The market has definitely slowed down a bit, is this fender bender rubbernecking or are we in for something more severe like an overturned big rig blocking three lanes? It is hard to say but right now, but there is a guy on the side of the road with a dented fender. I'm not sure what that big rig ahead is up to ;)
All traffic metaphors aside the market is definitely flattening out and most of the major analysts are suggesting Washington State is likely to weather any storms far better than most of the USA. Washington manages to appear on just about every positive top ten list there is aside from affordability for which we are certainly lacking. High housing costs have always been the price for local success and desirability.
I am more concerned with California. Now California still has some of the most expensive real estate prices in the nation but the state has fallen to mediocre or worse on all those same lists that rate lifestyle, jobs, quality of life, crime, schools, etc. At some point and it seems that point is right now, people will get fed up and leave. Middle class Americans are leaving California in droves and for the most part only rich and poor people are moving in. You might wonder why poor people would move to an expensive state, but that could be due to a few factors. California has a huge migrant worker job base and a solid welfare safety net. California is starting to look like a third world country with homeless people everywhere, dilapidated neighborhoods and a huge wealth gap, perhaps the largest in the nation. There appears to be no end in site for the decline of the Golden State.
Why should we care up here in the Evergreen State? Well because California has long been a trend indicator for real estate on the West Coast. If prices take a big dump down there it will have some ripple effect here and could take us from a flat market to a declining market. I think California is in for a major correction, think 2009-2012. But I still think Washington will be relatively unscathed with a minor slowdown and slight decline in values. Of course this all presumes that the national economy only suffers a mild recession here rather than something bigger.
California Governor, Gavin Newsom is trying to push through legislation that will attempt to tax California residents AFTER they leave the state. I am pretty sure the courts will strike that down, but the mere fact that he is trying it leads me to believe I am spot on with my diagnosis. They are losing the meat and potatoes of their tax base, the middle class and small businesses and are left only with poor people who pay less in taxes than they receive in services and wealthy people who will eventually leave if the tax burden gets too high for them to bear.
At this junction, we are still importing residents with more arriving than leaving but we have fallen from near the top of the list down a bit to #15 in growth of 50 states still in the top third. California was dead last at #50 with a population loss according to a widely quoted moving poll from U-Haul. Washingtons high real estate costs have no doubt slowed the migration as Californians and East Coasters seek more affordable areas like Texas and Florida where the economies are just as solid as ours but the prices for homes are half what they are here.
The bottom line is that what ever comes of this economic cycle, we should come out smelling rosy compared to most other places in the country and that should ease concerns among both buyers and sellers that Washington State including Vancouver and Clark County should weather the upcoming storm well.