The top real-estate forecast sees Seattle remaining among the most desirable markets next year. Tech and population growth are big drivers.
Once again, Seattle is among the hottest markets in the annual forecast of Emerging Trends in Real Estate by the Urban Land Institute and PwC. For 2017, Seattle ranks fourth in overall prospects among the markets to watch, behind Austin, Dallas-Fort Worth and Portland. It ranks first in investor demand as capital is expected to continue streaming here.
Spokane and Tacoma rank 71st and 72nd, respectively, out of 78 markets surveyed.
In homebuilding prospects, Seattle ranks 12th (context: San Francisco ranks 27th out of 78 markets). Raleigh-Durham, with a combination of demand and plenty of land for sprawl, ranks first.
The report states: “The fundamentals for the success of the Seattle market appear well established for another year. While the more traditional manufacturing sector may see some slowdown due to cuts in aerospace production, technology-related sectors of the economy are still growing rapidly.
“The Seattle technology industry is dominated by information technology firms focused on cloud computing and those focused on internet retailing. Tech hiring in Seattle has been so competitive that the average hourly pay rate for an IT worker is now $10 higher than the national average. The outlook for tech hiring remains strong as firms continue to locate to the market to take advantage of the proximity to industry leaders. This is evidenced by the increase in venture capital flows to the market over the past 12 months.
“Seattle has lowered its dependence on the aerospace industry from historical levels, but current cuts will still have an impact on the market. The job losses, along with the eventual loss of income, will be a negative to future economic activity.
“Population growth in Seattle is projected to remain at nearly twice the national rate. This pace is impressive given the current size of the Seattle metro area, at around 3 million residents. The combination of strong job growth and rising incomes is projected to push household formation up in 2017, which will increase demand for both single- and multifamily housing. The multifamily market will need the higher level of demand since the market will add 5 percent to its existing inventory.”
Emerging Trends is the most influential look at how industry insiders see real estate in the coming year, based in part on some 2000 interviews, both in person and by surveys. This doesn’t guarantee Seattle’s sizzle next year — everything from overbuilding to a local economic shock could throw that off. But over the past several years, the forecast has proved on target.
Some interesting macro tidbits: the expansion is seen continuing, without overheating (yet) in real estate; downtowns continue to be attractive for company locations; climate change is a slightly growing worry, especially for Florida; many developers are facing labor scarcity, and many more cities than Seattle are “stepping up” to address housing affordability.
The report was completed before the surprising election of Donald Trump as president. So be forewarned.
On the one hand, he’s technically “one of them,” a developer and real-estate player, albeit of a special kind. So he might pursue policies to push back regulations such as Dodd-Frank and environmental protections. On the other hand, a trade war with China would ruin everybody’s economy.
Today’s Econ Haiku:
Go to the drone store
Sorry, no Reapers in stock
That deal wouldn’t fly