Some of you have been living in houses that have been under water for years. Every year you get the valuation from King County and you wonder, ‘When is it going to come back from what I paid for it.’

There are new statistics published, but do they give us any better idea as to when these homes are going to be back in the black again?

I sat down with Tom Kelly, host of KIRO Radio’s Real Estate Today, to get some answers.

Tom Kelly: A lot of people think that appreciation is going to float all boats in the housing market, but people start so far under water – especially people with lower valued homes. They typically took out bigger loans and they’re going to have a more difficult time getting their money out, let alone positive equity.

When the economy continues on this upward path, interest rates will increase. When they do, housing payments will increase and fewer people will be able to buy homes.

Dave Ross: So why is it in this booming economy – and Seattle is 1 or 2 in the nation in terms of economic growth – why isn’t that spreading into the suburbs where all these underwater houses are?

TK: Builders aren’t building homes where the main housing force wants to buy and that’s the Millenials. You looked at Redmond and Microsoft’s campus for many years and then this huge employer was going to build this other campus above the plateau in Issaquah. People said, ‘You know what, we don’t want that. We want to live downtown.’

DR: If you’re trying to sell a home in the suburbs, you’re competing with a brand new, shiny apartment building downtown near clubs, restaurants, and the Space Needle, with all the glitz and glamor of downtown.

TK: In addition, Millenials are getting married and having kids later in life.

DR: Does this mean a depression for the suburbs?

TK: No, I don’t think so because of the number of people who are going to move into this area. For example, Snohomish County is slated to be the fastest growing county in the state in the next 15 years. There are not enough homes built there to accommodate it. The number of people coming in will wash the Baby Boomers getting out of these big homes. They’ll find people to buy, it’s just going to take a little bit longer.

DR: The neighborhoods that will bounce back the fastest…

TK: You trade miles for dollars. It’s an interesting dynamic in the Puget Sound area for a variety of reasons. You have the number of Boeing plants. It’s no longer the force that it used to be, but look at where they’re placed. There’s a lot of activity in Mukilteo, south Snohomish County going north. I think you’re going to see neighborhoods closest to Seattle snap out of it first. A lot of these people, they don’t want to spend their time on the freeway anymore. In addition, the number of Baby Boomers are going to sell their family homes and would like to have some assets in the bank. A lot of those people are going to be renting as well, maybe downtown or maybe close to an adult child, and not buying another home.

DR: Is it fair to say that in some neighborhoods traffic is killing home prices because people look at the places where the maps are perpetually red and say, ‘I’m not living out there.’

TK: I think that’s true and I think that’s why a lot of real estate websites now have a drive time from work to play and work to school on their websites so that potential owners can ascertain how long it’s going to take to get there.