Why It’s Now an Empty-Nesters’ Housing Market

There’s a mismatch in the housing market. Demand is rising, yet homebuilders don’t have the capacity to create the supply.  They haven’t banked as much land, they haven’t filed the permits and they’ve become increasingly short of labor—one possible byproduct of the Trump administration’s crackdown on illegal immigrants.

In fact, the nation is probably short about 700,000 homes on an annual basis. That explains why new home sales have been somewhat disappointing.

It also explains why sellers in many markets are now in prime position. According to Realtor.com, in December and January the supply of existing homes was 3.6 months, something that hadn’t happened since January 2005. In Seattle, for instance, the average time a house stays on the market is 36 days, compared with the national average of 90 days. In Dallas-Ft. Worth, it’s 42 days, according to Realtor.com.

Combine that with the prospect of higher-priced mortgages thanks to the Federal Reserve’s decision to begin lifting interest rates and it makes buyers a little more motivated. “We’ve seen home sales surge because buyers are beginning to realize there is this expectation that mortgage rates will rebound: you might as well get in now,” says Bernard Baumohl, chief global economist at The Economic Outlook Group. He says prices are rising at twice the rate of inflation and more than two times the rate of average hourly pay. That’s bad news on the affordability front for first-time buyers who are trying to get onto the first rung of the housing ladder.
Click here for more articles from Time Inc.’s Looking Forward series.

But it’s great news for empty nesters and other homeowners looking to downsize. Even better, there’s less of a supply constraint because developers have targeted the boomer market by building high service, luxury condominiums in major markets. And why not, says Peter Wells, a partner at Real Capital Solutions, which is developing a luxury condo tower in suburban Dallas: “When [boomers] sell their big place, they’re cash rich and it becomes all lifestyle driven.” Spring is a traditional time for buying and selling homes, and this season stands to be a busy one.

~Bill Saporito, Time

Was September the Sign of a Bigger Market Cool-Down?

Statistics, especially month-to-month statistics, don’t always give the best indicator of the local real estate market.

For instance: The Northwest Multiple Listing Service has found that, in September, inventory reached 1.7 months of supply by the end of the month. September was tied with February for the high in supply for the year. (A balanced market has  four to six months of supply.)

Couple that with the $20,000 decline in the median sales price in King County to $565,000, and you’d get the sense that maybe some balance is coming back to the market.

Then again, listings often fall off by about 30 percent every September and October, compared to the spring and summer months. And in the winter, they drop off even more. Every price drop feels like a annual change.

“While prices for single-family homes and condos were up more than 14 percent annually in King County, it’s hard to ignore the $20,000 price drop between August and September,” said OB Jacobi, president of Windermere Real Estate.

“But if you look at the historic data more closely, it shows that prices have also dropped between August and September in five of the past six years, which points to a seasonal pattern rather than a long-term trend that we need to be concerned about.”

But that doesn’t mean it’s all negativity. Just because the market is slowing doesn’t mean buyers will be up a creek without a paddle, according to J. Lennox Scott, CEO and chairman of John L. Scott.

“The pressure cooker for the housing market continues as the typical seasonal market comes into play for new listings coming on the market,” Scott told NWMLS. “October will be the best month for selection and availability until late February.”

Get in while the getting’s good, Seattle buyers.

~Zosha Millman, Seattle PI

This is the Hottest Real Estate Market in the Country–by Far

Home prices have been on the rise nationally since February, but no area of the country has seen a spike like the Pacific Northwest.

The price of single family homes in the Seattle area has soared 13.5% in the past 12 months. That’s more than twice the national average of 5.9%.

The median single family home in Seattle, as of August, costs $730,000 – though residents willing to brave the 1.5 hour (one way) commute from Snohomish or Pierce County can find a home for $455,000 or $313,000, respectively.

The numbers, from the monthly Case-Shiller home price index, show Portland in second place nationally, with an average 7.6% increase.

Demand for homes in Seattle has greatly outstripped supply, which has fueled the steep increases. And prices aren’t expected to drop anytime soon, since there’s not a lot of private undeveloped land left for builders to create new subdivisions.

The 12-month surge is the largest increase in Seattle housing prices since 2006, in the midst of the housing bubble. Since 2012, when the market bottomed out, average home costs have increased 79% – and they’re now 20% above their previous peak at the height of the bubble.

Chris Morris, Fortune

From Boeing to Microsoft, Amazon to Starbucks, how Seattle’s business innovation has shaped the world

One of Seattle’s earliest businesses was equipping 1880s miners headed up to the Klondike. Looking at the record number of construction cranes dotting downtown Seattle today, it’s clear the gold rush is on again – but now, people come to stay.

The city’s key industries are diverse, from aviation to retail to technology. But all the top companies share a proven success formula: offer useful products people need, treat workers well and add a twist of innovation. “They are not inventors, but perfectors,” says Leonard Garfield, executive director of Seattle’s Museum of History and Industry (MOHAI).

Seattle businesses attract creatives with an irresistible combination of great jobs, outdoor amenities and a progressive workplace culture that now includes a $15-an-hour minimum wage. Great companies are the driving engine that grew Seattle into a booming creative mecca, and their forward-thinking CEOs – especially Microsoft’s Bill Gates and Amazon’s Jeff Bezos – are the city’s rock stars.

Here’s a look at how the most important Seattle companies grew, and how they continue to shape the city’s future.

The builders

Before The Boeing Co, company historian Michael Lombardi notes, Seattle was a logging hamlet. William E Boeing changed that when he founded his commercial aircraft company here in 1916, just two years after the first ever commercial flight. “Seattle and Boeing grew up together,” Lombardi says. As Boeing’s fortunes rose and fell, so did the city’s.

During the early 1970s, Boeing saw a big government contract end, and Seattle unemployment shot to 17%. One wag posted a billboard that read, “Will the last person leaving Seattle – turn out the lights.”

Boeing bounced back, thanks to its diversity. While most aircraft firms specialize in commercial planes, spacecraft or military projects, Boeing pursues all three, Lombardi notes. As China and other Asian nations visited to purchase planes, Seattle became a more international city. Today, Boeing has roughly 80,000 local employees, and the 20 to 50-year production timeframe for airplane models means Boeing brings economic stability to the region, he notes.

Another constant presence is 116-year-old Nordstrom. The chain grew to nearly 350 stores by making shopping special, with live piano music, in-store restaurants and legendary sales staff, who meticulously note and remember customers’ preferences.

“Nordstrom made Seattle the customer-service capital of the United States,” says Robert Spector, a longtime local business observer who has authored books on Amazon and Nordstrom, including The Nordstrom Way to Customer Experience Excellence (Wiley Sept 2017).

Ever an innovator, Nordstrom jumped into e-commerce ahead of competitors, in 1998. Last year, the company brought its store experience and website together with a Reserve & Try feature, which lets customers choose items online to try on at their local store.

A top Seattle style-setter, Nordstrom added more than a dozen exclusive labels to its remodeled downtown flagship store last year, including Louis Vuitton and Beyoncé’s Ivy Park. Nordstrom is one of the last department store brands to retain leaders from the founding family, notes author Spector. He says their success stems from the Nordstroms’ habit of making each new generation start on the sales floor.

While Nordstrom gave Seattle fashion flair, REI served rugged outdoor explorers. Founded in 1938, the company’s flagship store on Seattle’s Capitol Hill was a popular early tourist attraction for its then-rare selection of affordable mountaineering gear, says Alex Thompson, REI’s vice-president for brand stewardship and impact.

Today, REI doesn’t just sell gear – it’s about getting people outside, offering more than 250,000 outdoor classes annually, Thompson notes. The company’s new Force of Nature initiative facilitates women-led outdoor events, and is prompting gear-makers to design with women in mind.

With its co-op ownership model and commitment to sustainability, REI is about more than profits. An example: after opening a zero water and energy-use distribution center in the Arizona desert last year, the company made the plans public, so others could use them. Spreading the gospel, many former REI execs now lead other Seattle outdoor organizations such as The Mountaineers, while former chief executive officer Sally Jewell served as Secretary of the US Department of the Interior.

“There’s a strong correlation between working at REI and going off to do great things,” says Thompson.

The innovators

Seattle’s over-dependence on Boeing jobs ended in the 1980s, after Bill Gates and Paul Allen brought their software startup to town. When Microsoft Windows was introduced in 1983, it became an instant hit, ushering in the age of the personal computer. In 1986, the company settled into its Redmond campus, which now employs more than 46,000 people. Along the way, the ‘Microsoft effect’ brought affluence to the Eastside, which grew its own downtown in Bellevue.

“When I arrived in Seattle in the late 1970s, before Microsoft took off, it was still just a big town,” says Spector. “Now it’s a medium-sized city.”

One thing this chilly city loves is coffee. Howard Schultz saw Seattle’s potential for an Italian-style coffeehouse scene and bought the original Starbucks store in Seattle’s Pike Place Market in 1987. Suddenly, Seattleites couldn’t get to work without a $5 latte.

“I think the brilliance of Howard Schultz,” says MOHAI’s Garfield, “was that he took a prosaic item – regular coffee – and made it an essential luxury, and something that people are passionate about.”

While Starbucks exported Seattle coffee culture to more than 22,000 locations around the globe, the company also raised the bar on employee benefits. The chain offered full health benefits to part-timers in 1988, and added college scholarships in 2015. From recycled cups to ethically sourced beans, Starbucks strives to do well by doing good.

The disruptors

As the 21st century neared, a new breed of entrepreneurs arrived in Seattle. Leading the charge was former Wall Street internet project manager Jeff Bezos, who thought consumers would buy products on the internet.

From its first book sale in 1995, Amazon.com touched off an online shopping revolution. Locally, Microsoft executive Rich Barton would follow suit, spinning travel-booking website Expedia out of Microsoft in 1999, and co-founding real-estate site Zillow in 2006.

Amazon would also foster a new, results-oriented corporate culture that became the norm for local tech startups. Sure, kayak to work, bring your dog, and work when you want – as long as your projects get done. “My team set their own schedule,” says corporate communications manager Sam Kennedy.

It must be working: today, while many traditional retailers struggle, Amazon is hiring 100,000 more workers nationally. Locally, its hiring boom is single-handedly spiking home prices.

As Microsoft reshaped Seattle’s Eastside, so Amazon’s sprawling campus is transforming the once-industrial South Lake Union neighborhood north-east of downtown. Google is building a major branch office nearby, and restaurants, condos and shops have sprouted.

In all, Seattle’s companies bring the practical, progressive lifestyle not just to the city but to the world, says MOHAI’s Garfield. Visitors fly home in Boeing planes, on which they’re served Starbucks coffee. Often, they’re wearing Nordstrom dresses or hauling an REI backpack, while they shop on Amazon or use Microsoft Office on their laptops.

“Every iconic Seattle company is about our lifestyle, ethic and culture,” he says. “It’s hard to think of another US city where you can say that.”

~Carol Tice, The Drum