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On February 15, 2012, Mathew Gardner, CEO of Gardner Economics, presented market updates to the monthly Windermere Premiere Property Breakfast Meeting, data which is will relatively affect properties in all price levels. Following are excerpts from Gardner’s report:
Matthew Gardner stated he was 85% certain that there would not be another recession (a double dip) in the next quarter. There ought to be several months of job increase and home sales; business in general is expanding, not shrinking. However, there will not be an actual unemployment rate of 6% until 2014. The current unemployment figures do not show the “shadow unemployment” of people who are no longer receiving benefits and are not looking for jobs. That figure is closer to 15.6% in this state. Washington is not as stagnant as Oregon—the out-migration leader. More people from Oregon than any other state, move here, and California with a $38 billion debt is the second contributor to in-migration for this area/King County/ State.
The lame duck political situation will tend to maintain the status quo; neither party wants to make big changes that might lose votes; no one wants to take a risk, even if the risk might result in good things. Positively because there has not been income growth or stable employment, we will probably not see any inflation until 2014, keeping interest at the lowest point in many decades. Banks are not lending to small businesses and since banks survive by making money from interest, this situation cannot continue much longer. There has been a steady withdrawal of funds from “Big Banks” and increased deposits in local banks and credit unions. There will be a slight negative effect from the current European countries that are bankrupt. (Gardner calls these the PIIGS—Portugal, Italy, Ireland, Greece and Spain.) The only Big US bank that does not have economic exposure in the European markets is Wells Fargo. Other major banks are heavily invested in many of these countries and will not be repaid the money they have loaned. The effect from outside our country will be negligible; this year will be better than last year!
Good news for the Seattle area is the interest of East Coast investors, who foresee this region (and Seattle) as being the most important west coast region/ city for the next decade. The definite feeling is the potential for growth in jobs and the housing market (new construction) is much greater here than any other western state. Investors are positioning themselves to back this area. One of the reasons for their thinking are what Gardner refers to as, The Five B’s:
Boeing—an Asian nation ordered two hundred 747’s on Valentines’ Day.
Bytes—this is one of two major centers for technical development in the US. For example, there are 350 companies in the Seattle area, manufacturing video games!
Bio-tech—a local company is within a year of announcing a cure for one major group of cancers.
Bothell—There are two people in Bothell on the verge of patenting a car that goes fast, for much longer distances on electric power; and the price will be low. This is not Tesla!
Benefactors—We have the highest concentration of billionaires of any place in the US except the lower East Side of Manhattan (an island that is the same size as Vashon-Maury). Philanthropists create an environment that fosters human creation, diversity, and intelligence. Local people are among the greatest givers in the world—setting out to rid the world of polio, malaria, and fixing countless other problems plaguing Earth. Good people are attracted by this positive energy. This is a good place to be!
