Who would have thought in 2019 that a global pandemic would lead to a real estate boom? Today, we are faced with a new set of uncertainties: a correction in the tech sector of the stock market and inflation.
All of this does not necessarily mean doom and gloom for the Northwest real estate market. The region is fortunate to be buoyed by two of the world’s great companies, Amazon and Microsoft, and a plethora of smaller tech companies that all offer great compensation and require a wide range of services and professions to support them. We also still build airplanes, launch new ships and produce a diverse array of outstanding wood products.
Even downtown Seattle, a recent victim of neglect by our city’s political leaders, has turned a corner. If you have not been downtown lately, go. Start with a morning at the Pike Place Market, and then walk up to Nordstrom to buy yourself a new outfit. You’ll notice the streets are cleaner and more welcoming than they were even six months ago.
This all brings us back to real estate.
Over the mid- and long-term, real estate is a terrific hedge against inflation, and if your timeline is over five years, there is very little chance your home will decrease in value. According to the Case-Shiller Index, over the past five years, the average home in Seattle has gone up 82 percent with an annualized rate of return of 13 percent. Since 1990, the annualized home price increase has been 6.07 percent for a total return of over 558 percent. During that same period, beginning in 1990, for your home to end up down in value after five years, you had to buy your home between April 2007 and December 2008. In short, your home is a safe and stable investment.
It turns out that the greatest return on homeownership may not be monetary. I bought my first home in 1994. Since then, I have raised two curious and energetic children, made countless friends, served on the McGilvra School PTA, coached youth soccer teams and had thousands of informal conversations on the sidewalk with neighbors and people passing by. Homeownership creates a strong civic and social fabric. Homeownership provides more than a home; it provides a sense of home.
Toby Lumpkin | Broker
Realogics Sotheby's International Realty| Madison Park