We’ve come a long way from the “Will the last person leaving Seattle –Turn out the lights” era of the 1970s. From 2012 to 2013, the population of Seattle grew by 2.8. Fast forward to 2016, just four short years later, and the population growth rate shot up to 12.3%. With the sudden explosion in population comes an equally swift ascension of house prices. The demand is rapidly exceeding supply and those in the real estate industry are riding the cash wave. Let’s take a look at how this happened.
For the longest time, the largest employer in the Seattle was the Boeing company. With it’s constant fluctuation of layoffs and hiring bursts, there wasn’t much variation in the expansion in the population base. When it did happen, it was in the suburbs and bedroom communities that constantly fed the two giants (Microsoft being the other) its needs for workers. Neither company had explosive hiring bursts, either.
Enter Amazon. Back in 2010, Amazon consolidated its massive operation to the South Lake Union area of Seattle. With that came a colossal hiring spree of thousands of new employees. Something that has continued to this day. On average, Seattle has gained 14,511 people per year, according to census data. There’s been variations, of course, not not much dip from that. With this, neighborhoods that once saw modicum of growth were quickly overrun with new residents. This brought about about the new Seattle housing boom. Cranes burst into the skyline almost overnight as developers scrambled to meet the demand for new places to live. For example, the number of buildings under construction in 2016 was 65. That’s a full 16 buildings more than just the previous year.
With this, the cost of preexisting homes also skyrocketed. As of May 2015, the average rent for a one bedroom apartment in Seattle was just over $1,500 a month. Which was an 11% increase over the previous year. Compare that to today where it’s in the neighborhood of $2,000 a month. Sometimes higher – depending on the place and where it’s located. In fact, Seattlites are, on average, paying at least a third of their salary in just housing along. With rent prices that are basically equivalent to what you would pay for a mortgage (minus the equity you would get from actually owning a home), droves of people are looking outside the city limits for affordable housing.
The two main schools of thought (outside of relocating to Portland – which is also on the rise) is either move north to the Everett area – or further, or south to the Tacoma area. The Eastside, which did see an initial bump in the early 2000’s with the Dot Com Boom and again in the mid 2010’s with a growing number of startups popping up in the Kirkland area; is largely ignored and considered to be too expensive. While wages due to the surge in jobs has increase somewhat, it hasn’t been nearly enough to accommodate drastic escalation in prices. In contrast, you can rent an apartment in Tacoma for less than a thousand and even buy a house in that are for comparable and pay about the same in a mortgage as you would to rent a one bedroom in Seattle.
Essentially this, it is now no longer financial feasible to live in Seattle and still make ends meet. Even with the escalating minimum wage increase to $15 an hour, the average person would still have to make a 46.15% increase (to $45,597.50) in annual income just to meet the standard of living there. For a snapshot comparison, just a short distance away in Tacoma, the average person would only have to make a 9.38% increase (to $34,125.00) in annual income just to meet the standard of living there.
In the next few posts, I’ll break down just how we got to this place and what options future home owners actually have.
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