housing market. Citing Redfin, King5 reports this morning that one out of three homes in King County was purchased with cash over the last year - meaning there are still some wealthy folks (known as "investors") attempting to reap the benefits of Seattle's falling home prices.
From the King5 story:
Redfin said investors with cash are able to buy homes, live in them or flip the houses or another option rent them out.
"I was definitely surprised it was so high. I was expecting it to be somewhat high but not that high," said Tim Ellis, a Redfin real estate analyst who's tracking the trend.
Real estate experts say all-cash buys are a sign of a strong investor demand. Rentals are seen as a good investment now that rents are up 5 percent.
Just how positive all-cash home purchases are, however, seems to be debatable and hinge on socioeconomic status. Ellis tells King5 that it's potentially a good sign, though also likely very frustrating for the average homebuyer, saying it "might not be the most fun to buy a home in."
On the other end, Stan Humphries, of the online real estate marketplace Zillow.com, tells King5 the high rate of cash sales can be seen as a harbinger of good things to come.
"It is good news for the housing market, because it's through this process the market is going to heal itself. The fact a lot of people who are paying all cash are investors means they're seeing an opportunity to buy up cheap assets and rent them out, that means good for both the rental and purchase market."
Especially if you have enough money to pay cash for a house.