By Ken Urman, Realtor
During the last month, several people have asked me if it is
wise to continue investing in the housing market. My response has been a resounding
“YES!” Several indicators point to a strong market for the foreseeable future.
Our region’s economy is no exception.
The data for the Seattle-Tacoma-Bellevue area is compelling:
1. Job growth in our area is remarkably strong.
According to a report from Bright Media, a staffing agency, the Seattle metro
area saw 168.44 new jobs per 10,000 residents. This places us at the top of the
list of U.S. metro areas in job growth. The top industries for this area were
professional services, health care, tech, financial services, and retail.
2. According to a recent Gallup poll, the region
ranked second in the nation for wage growth. Employees in the
Seattle-Tacoma-Bellevue area saw salary increases of $4,320 between 2009 and
2012.
3.
To assess consumer confidence relative to the
real estate market, one need merely look at the competition for available real
estate inventory during the last year.
4. Inventory of home available for purchase has
been consistently tight. I’ve commented on this issue almost every month for
the last year in my monthly market update (published in my monthly newsletter).
Our area has abundant pent-up demand.
5. Housing starts in our area – primarily for
single family homes – is somewhat behind the national average.
A recent article published on Forbes.com by PIMCO pointed to
“4 Reasons to Stay Invested in U.S. Housing.”http://www.forbes.com/sites/pimco/2015/10/02/4-reasons-to-stay-invested-in-u-s-housing/ retrieved October 6, 2015] Some of the key points in the article are
particularly relevant to our area.
·
The nation’s housing market is continuing to
grow faster than the economy.
·
Strong job growth and rising consumer confidence
will lead to demand for homes, even if mortgage rates rise modestly.
o
The U.S. economy added about 3 million jobs in
the private sector during the last year.
o
About 750,000 of those jobs are in the 25 – 34
age cohort, which is near a 15-year high. This is the prime segment for
first-time home buyers
o
The unemployment rate dropped by 2.4% in the
last two years to 5.1%.
o
The authors expect these factors will lead to
increased consumer confidence and a higher demand for homes.
·
Low inventories and rising pent-up demand.
o
Nationwide, home inventories are near 15-year
low levels.
o
In the last year, 1.5 million new households
have been formed, yet less than 12 million new housing units have been added.
o
About one-third of people aged 18-34 are living
with their parents.
o
This translates to a lot of pent-up demand at a
time when the nation has been significantly under-building relative to long
term demand.
·
Banks are more willing to lend and demand for
credit is expanding.
o
Mortgage origination at all four of the largest
U.S. banks rose by double digits.
o
Consumer confidence is rising.
o
A large number of previously foreclosed
homeowners could become eligible to buy a home in the next five years.
o
These factors are expected to result in
increased supply of credit, which should, in turn, support the U.S. housing
market.
·
Relative affordability. The cost of owning a home is still remarkably
low both as compared to the cost of renting and as compared to historical
housing affordability.
When all factors are considered, it is clear that the
housing market will remain strong in the Seattle-Tacoma-Bellevue area. It is a
great time to sell, a great time to buy, and a great time to invest in real
estate. If I can be of assistance to you, please give me a call. Let my
experience, professionalism, and tenacity help you make the best possible real
estate transaction.
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