I’m Sean Reynolds from Summit Properties Northwest and Reynolds & Kline Appraisal. Today we’re shooting on the last work day of December 2017 and what this kind of historically marks is 10 years forward from the beginning of the great recession. And so this is a quick video that just kind of shows us how real estate specifically in the Seattle area has kind of transpired over the last 10 years. It’s been 10 years and a lot of people don’t want to talk about it because it’s been kind of a, a painful 10 years to get through if you’re in real estate. Back in 2007, 2008, geez probably through 2010 if you told people you’re in real estate and they’re like, oh, that can’t be good and you’re like, no, that’s not good. But then you know, real estate is kind of an up and down thing. So you got to kind of take the good with the bad.
So some of the factors in December of 2007, that caused a big increase in property values where you had no doc loans, you basically didn’t have any documentation. You still got a mortgage, you had sub-prime loans, meaning less than a credit, and you had a lot of house flippers. You had a lot of speculation going on in the marketplace back then. Those were the factors that kind of drove up housing prices in 2007. So is there anything to prevent a housing crisis in 2017 like we saw in 2007? And the answer is yes, there are. Within the mortgage industry, you’ve got higher credit standards. Uh, the FICO credit scores are considerably higher now, so lenders require greater credit scores. Lenders basically we require better repayment ability. So you’ve got to have some kind of down payment. You’ve got to have a history of employment where you can actually repay the loan and higher credit scores.
And so the whole Dodd Frank Act of, I think it was 2009 was major legislation that kind of changed around, uh, the ability of a borrower to get a loan. And I think that’s helped out considerably on top of the fact that we’ve got fundamentals in the real estate market now that are not dependent upon the subprime financing that we saw before and also kind of just some of the funny money that was fueling the market that the crash of 2007 was based on. So over the course of the last 10 years, some cities have recovered really well. You’ve got Austin, Denver, and Dallas that have done, they’d have just tremendous gains. I think Austin is up over 60 percent. It’s like 63 percent appreciation since its bottom, Denver somewhere in the mid fifties with appreciation since the bottom from 07′ to 2017 and Dallas, I think it’s like 45 percent.
It’s appreciated since the bottom. Those cities have done incredibly well in a lot of that has to do with job growth. Seattle has done very well too, but it didn’t drop quite as much. So it hasn’t had the massive big upward side swing. So those are cities that have done really well. Cities that haven’t done as well, and those are: we’ve got Riverside, California, we have just about anywhere in Nevada has not done exceedingly well and we’ve got Tucson, Arizona. Those cities had a big run up and then a massive kind of decline and all of those cities are somewhere around 20 to 25 percent still off their high pricing from 2006/2007, so they have not recovered. So the big difference in the cities that have recovered and the cities that haven’t recovered is typically job growth and what we’re seeing over the last 10 years is the, the tech sector employment, so computer tech jobs, anything related to that industry and those jobs all seem to be going to kind of the same cities.
You’ve got a ton in Austin, you’ve got a ton in San Francisco, you’ve got a ton in Seattle, cities like that, and that’s kind of corresponded to the appreciation and the robustness of those housing markets since the crash. So looking forward in our housing market from 2018 forward, what can we kind of expect to see? There’s kind of some general trends that we can kind of identify and the thing that we’re looking at in most of the big markets right now is a lack of inventory. You’ve got more people coming in with jobs, than you’ve got housing that’s available to buy and so you’re going to still see a continued increase in pricing. And a lot of that has to do with we can’t build homes fast enough to fill the demand curve for the job population. I think another thing you’ll see in 2018 is in 2017 we had this super, uh, almost lineal appreciation.
We had just an incredible amount of appreciation in 2017. That is not something that’s sustainable. So I think you’ll see that level off for sure in 2018 instead of it kind of going up like this, I think you’ll see kind of a steady increase still because we don’t have enough housing, but it won’t be as rapid an appreciation as 2017. I think that’s one of the trends we’ll see, um, we’ll still have an upward market, but it just won’t be as fast. So Seattle has topped the nation’s appreciation in real estate, I think the last 11 months in a row. I think it’s a record and I think Phoenix had the record prior to that. And so the question that gets asked a lot is how much of this appreciation is kind of returning back to the mean and how much of the appreciation is from job growth and economic growth within our area.
And to me, I think it’s a little bit of both. I think you’re seeing normal appreciation on top of some pretty huge employers, specifically Amazon in Seattle, that are taking down thousands and thousands of jobs and the trickle-down effect that has on our economy. So comparing 2007 to 2017 wildly different dynamics, but kind of the end result is still the same. You’ve got a lot of people clamoring for houses, you’ve got price appreciation going up pretty rapidly in a lot of the nation and specifically on the two coasts, it’s going up very rapidly.
I’m Sean Reynolds from Summit Properties Northwest and Reynolds & Kline Appraisal. This is the last video we’ll do in 2017, so I look forward to seeing you in the new year. Happy 2018. Thank you for watching the video.