Fitch: Home prices running hot in the Pacific Northwest, USA
Much of the overheated movement in U.S. home prices has emanated from California and the Bay Area of late, though housing markets in some major cities in the Pacific Northwest are also now overvalued, according to Fitch Ratings in its latest quarterly U.S. sustainable home price report.
Home prices in Seattle, Washington and Portland, Oregon have been among the fastest growing in the country for the last couple of years. In fact, Portland home prices have risen at the fastest clip of any nation since second-quarter 2014 (2Q’14) at 22%. Meanwhile, Seattle is not far behind with home prices rising 19% during the same timeframe. As a result, Fitch estimates home prices in these cities as 5-15% overpriced along
‘The recent rate of home price growth in the Pacific Northwest is hard to rationalize,’ said Managing Director Grant Bailey. ‘Foreign investors and spillover from tech employees priced out of San Francisco are likely playing a role in the run-up, though to what degree is hard to ascertain.’
Home price gains in San Francisco, though they have considerably cooled since the start of this year, are still stretching affordability for local businesses and employees, thus making Seattle and Portland more attractive relatively. ‘Current home price growth rates in the Pacific Northwest are unsustainable and recent slowdowns in San Francisco likely indicate that a slowdown in the Northwest is coming,’ said Bailey.