Why industry players see us as the best place for business in 2018.
Seattle has long been in the top 10 metro areas in the influential “Emerging Trends in Real Estate” study put out annually by PwC and the Urban Land Institute. Last year, looking at 2017, the report rated us No. 4. The new forecast, released today, places Seattle No. 1 for next year.
Based on 1,600 interviews with property owners, developers, real-estate advisory firms, homebuilders, lenders and other investors, Emerging Trends is a gold-standard look at where various real estate sectors are headed. The other top markets are Austin, Salt Lake City, Raleigh-Durham, Dallas-Fort Worth, Fort Lauderdale, Fla., Los Angeles, San Jose, Nashville and Boston. Portland ranks No. 13. Boise scored 31 and Spokane was 57.
To be sure, the report is primarily for those working and investing in real estate, but it’s considered an important measure of economic conditions. Obviously this is daunting news for potential homebuyers and renters. Good news for homeowners.
The forecast noted a positive outlook for all segments in Seattle, especially industrial and single-family housing. Among Seattle’s strengths are population growth that’s twice the national average; a diverse economy with a young, educated workforce; abundant capital; and top rankings for walkability and outdoor activities. We benefit from having twice the U.S. average — 12 percent — working in STEM occupations. Although rising prices nationally don’t guarantee new homebuilding, Seattle ranked 10th in homebuilding prospects for next year.
The headwinds: Overall costs, housing affordability and availability of construction labor. Also, further infrastructure improvements are needed.
Nationally respondents were less worried about a bubble, although they see a winding down of the long expansion and many are shifting into defensive positions (this is the real-estate market; the stock market has yet to stop booming). Yet risks are out present:
“If a so-called black swan is out there, it could be less in overheating than in unraveling,” the report states. “The long-term strength of the U.S. economy has been in the stability and growth in middle incomes. Upward mobility in both the blue-collar and white-collar sectors has fueled housing demand, consumer spending, and even office sector growth…. The three-decade-long exacerbation of income inequality, wage stagnation, and regional economic disparities threatens the breadth of the demand drivers across the economy, and for real estate as well.”
It adds, “The rise of populism is a warning signal not only for politicians, but also for all who are invested in the future of the economy. The prospects for a soft landing should not be taken as a reason to dismiss those warnings, but as an opportunity to use time wisely to start the corrective process.”
And for ways to make growth more inclusive.