Split Decision for Northwest Housing Markets
“What we’re seeing is the return of the investor,” says Charles Turner, principal broker of the Turner Team for Atlantic & Pacific Real Estate. Houses used to take 160 days to sell, but that has now improved to 136 days, Turner says.
The beginnings of new construction can be seen in some city neighborhoods, Turner notes. “Things are breaking ground.”
Seattle Job Growth Attracts Developers
Investor interest is also apparent in Seattle, where leading developers such as Toll Brothers have set up shop in the Northwest through acquisitions of local builders.
“Almost a third of all purchases last year were in cash,” says Gardner. “That tells me a lot of investors are getting into the market place.”
Rising investor interest signifies a notable change in confidence about the real estate market in the Northwest. The early signs of economic stability have become more pronounced in Seattle as job security improves, thanks to increased hiring by the big employers.
In February, Amazon announced plans to purchase three office towers near downtown Seattle, which could add 3.3-million-square-feet worth of office space and possibly bring in tens of thousands of jobs to the city.
“Job growth in Seattle appears to be coming back, and the expectations are higher here for increased jobs as we go forward,” Gardner adds. “Investors look at the longer term.”
The state of Washington added 62,500 net jobs in the 12 months through January 2012, lowering the unemployment rate to 8.3 percent from 8.6 percent in December 2011.
While the unemployment rate in Portland has also declined, Gardner believes the city will see fairly anemic job growth.
“Employment expectations in Seattle are higher than in Portland,” he says. “That’s going to hamper any demand for new single-family housing.”
Shrinking Inventory Spurs New Construction
The biggest issue facing the Northwest continues to be the overhang of inventory, as the number of houses that have yet to be foreclosed still has not been released to the market. In addition, sellers are playing the waiting game as many now perceive things are turning around and are willing to wait for better prices.
“There’s not enough supply to meet demand right now,” says Mark Knoll, Blueprint’s co-founder and CFO.
As Seattle developers crank out new homes in an attempt to meet that demand, Blueprint has seen the dollar volume of its construction loans double in 2011.
According to Knoll, 87 percent of their loans represent new construction, out of which 70 percent are focused on single-family residences and 25 percent on multi-family homes.
Potential home buyers can expect to see more multi-family projects going forward, notes Duffus, as the glut of legacy projects left behind by builders that went bust have dried up in the last four-to-five years.
“There’s not a lot of inventory [in the town-home market]. Everything is getting snapped up pretty fast,” says Knoll.
With Seattle’s population projected to grow nearly 3 percent next year and inner-city prices starting to creep up, the Northwest real estate market is in for a positive change in 2012.