Coming off of two consecutive record years, J. Lennox Scott sees another great year for residential real estate in 2003.

Fueled by 40-year record low interest rates, which now are in the high 5 percent range, residential real estate will continue to be the bright spot in the Puget Sound region’s economy. Yes, rates are expected to increase, but Scott says experts think they’ll creep up only slightly.

“You’re just talking degrees,” he said, adding that rates will go from his current “phenomenal” rating to “fantastic.”

Further driving the market is what he called incredible demand among first-time buyers who are seeking lower-end homes. Even high-end homes, whose sales have been lagging, will do well, according to Scott, because prices are being reduced.

Clearly, it is a buyers’ market, he said.

And what happens when interest rates start going up?

Nationally, job growth is expected to continue. In the Puget Sound region, however, growth is anticipated to be minimal — Portland’s anticipated rate is 1.3 percent higher than Seattle’s.

The good news, Scott said, is: “We’ve kind of have hit the bottom here.” Job growth in the Seattle area is expected to pick up more in 2004 and 2005. He anticipates any rise in interest rates will be offset by job growth, which he said is the No. 1 indicator of the residential real estate industry.

What has protected the Puget Sound region’s bubbly residential real estate market from bursting is a lack of what Scott called runaway appreciation as is being seen in parts of California.

“During recent times of economic slow down, residential real estate has remained a pillar of strength, opening doors of homeownership to people throughout the Pacific Northwest and across the nation,” said Scott. “I predict that it will continue to do so in the coming year.”