Is Amazon responsible for Seattle’s housing cooldown? Real estate experts weigh in
Seattle’s housing market has risen to record levels — for better or worse — along with Amazon’s historic success, but the tech giant’s hiring has slowed in recent months. At the same time, the region’s housing market has cooled, losing its nearly two-year title as the nation’s hottest.
But correlation does not necessarily mean causation, and real estate experts interviewed by GeekWire say they don’t see a connection between the slowdowns at Amazon and in the housing market. Instead, they say the real reason for the housing slowdown is that for the first time in years there are more than just a handful of houses for sale in any given area.
More homes hit the market in the Seattle area than at any time in the last three years in August, according to the latest statistics from the Northwest Multiple Listing Service, released Friday afternoon. That means more choices for buyers, smaller price growth and fewer of the multiple-offer horror stories that almost every buyer over the last couple years has experienced.
“It’s not so frantic, where if something comes on the market today, you’ve got to be there tomorrow morning or tonight with an offer in hand,” said Brian Golik, a managing broker for John L. Scott Real Estate. “There’s no rush to do that, and it’s getting back to more of a normal real estate situation where you can take a little time, you can do your inspection, you don’t have to waive everything.”
Last quarter, Amazon reported its first employee decline in nine years, and its CFO Brian Olsavsky told investors it is slowing hiring in favor of internal re-shuffling. But fellow tech giants and startups thirsty for talent will gladly step up to fill any potential Amazon void and bolster the pool of homebuyers.
Google is growing rapidly and just upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond.
And it’s not just the giants growing fast and taking big chunks of space. In just the last few weeks, GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach.
“They are not the be all and end all,” Matthew Gardner, chief economist for Windermere Real Estate, said of Amazon “Other companies continue to grow and that will pick up any slack, or any perceived slack, given the slowdown in employment at Amazon.”
According to NWMLS, there were 5,803 homes for sale at the end of August in King County, a 74 percent increase over the 3,329 active listings a year ago and the most since September 2015. The median sale price in August was $669,000, up 2.9 percent from last year’s median of $650,000, but down from May’s sky-high median of $726,275.
Areas near downtown remain competitive and expensive. The growth of hometown startups as well as Bay Area tech giants means more new executives and highly paid employees, many of which could come from out of town. And a lot of those people want to live close to work.
“There’s a value to people’s time. People will pay to live closer to where they need to be,” Gardner said.
Region-wide, Gardner says the days of double digit price increases across the board are in the rear view mirror, for now at least, with a return to historical averages of about 6 percent annual rises going forward. Gardner said he is happy to see the trend, as he’s not a fan of over-eager markets.
Golik noted that brokers are having “tough conversations” with sellers pricing their houses based on sales that happened six months ago. And today we are in a different market, where some homes will have to be marked down about 5 to 10 percent to sell. Homes that would previously sell after just a few days are now spending a couple weeks on the market, or in some cases up to 50 days, according to NWMLS.
“I guess we should have schooled them a bit about a phasing-in process and not to bunch up at the listing house door,” said Dick Beeson, principal managing broker, RE/MAX Professionals in Tacoma, Wash. He added that “The real estate sky isn’t falling” for sellers.
Despite the flood of new inventory hitting the market in recent months, the Seattle area still remains under-supplied. There is just under two months worth of home inventory on the market right now, and Gardner wants to see that number creep up toward four to six months.
As the market cools, Gardner cautions against losing sight of the bigger picture of housing affordability. Even as price increases stagnate, the median home sale price remains unaffordable to most buyers.
That could also give companies pause about coming to Seattle, Gardner says. Right now, both companies and employees get a bigger bang for their buck compared to the Bay Area and its out-of-control housing costs. As costs continue to rise, Gardner posits, companies could look to lower-cost markets, where they wouldn’t have to pay as much for their employees to live comfortably.
The answer to this affordability crunch, according to Gardner, is zoning. In an argument echoed by Redfin CEO Glenn Kelman, Gardner says the city needs to, at minimum, change rules to allow more townhouses in areas that today only allow single-family houses. However, Gardner says, there is “zero political will to do that, and that’s a big, big problem.”
“I took a map and overlaid the city of Seattle and the city of Paris,” said Gardner. “And you can fit Paris into North Seattle. But here’s the kicker, Paris has got a population of 2.2 million people, we have a population of 730,000. We’re not close to being dense.”