The real estate bust has played out like a roller coaster- cities that rose dramatically early in the game- Miami, Las Vegas, Phoenix, San Diego, were also where the cracks first started to show.  Other markets around the nation ignored the warning signs however, feeling that somehow their markets were "bullet-proof".  Buyers looked at above average appreciation and decided to buy, not wanting to believe that their market would follow the same pattern as others. Case in point, Seattle.  This Seattle Times article from July 16, 2006 was typical for the period:

As the residential real-estate market cools in other parts of the nation, one question is why Seattle’s market remains robust. Money magazine predicts homes in the Seattle-Bellevue-Everett area will appreciate 10.5 percent between this June and next. That’s twice the rate predicted for the country overall.

Home prices are often described in simple terms as products of supply and demand, but several factors — land availability, job and population growth, and interest rates — make the housing market more complex.

Professor Chris Mayer, director of the Milstein Center for Real Estate at New York’s Columbia Business School, says Seattle outperforms other major cities because it’s relatively unusual.

"Seattle is one of a handful of places I’ve written about and referred to as a ’superstar city,’ " Mayer said. "It’s not quite in the same league as San Francisco and New York, but if you look at census data, house prices in Seattle have grown faster than the national average for 50 years, from 1950 to 2000."

For those of us that watch markets across the nation, we’ve seen that "We’re special" mantra change to "We’ve been hurt by national trends" time and again.  Seattle is joining the club.  According to local agent Jirius Isaac sales are down 12.5% from last year.  Another agent, Jim Hunt, says single family inventory is up 33% YOY and condo inventory is up 62%.

But that doesn’t stop the perma-bull predictions:

As December came to a soggy close in 2007, the housing market saw the expected seasonal slowdown.  But the real estate brokers maintain optimism, citing job growth, stable prices, and other indications of an improving house market.

Brokers reported 3,950 pending sales during the month of December, down from November’s transactions of 5,194.  Compared to numbers from December of 2006, the number of pending transactions had dropped by about 31%.

Despite the slowdown, real estate brokers said buyers are still upbeat and ready to act.

[According to] Windememere/Commencement Associates in Tacoma, "My agents tell me their recent conversations with buyers indicate pent-up demand that should start showing up in the marketplace this month and next."

Sales will undoubtedly start their month-to-month increase in the next couple of months as the sales season gets going, but year-over-year, it’s going to be down.  The same issues, i.e. bad mortgages, lack of buyer confidence, rising inventory, etc., that hit the rest of the "hot" markets will be back to bite Seattle. 

Another bull market bites the dust.