Not nearly as extreme as Vancouver BC, a 2.5 hour to the north in Canada but still...its to the point of unaffordable for your average family. I once remember looking at a fixer on top of queen ann hill a house that was asking price of 90k in 1997. Today the house probably would be close to 950,000k How things have changed!
Yes to some degree I am with you on that. The problem is there just isn't anything for sale, so you have houses for sale with 10-20 offers on the table driving up the price. So I think the market is valued accordingly.
yes ..agreed .....over valued in most of King / Snohomish / Pierce counties
Prices are driven by demand. Since Seattle has tons of tech jobs available, and thousands of people moving in every year values will continue to be high.
Friend of mine bought condo in Seattle in 1997 for roughly 90k. In 2007 he sold it, and for proceeds bought two houses in Renton, one for him self, and second one as rental.
I am interested to see how high it will climb, but as for now demand is definitely there, and more SFR being teared down everyday just to be replaced with 3-6 town homes.
I personally have a concern Amazon's HQ2 could be a game changer for the Seattle market. Amazon is responsible for a huge portion (I read 1/3 somewhere) of the influx of people (with money) into the area. Amazon's success can be attributed to the endless pursuit of lower prices, which goes hand in hand with keeping the costs of doing business low. I do not see them changing this winning formula any time soon, and see HQ2 as a vehicle to continue the pursuit. When HQ2 comes to fruition, I see a great risk to the Seattle market that;
a: Investors who want to follow Amazon (there are many) will take their money and offers to the new HQ city.
b: Amazon employees who will need to move to help establish the new HQ, and those who will be given offers to move (and most likely to a much more affordable city).
c: New construction completions (who counted on Amazon's growth here) adding to the supply.
d: Increase in borrowing costs pushing affordability more out of reach for non-tech workers, and possibly wreaking havoc with those investors who need to refinance a commercial loan.
I cannot help to think of Boeing, and how they continue to pursue lower cost of labor/tax outside of the PNW. And a few key differences between the two add to the worry. #1 Boeing deals with union workers that make moving much harder #2 It's much harder to sell a manufacturing plant and build a new one than to move an office (as with their suppliers).
I don't think Amazon has secret plans to exit Seattle, but I definitely see this as a potential shock to Seattle's winning equation for price and rent appreciation.
This sounds like a lot of negative self talk to justify not to do anything. The facts is if you don’t invest what else are you going to do? Play the game not to win?
I am merely conveying my opinion of the post’s subject. But I would be interested in hearing your opinion about the risks that I see. Do you find them to be valid/invalid and why?
Amazon is not close to done with Seattle. It's only looking for a new HQ2 because it has projected it will exhaust Seattle in the next 5-10 years. It still has hundreds of thousands (millions?) of commercial square feet that it has yet to build, to say nothing of occupy. The Rainier Square Tower, for example, will be over 700,000 square feet, which Amazon will occupy nearly all of, adding thousands of employees.
Tack on growth of other tech firms like F5, Expedia and even Facebook and Google occupying enormous footprints in Seattle and Redmond, and Seattle is still years away from peaking. Housing inventory is now only barely beginning to catch up.
Great call-out, Lorin. Seattle is wildly overvalued, that's a fact. Anyone arguing against that is either delusional or hasn't done any due diligence. A very basic econometric analysis of the last few years provides more than enough data to show that. The rate is unsustainable and will lead to an exacerbated affordable housing crisis. Inventory continues to tighten leading to increased demand in housing. Sellers have the clear market advantage.
Matt, the Amazon effect will not stop due to HQ2. HQ2's new location is a strategic move. The number of employees relocating during start up is minimal and wouldn't take a substantial hit to Seattle's economy. They'll be hiring 50k new employees wherever they end up. Every indication point towards the trend of housing prices increasing is spot on.
With the new amazon HQ - is seattle projecting significant amount of talent (and high wage earners) to actually leave the market?
I was just at a local REIA meeting in Bellevue last night regarding the state of the Puget Sound RE market. The guest presenter is calling for prices to increase for the next 14-16 months, level out for another 14-16, and finally becoming a buyers market around 2021 with prices at today's level. It was very clear through all the data presented that the inventory crunch in the Puget Sound will not stop, even if the job growth/migration ends today. On the negative side, he was adamant there there is now an apartment bubble forming in Seattle proper with a ~3yr timeframe (67000 units coming on line in Seattle alone), mainly due to demographics/millennials. He also noted that there is a risk (20-30% price decline after shock to luxury housing) should China decide to require repatriation of money, though that could take about 6 years to play out.
At least Seattle is over-regulated LOL. Can't go a month hardly without lawmakers proposing some new restriction on landlords and developers.
Rent control, first-come, first-serve applicant screening, can't terminate a m-m rental agreement without cause, ESAs..... tune in next week for the next anti-business, anti-capitalism, socialistic measure...
Oddly enough I just came across this article, then this thread...
Too little supply will continue to push up prices as long as population continues to increase.
Yes, potential oversupply of apartments coming online in next few years however still significant shortage of condos/1st homes for homebuyers making initial purchase.
Many people thought that the Bay Area was over valued in the 90's and sold....that was a great decision.
Like others have said, its supply and demand; as seen below; inventory is at its lowest point in the last 20yrs
Quantity of closed sales are pretty high.....
you put the above 2 together and you get record high prices...
Things that could put downward pressure on prices are inventory picking up, interest rates going up, hiring in the area slowing.
I think long term seattle has nowhere to go but up; its attracting high paid people to an area that's geographically constrained in terms of where houses can be built.
The 'Seattle' effect is felt all over Puget Sound. We are feeling it here in Tacoma and Olympia, and Bremerton too; but the housing market has taken wild swings in this area before. The good thing is that even if prices soften the rental market has held up pretty well throughout, at least according to my research.
Everyone is talking about the tech jobs and demand. While demand is there the supply is capped by government growth plans. We are surrounded by waters, mountains and trees government is trying to protect. It’s hard to find the balance when you want to create affordable housing in Seattle while capping the lots available for development.
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