Pacific Northwest Real Estate: What's Up? The Prices

Seattle, Washington
Seattle, Washington

National stats out this week from various agencies that track real estate showed prices nationwide are falling, falling like a ton of bricks. But like I always say, all real estate is local, and staring out at me from the list of minus signs were two startling plus signs: Seattle, Wash. and Portland, Ore.

According to theS&P/Case-Shiller Monthly Home Price Index, prices in Seattle are up 9.6% from May of last year, and prices in Portland are up 6.4%. We’ve noted the two cities before, bucking the national trend, thanks to strong hiring from Microsoft ,Google and other tech companies as well as Boeing’s 787 aircraft program. Interesting to note, though--Salem, OR is getting the spillover, with home prices there up 15.6% over the last year.

My question is this: Why don’t we learn from each other? I realize that the Pacific Northwest is experiencing excellent economic times, and it’s also a spot where land, near the cities anyway, is scarce and highly restricted, but affordability is affordability, and not everyone there is a tech billionaire. The rest of the country is in the midst of a big ol’ “I told ya so” of a correction, where despite some strong economic fundamentals and declining prices, folks simply still can’t afford to buy that center hall colonial they’ve been eyeing. And even if they can afford to, they don’t want to jump into an uncertain market.

Now I’ll admit, I lived in Seattle for a year (local reporter at KIRO-TV…god I miss the chopper), so I know that it’s easy out there to feel somewhat isolated from the rest of the country. But I’m pretty sure they get newspapers and I’m really sure they have the internet, so I ask you, all of you, why are they all still running up the prices there, knowing what may be headed down the pike? What goes up, must come down, I don’t care where you live.

Still, if you want to jump in the game, some Pacific Northwest stocks related to the housing sector are Washington Federal and Cascade Financial . Analyst Sara Hasan at McAdams Wright Ragen says their credit quality is well above average.

Note from the company:
WFSL should take market share in the next 12 months as “the market is likely to shrink, and Washington Federal is now in a position to be much more competitive.” The stock also has a good 3.5% yield. CASB is a thin-trader, but has an excellent outlook. Its credit quality is also outstanding, and it is based in Everett, Washington where the economy is booming. Cascade Financial should benefit from hiring at Boeing’s huge assembly plant (the largest in the world), which is based in Everett. Boeing it is just beginning to assemble the very popular 787 Dreamliner. Both WFSL and CASB are Buy rated. We currently have a $26 target on WFSL (8% upside plus 3.5% yield) and a $21 target on CASB (32% upside).

Questions? Comments?