Takeaways from our “Night with an Economist”

Seattle fundamentals are strong, but affordability challenges, low supply, and rising mortgage rates are coming

Matthew Gardner treated the crowd at West Seattle High School to an informative, engaging talk on Seattle Real estate. He packed in so much useful information, that we can’t relate it all. So here are some of our highlights:

  1. Seattle’s economic fundamentals are strong. The economy has diversified and unemployment is at 4%. Amazon has a zillion workers. They also have more employees with MBAs than any other company. Just as Microsoft employees left and created new companies and large employers (Zillow, Expedia, BMGF, etc.), Amazonians can be expected to do the same. Seattle’s technology and business ecosystem is likely to continue to produce high wage jobs.
  2. Keep an eye on affordability. Seattle is following San Francisco but is still far from that reality. The average home price in SF is $1.3m; Seattle is $700k. That is why so many Bay area tech firms are expanding their Seattle operations—the lower cost of living amounts to a substantial pay raise for their workers. Even as housing costs seem to rise (insanely) by Seattle standards, for the new workers that are moving to Seattle the costs seem reasonable.
  3. Supply is a problem. The Growth Management Act is unlikely to change, which means new supply must come from infill. While King County estimates that there is 20 years worth of land to be built, Gardner estimates that there is 4-5 years of build-able (profitable) land to build. The supply problem (which directly fuels the affordability problem) should be conceived of as a regional issue and our zoning and transportation choices are the best tools to address supply. 
  4. Millennials are going to start buying homes. While student debt (and other factors) have delayed their home purchases, the myth that they are “lifetime renters” is false. They are going to want the equity. They are eventually going to have kids and won’t want to live in a Seattle apartment.
  5. Should I wait or should I go? Prices are going up. Mortgage rates are also expected to rise. (Remember the 1:10 rule—a 1% rise in interest rates leads to 10% less purchasing power, as more of a buyer’s payment goes toward financing their debt.) But the problem is that you may not be able to FIND something to buy. So, if you can find something, definitely don’t wait. Being ready, nimble, and decisive are the keys.

Thanks again to Matthew and the Windermere West Seattle team (Larry, Raven, and Monica) for hosting this event. From all accounts is was a great success. We expect to see more of these conversations in the future.

One Response to “Takeaways from our “Night with an Economist””

  1. Mike Sullivan March 17, 2017 at 4:11 am #

    Great summary of the event and real estate economic forecast. I left the event feeling optimistic, as Seattle has diversified it business economy and will continue to steadily grow. With supply remaining low, home prices will continue to steadily increase, maintaining the “seller’s market.”

    Having an outstanding agent is key with this competitive of a market. I was lucky to have Desiree in my corner a couple months ago when I bought my house. I can’t imagine anyone else negotiating and battling in such a complex transaction.

    Thanks again Windermere for hosting such a great event!

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