Seattle's tech industry continues to boom, with companies all over the region hiring and expanding. According to Glassdoor.com software engineers in Seattle command starting salaries of more than $108,000, that's about 20% higher than the national average. And its not just software engineers. Companies from Microsoft to Boeing and University of Washington to T-Mobile are hiring in a variety of career areas, all with salaries well above national averages.
We're enjoying unprecedented growth and prosperity, relative to many other parts of the country. And that's good news, right? Yes, of course it is. But that prosperity doesn't affect everyone the same way and growth brings on its own set of challenges.
Seattle's real estate market is hot, hot, hot! If you're a seller that is blissful news to hear. But its an increasingly difficult situation both for new buyers and anyone considering a local change.
Current inventory in Seattle (the number of homes available for sale) is near an all-time low. At present, there are just enough homes for sale to satisfy demand for a little over a month. In a more balanced market, that period would be 3-4 months supply or more. That's not unexpected in a growing economy, but that doesn't alleviate the pressure it applies to all levels of the housing market.
In February, King County issued drivers licenses to new residents from out of state at a rate of 233/day. But meanwhile we're issuing building permits for residential housing units (apartments, condos & homes) at much slower rates, about 30-40 per day. About 25% of the new drivers licenses issued in February were from residents migrating to Seattle from California. And though Seattle prices seem high, they are still much lower than those faced by tech workers fleeing the Bay Area cost of living. We all know that Seattle is an amazing, beautiful, exciting place to live... a dream destination, really. But for many its increasing lack of available housing makes that dream increasingly difficult to achieve.
What does this mean for housing prices?
Though many forces work together to affect market pricing**, we can be assured that as Seattle's economic prosperity continues housing prices will continue to experience upward pressure. And unlike the bubble we experienced in 2008, this pressure is fueled by legitimate demand for housing and continuing shortage of residential units. This pressure begins in the urban central neighborhoods of Westlake, Eastlake, Downtown, Capitol Hill and Queen Anne but it extends outward in all directions, as far as commuters are willing to travel. And they are willing to travel pretty far...
Housing prices in traditionally modest, outlying neighborhoods are rising and strong. Buyers who are able resign themselves to spending more than planned in order to outbid competition. Those who lose this competition must seek more modest housing or move farther out of their originally desired locations. This has the effect of driving up housing prices across the board for all types of housing and in virtually every neighborhood. And this cycle repeats itself for all levels of housing, from first time home buyer options to premier lakeside living.
But not to fret.
There is lots of good news here, even amidst the challenges! The legitimate strength of our housing market means that home ownership continues to be one of the greatest wealth building opportunities in your portfolio (and its outlook is strong). If you don't need to sell, then enjoy your incredible Seattle life and appreciate how much your investment is growing! If you're moving to the area, allow yourself to explore a multitude of living options you may not have previously considered from ferry or light rail commuting to bus, bicycle or ride sharing! There are hidden neighborhood gems throughout this great city just waiting to be experienced by you.
The best response to any challenge is always preparedness.
And this is where a good Realtor can help.
If you would like to talk more about buying or selling a home in Seattle, contact Allison for a free consultation. She'll look forward to hearing from you.
** Supply, demand, financing, regulation. These are the factors that affect housing costs at a macro level. We'll explore them in further in blogs to come.