What The Seattle Boom Means For Residential Buyers, Lenders And Developers
Following our recent Seattle State of the Market, Bisnow held a cocktail event, hosted at local architecture firm MG2 with Riley Group as a sponsor.
It was more than just cocktails, since the event included another discussion, "FutureCast 2020 Forum powered by Realogics Sotheby's," focusing on the future of greater Seattle. Attendance was by invitation.
Realogics Sotheby's principal Dean Jones, who founded the FutureCast 2020 Forum, said every sector of Downtown Seattle is growing, except maybe the financing for apartments, which is taking a bit of a breather.
Driving all that growth? Jobs and more jobs. Seattle has now eclipsed the Bay Area in terms of jobs creation, most of which are Downtown, Jones said — a major milestone.
About 30,000 residential units are planned in the city, and there are more construction cranes active in Seattle than any other city. 2019 will be a major year for apartment completion here, but not the last major year — the next decade will be a "juggernaut of residential development," Jones said.
Most of the underway and planned residential development is rental, Jones said. In some recent years, there have been no new condo developments delivered, and only a few hundred units are slated for 2019 and 2020. Also, some earlier condos that became apartments never reverted back to condos even in recent boom years.
"They're worth too much as apartments," Jones said.
Though it is comparatively inexpensive, that does not make Seattle a cheap residential market.
"One challenge is the demand in the market is high for homes under $700K, but they're hard to deliver profitably."
There is an office boom here as well, he said, in no small part because of the tech industry. The Seattle convention center expansion also is spurring growth in the local hospitality industry.
Caliber Home Loans branch manager Trevor Bennett said millennials are the largest residential buyer demographic in the country and the Seattle market.
"I see some millennials with solid incomes struggling to find properties they can afford, which is why they're looking in farther-out markets like Redmond. They don't want to give up on the ownership aspects of the American dream."
Bennett said he also sees millennials who are taking part in the Seattle tech boom, working for Amazon and Facebook and Google and the like. They, too, are keen to buy property.
"They aren't going to put the brakes on buying a home, even though rents are comparatively cheaper here in Seattle," he said.
For the last 20 years, the mortgage industry has not changed much, Bennett said.
"Now technology is being integrated into the process, and borrowers will have a little better experience. The experience will be more mobile-centric because the largest share of borrowers are starting to demand it. Lenders who figure this out will do better."
Colliers International Senior Vice President Dylan Simon said the majority of growth in Seattle is in the urban core, largely because of the tech ecosystem — and not just Amazon, as large as that company looms in the market for office space and in the popular imagination.
"We're not just a one-horse tech town," Simon said. "The technology ecosystem creates a real vibrancy for companies like Tableau Software to move from Silicon Valley and grow here, and for Apple and Salesforce to have offices here."
The average tech worker's salary in San Francisco is about $120K/year, while it is roughly $100K/year in Seattle, but considering the state income tax in California, tech workers there take home only about 5% more, Simon said. Meanwhile, the cost of housing, rental or for-sale, is vastly higher in the Bay Area.
Class-A office is considerably cheaper in Seattle as well. So employers and employees will be coming from the Bay Area, New York, Boston and other expensive places. Seattle is joining the ranks of major cities, and with that will be benefits, but also problems such as traffic and an increasing cost of living, Simon said.
Other speakers included Madrona Financial Services principal Brian Evans, O'Connor Consulting Group principal Brian O'Connor, Gray Magazine Editor Jennifer McCullum and Real Retail principal Maria Royer.