The Seattle Tech Migration

By Ken Urman, Realtor

I have commented frequently during recent months about the number of new jobs bringing people into the Seattle-Bellevue-Lake Washington area. These people are looking for, and buying, homes

and condominiums. They are contributing to the fierce competition for available properties in and near the job centers. Many of the people moving to the Seattle metro area are part of the Seattle tech migration.

There has been a “tech boom” in the Seattle area during the last few years. In fact, Seattle ranks second to the San Francisco Bay area among the nation’s four tech hubs.

Although people have been migrating from California to the Seattle metro for many years, the rate of the migration has increased. The source of the migrants has also narrowed in many cases to the San Francisco Bay area, specifically Silicon Valley.

Why Is the Tech Migration Happening?

As Silicon Valley became the nation’s primary tech hub, the Tech Giants like Google, Facebook, Apple, and others paid higher compensation and offered more perks to get top talent. The talent brought into an already expensive area found housing costs continuing to rise. The result was a cycle of rising compensation driving higher housing costs driving higher compensation.

As some employees grew tired of the ever-increasing housing costs, they moved to more affordable surrounding areas, with longer commute times. Eventually, these prices began to rise, more people were commuting, and commute times grew longer. According to one report, between August 2014 and August 2015, home prices increased 13 percent, rent increased 12 percent, and the average

Silicon Valley commuter spent 67 hours in traffic. Recently, the situation in Silicon Valley became so desperate that some of the large tech companies began supporting the construction of high-density housing, with some even lending their names to the structures.

The average software engineer was paid $132,000 in 2015 in Silicon Valley (according to recruiting company Hired). In 2015 in Silicon Valley, the median home price was $870,000. According to Zillow, the median home price in San Francisco is now $1.2 million.

People soon began to realize that their money would go farther and their quality of life would be better in other cities. Please recall that Google recently opened a facility in Seattle, for example. Based on differences in the cost of living in the various locations, Silicon Valley’s $132,000 when adjusted for local cost of living is $164,000 in Seattle and $195,000 in Austin, TX (another tech hub). The median home value in Seattle ($533,000) is half that of San Francisco. Austin’s median home value ($290,700) is one-fourth of San Francisco’s.

What Does It Mean For Seattle?

The Seattle tech migration has been going strong since 2012. Although Californians have been migrating to Seattle metro in large numbers since 1999, according to the Washington State Department of Licensing, the number of license migrations from California rose from 25,619 in 2012 to 37,624 in 2015.

Already, these migrants have impacted the local housing market, competing for available properties and contributing to the increase in local home values. Although Seattle has not been the top destination for tech workers leaving Silicon Valley, Seattle has already become a major tech hub. Software developer is the second most common job today in the area, with 45,312 workers. The average salary these workers earn is $119,000.

While many homeowners are delighted to see their homes bring high prices in the market and many community leaders are happy about the growth of the local economy, others are concerned that the situation in Silicon Valley will be repeated here. They point out that there is limited opportunity to develop additional housing now.

I believe that with strong leadership and thoughtful planning the Seattle metro area can continue to accommodate growth in the tech sector and provide commuting options that will permit growth in some of the surrounding areas. 

Selling in Seattle’s Spring Housing Market? You Need a Plan . . . and an Experienced Realtor

By Ken Urman, Realtor

Are you planning on buying or selling in Seattle’s Spring Housing Market? If you are, you need a plan  . . . and an experienced Realtor to achieve your goals. The Seattle Metro area, including Bellevue, Mercer Island and the communities surrounding Lake Washington, is already one of the hottest real estate markets in the country. The Spring peak selling season, beginning now, offers both unique opportunities and unique challenges for both buyers and sellers.

The Market

For the last few months, the local housing market has been extremely tight due to record low inventory and very high demand. Limited areas available for new development, strong reluctance on the part of homeowners to list their homes, and increasing demand for available homes have generated bidding wars for single-family homes and driven the prices of both houses and condos to pre-recession highs. Potential sellers have been reluctant to list single-family homes often due to fear they will not be able to purchase another home before their current home sells.  As the current trends continue, we can expect more first-time buyers to enter the competition for available properties.

The job market in the Seattle area has remained strong. This trend is continuing as Expedia and Weyerhaeuser move from their suburban headquarters to Seattle, Amazon opens a new campus in South Lake Union, and both Facebook and Apple open satellite offices in Seattle. The strong job market has driven increases in family incomes during the last five years, a trend that is likely to continue. The current and recent changes will also drive increased demand for homes near the job centers (mostly in Seattle) and for waterfront properties. Already, the median home prices in Seattle have risen 29 percent in Seattle, compared to a mere seven percent in the rest of King County.

Online real estate company Zillow conducted an analysis of the Seattle metro area housing market. They discovered that houses sell 20 days faster if they are listed between May 1 and May 15. They also sell for $2,600 more, on average. Zillow also found that area homes sell faster than the national average during this peak season. Finally, Zillow found that sales increase significantly beginning in March, increase somewhat more in April, and leap in May; June brings a decrease in sales, and July sales drop significantly. Sale prices increase by more than $5,600 from March to May.

Although I expect a number of sellers to decide to list properties this spring, like many market experts, I anticipate continuing low inventories of available homes, intense bidding wars for available homes, and a continuing lack of new housing options. In this market, the two things I believe every buyer or seller needs are a solid plan and an experienced, knowledgeable Realtor.

Home Seller Planning

Sellers also need a plan in intense markets like Seattle. Here are some important guiding insights to help you.

1.    .    Do not be overly aggressive when pricing your house for sale. If you price a home above market value, the home will typically sit on the market too long. When this happens, buyers tend to conclude that there is something wrong with the house.
2.            At the same time, it is not good to underprice the house. There will be potential buyers who conclude there is something wrong with the house. This approach could also make the home seem inappropriate for buyers who are looking for a home in the price range of a market price for your home.
3.           Sometimes, there is an advantage in listing a home further into the peak season, according to Zillow’s chief economist Dr. Svenja Gudell. Your listing might attract the attention of buyers who need to find a home and are willing to pay a premium for the property.
4.           Listen to the advice of your Realtor about when to list your home. He or she will have the intimate knowledge of changing market conditions to guide you in establishing listing price and deciding when to list.
5.       Ensure that your home is clean, freshly painted, and decluttered to make it possible for buyers to appreciate the features of your home. Work with your Realtor to identify and repair things that would make the home unattractive or become distractions for potential buyers.
6.       Resist the temptation to overprice your home. Marking down the price of your home after listing it will send a message that something is wrong with the property. Trust the knowledge and experience of your Realtor.

When selling in Seattle Metro’s spring peak season, you need a trusted Realtor to help you navigate the complexities of a very hot market with low inventory and abundant opportunities for costly mistakes. If you are ready to  sell, call me. I’m ready and willing to help you sell your current home.