A Market to Watch
Seattle ranks among top real estate "markets to watch" based on the strength of investment, development and homebuilding, according to a widely read forecast report.
The 35th edition of Emerging Trends in Real Estate reports the housing market "is no longer a drag on most local economies." The recovery will be strong enough to be an unexpected boost to a number of local economies, according to the report, a joint publication of PwC and the Urban Land Institute. Authors also stated:
- A number of local housing markets have seen prices return to levels comparable to the peak from the previous cycle.
- In most markets, activity has reached a level that is supportive of economic growth.
Researchers said survey results indicate an improved outlook for all types of residential property investment in 2014. Notably, infill and in-town housing continues to strengthen. That category is the top-ranked favorite for both investment and development.
Housing for seniors also ranked near the top, due in part to the aging population and a functional obsolescence of older independent living facilities.
Among "markets to watch," Seattle moved up a notch from last year's report, rising to No. 6. Of the three market components (investment, development and homebuilding) used to evaluate the markets, homebuilding posted the largest gain. Home prices are projected to increase 4.9 percent in 2014 when compared to 2013.
Researchers cited the city's tech industry (and its above-average wages) and aerospace manufacturing as positive drivers in Seattle's outlook. Quoting a national real estate consultant, the report said "Seattle is also becoming a core market for foreign investors."
The study singled out Seattle's high rate of educational attainment and global connections as factors that will keep the economy viable in 2014.
The 100-page Emerging Trends report noted the most significant change in prospects nationwide for 2014 are expected in the single-family sector - both moderate-income and high-income housing.
All-cash purchases are fueling the market, accounting for an average of 45 percent of all residential sales in August 2013, up from 30 percent in August 2012. Foreign investors are playing a role in the residential market, according to the report.
Among demographic segments, Generation Y is expected to be a force on the housing market, due to the combination of their plans to move and housing preferences. Far more gen Yers (those born between 1979 and 1995) told researchers they expect to move in the next five years compared to the adult population overall (63 percent and 42 percent, respectively). Of those who plan to move, 60 percent intend to move to a single family home.
These 72 million Millennials want to live in a midsize or big city where they can use transit, walk, and bike. However, researchers stated, whether this cohort will be able to afford the lifestyle they desire and in the locations they want will be determined in part by the ability of metro areas to provide a range of affordable, appealing, and high-quality options, according to the report's authors.
Emerging Trends in Real Estate examines real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the U.S., Canada, and Latin America. It reflects the view of more than 1,000 individuals representing a wide range of industry experts.