This analysis was completed by Bloomberg using the US Bureau of Economic Analysis data for the 100 largest metropolitan areas in 2014. Gross Metropolitan Product (GMP) was clearly much higher in high-tech areas, with San Jose ranking number one nationwide. This reflects an ongoing trend showing that densely populated areas with educated, skilled, workers are compensated at much higher rates than the national averages. Income in these areas is expected to continue to increase, unless housing costs rise too high or the standard of living declines.
The proof is in. The Bureau of Labor Statistics has recently released a report recently that shows that Seattle's incomes are increasing rapidly. In fact they are rising at twice the national average. (see chart)
Of course everyone acknowledges this is affecting the purchase price of real estate, as well as rentals. And that is true. But it also has a compounding effect on other issues. More people with higher skill levels are relocating here in hopes of better income and jobs. Employee benefits are increasing for companies in order to be competitive. And more people are being asked to work longer hours because hiring is expensive for businesses, even if they can find qualified employees.
Don't get me wrong, increased income is good, it's even great! But Seattle and the surrounding area needs to be aware of the unintended consequences that comes with it. And be ready to address them in creative, realistic, and effective ways.
Housing Chartbook: February 2014
Several Mortgage Professionals with Wells Fargo have sent me this report over the last couple of days. It's a very thoughtful analysis of the near-term housing outlook based on historical data and near-term predictions using a number of factors. They look at GDP, energy and material costs, demographics and changing family makeups, multifamily and single family homes, both in rentals and ownership. These economist come from all over (NAR, Case-Shiller, Corelogic, NAHB, US Dept of Commerce, and Wells Fargo) to put their heads together to help get a picture of where we are and where we are going. This is detailed thoughtful stuff!
The short news is that these predictions and models are showing that things will be slowing down for a bit. But we shouldn't see massive increases in interest rates either. These are very macro-economic national predictions and may not be reflective of our local real estate market here in Seattle. But it is helpful information all the same. There are tons of charts for those of you who like this sort of thing. I've put a PDF link to the report so you can download it.
As reported in the Seattle-PI, it's official! The Amazon Twin Towers Downtown Seattle development located in the Denny Triangle area has been tentatively approved by Seattle City Planning and Development Department. With just a few minor design changes to go, we will see an additional 3.3 million square feet of office space in the next few years in buildings going up 38 floors. The development will encompass the area between 6th Ave on the west and 8th Ave on the east. And between Westlake and Blanchard Streets on the north and south. This comes after Amazon already agreed to buy it's South Lake Union 11-building complex from Vulcan Real Estate for $1.16 billion back in October.
Amazon is not the only company building office space downtown. Commercial developers are coming back to Seattle in a big way. According to the New York Times, Seattle is one of the few markets where developers are making money. And office vacancy rates are now under 10%. As a residential real estate broker I can tell you, this is music to my ears. Nothing brings strength and confidence to the residential market more than a strong business climate.
To look at condos and homes under $500,000 available for sale near this development and the existing Amazon Campus, click on this link: http://www.Seattle-RealEstate.idxco.com/m/8520/AmazonCentricListings?
According to MarketWatch of the Wall Street Journal, the the Seattle-Bellevue-Everett area is one of the 10 fastest recovering areas in the country.
Housing inventory decreased 42.9% in the second quarter, compared with a year ago, and median list prices increased by 10.85% in the Seattle area. Unemployment in the area is 7.8%, lower than the national rate. And homes are spending less time on the market, with the year-over-year age of inventory down 42.86% in the second quarter.