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Despite record home prices in Puget Sound area, economist says there’s no bubble

SEATTLE -- Seattle’s home prices hit a another record high recently, and even if you are not in the market to buy, economists say the market is having a ripple effect across Western Washington.

If you are wondering what a median price looks like in Seattle, take for example a home in the Capitol Hill neighborhood.

It’s a three-bedroom, 1,800-square-foot home listed with an asking price of $750,000.

It sold under seven days -- and there is no word yet on how much it actually sold for. In a hot housing market, buyers often pay more than the asking price to nab the home they want.

'For sale' signs don’t stay up for long in Seattle and that has Michelle Pierone thinking.

“I feel like I almost want to sell my house just because I can make some money,” Pierone said.

Pierone bought her three-bedroom West Seattle home two decades ago for $300,000.

“Proud to say I did it all on my own,” Pierone said.

And it’s taken a lot of sacrifices to stay a homeowner in this area, including barely taking any vacations and driving the same car for 14 years.

Even if Pierone were to sell, home ownership feels unreachable to many in our area.

“I have to weigh if it’s worth it to stay here and I wonder if other people are wondering that, too,” Sarah Waterman said.

Waterman has been renting and working in Seattle for years.

“We had a place with 10 people in it at a time,” Waterman said.

Then the next year she moved to Puyallup.

But the commute got to her, so Waterman came back to Seattle.

“I had another house with 14 people in it,” Waterman said.

All the while fantasizing about buying a home.

“It’s kind of heart-wrenching because when you feel like this is your home it’s not easy to say, hey, let's pick up and leave,” Waterman said.

But that’s what many are doing. But many of the moves aren't to Snohomish and Pierce counties anymore.

Home prices have skyrocketed by nearly 18% in Snohomish County and 16% in Pierce County in the past year.

Affordability now means Thurston County for many.

“I would say Skagit County, as well and Whatcom County, but the biggest issue is -- are you really going to be commuting six hours a day,” said Matthew Gardner, chief economist for the Windermere real estate firm.

With Seattle’s median home price hitting a record once again -- now inching closer to $800,000 -- buyers will have to go farther north and south.

“It’s actually even hard for me to digest that,” Waterman said.

But if you ask Gardner, the housing market is not in a bubble.

“It’s not -- there are several reasons why. I wish there was one reason, I am an economist so there is always a dozen,” Gardner joked.

Gardner says there is a lot of people profiting from built-up equity in their homes. He also points to the fact that buyers now are overly qualified.

“We’ve moved from the subprime back in 2005 -- have a heartbeat, get a mortgage -- to the ridiculous that credit quality is very high, almost onerously high in some respect,” Gardner said.

He added that home prices will slow down once interest rates start creeping up. But he says that won't happen this year.

He predicts a recession at the end of 2019, but for this area he says don’t expect a significant dip in home prices. He said it’s more about stabilization than anything else.