Despite high unemployment, the continuing threat of war and other economic set-backs both locally and across the nation, the residential real estate market had an exceptional year in 2002, setting records locally as well as in markets across the nation.
   A Year In Review
   The same factors have continued to come into play for the real estate market over the last two years: low interest rates and record levels of first time homebuyers. However, 2002 showed signs of improved sales in the middle and upper end housing markets as well. We saw the pyramid of sales take form, illustrated by the chain reaction of sales up the price points starting with the more affordable markets and moving up into the middle and upper end markets.

Much of this activity resulted from homeowners who took advantage of low interest rates and “price jumped” into a more expensive home. Because of historically low interest rates these homeowners were presented with an opportunity to afford a mortgage on a higher-priced home without as large an increase in their monthly payment. In other words, lower interest rates allowed for a higher loan balance with less monthly payment. This provided an advantageous opportunity for those who wanted to move up in the housing market in 2002—and will continue to do so in 2003.
   A Look At 2003
   Given tight housing inventories in the more affordable price ranges both locally and across the nation, appreciation is expected to remain strong in 2003 (affordable = homes priced below the median housing price for a geographic area). Locally there is little threat of a housing bubble — as long as we continue to have a shortage of affordable housing close to the job centers, prices will only continue to rise. Prices in the high-end housing market already adjusted down following the dot-com decline back in 2000/2001. Appreciation is not expected to be as aggressive as it has been during the past few years, but it’s anticipated to remain quite healthy in 2003, particularly in the more affordable markets.

After record setting years in 2001 and 2002, the residential real estate market is expected to have another successful year in 2003. Economists aren’t predicting the same record-breaking activity of the previous two years, but overall, residential real estate will remain very strong. David Lereah, Chief Economist for the National Association of Realtors, believes that housing sales will dip down slightly in 2003, but overall he anticipates another historically strong year in real estate. The Mortgage Bankers Association of America agrees; they expect that low interest rates, combined with strong projected economic growth by the second half of 2003, will result in another successful year for the real estate industry.

During recent times of economic slow down, residential real estate has remained a pillar of strength, opening the doors of homeownership to people throughout the Pacific Northwest and across the nation—and it will continue to do so in the coming year.