HOME PRICE APPRECIATION - SEATTLE
Home price appreciation in the Seattle area has declined to levels last seen during the start of the last 2 recessions. Starting June 2018, a deceleration in home price appreciation began in the Seattle area. Year over year home price appreciation peaked at 13.6% in May 2018, before quickly slowing to 4% price growth in January 2019.


(Tap blue line to see the rate for that period)
The last time home price appreciation fell below 5% was in September 2007. The Great Recession officially began in December 2007, 3 months after we crossed below 5%. If we look back further, May 2001 was the last time it happened before that. The dot-com recession officially began in March 2001 - two months before home price appreciation dropped below 5% (although the start date of the recession was not identified until later.)

THOUGHTS
If you're flipping houses or buying them, be careful about trying to rely on the same type of price appreciation or "hot market" that causes offers to get squeezed upward, as you may have experienced in 2017-2018. 
UNEMPLOYMENT RATE
The unemployment rate in the Seattle/Tacoma/Bellevue metro area is near the lows of the last three economic cycles, and has largely stopped improving, as is typical in the last phase of economic expansion in a cycle. Typically, the unemployment rate here does not spend much time below 4.0%, before it begins increasing, and a recession starts.


(The grey shaded areas are a recession)
In both April and Oct of 2018, the unemployment rate in the Seattle/Tacoma/Bellevue Metro hit cycle lows of 3.5%, after bouncing around from 3.6% to 4.5% since April 2017. This is pretty typical of the late-cycle unemployment rate. Usually the decline in the unemployment rate is more dramatic directly after a recession, then improves more slowly until it gets to historic lows, and starts bouncing around new its lows, before there is a new recession. 

LESSON 1
Notice that during recessions, the unemployment rate tends to move more quickly upward for a period of 1-2 years, then improves more slowly over the next 5-10 years to prior levels. The lesson is that job losses during recessions happen faster than job gains during recoveries. 
 
LESSON 2
Historically, recessions tend to happen when unemployment rates are their lowest. Popular and economic opinions rarely predict a recession when everyone has a job, because the economy is "so good." But history has shown that recessions are most likely to happen when unemployment rates are at or near historical lows - where we are today. 

LESSON 3
It's extremely difficult to call the timing of a recession. However, it is much easier to tell if we are early or late in the economic cycle, relative to what has happened historically. How much better does it get, historically, from this position..?