We live in a bubble.Me and my neighbors. We live in what seems like a giant bubble of goodness right now.I don't mean the kind of bubble ready to go, "pop," but more like the "Boy in the Bubble," or a domed city, or a fortress.The Puget Sound region was tardy to the real estate downturn party, holding on through 2008 before the bottom started to drop out. 2011 was a brutal year through the region where most of the country started to flatten out. Puget Sound saw dramatic price decreases and sweeping increases in foreclosures and short sells. It is estimated that 1/3 of residents are now upside down, and home prices are down to 1999 - 2000 levels in the area.But we live in a bubble.Amazon - boomingBoeing - can't build the near decade worth of orders they have fast enoughStarbucks - they are back babyGoogle, who is expanding rapidly in the area and on a hiring frenzy.Microsoft, which is now back to its pre-layoff levels of 40,000 regional employees (give or take) and just gave most employees a pay raise to better align with the salaries being offered by regional upstarts like Google. A wounded animal but with a balance sheet most companies would kill to have.That doesn't even include other industries in the region like just about the entire Alaskan fishing fleet, which "summers" in Seattle for repair, maintenance and storage, or tourism, with a booming Alaska cruise industry bringing in an estimated 2.1 million tourists into the city from May to September. For those not familiar, if the cruise ship is leaving from Pier 67, it is a free bus ride to Pier 48 and a walk up a series of stairwells (or elevators) and catwalks to Pike Place Market.The other thing to consider is that every Boeing worker, every Google worker, over Microsoft worker, every Amazon worker, etc. indirectly supports 4 to 5 more jobs in the region. With such a concentration of product and high tech companies there is a huge demand for product managers, marketing managers, and program managers. Do a national search - these are some of the most sought after people in the country right now because its hard to find a product manager that actually knows what the heck they are doing. So amazingly, despite state unemployment of 8.1%, in Puget Sound it is very much an employee market if you have the right skill set, or supported indirectly by the people that work in those roles.The other thing that has happened locally is the cost to rent versus the cost to own has crossed. For more than a decade, it made more sense to rent than own in Puget Sound. At the absolute height of the housing insanity a lot with a run down falling down two bedroom one bath no garage built in the 50's crap box was selling for over $400K in the city. Condos in Queen Anne and Belltown, that were horribly built were selling for $800K and more for one bedroom one bath units. How badly built? Seattle has the black eye of having to declare one of the towers unfit for habitation due to so many structural problems, and having to force everyone out. Now there is the challenge of the demolition without bringing the whole disaster down.The McMansion developments that were built in Lacey, Puyallup, Marysville, and Snohomish have lost more than half their value. But there is a real estate boomlet going on here. Interest rates under 4% now means that a 2,500 square foot home in say Shoreline, Lynnwood, or the nicer parts of Kent (OK, that may be an oxymoron) will have a mortgage payment of $1,500 - and a rent payment of $2,000. You do the math. And people are.If you have a FICO score of 660 and $15,000 in cash you can FHA yourself into a home right now. And you have skilled manufacturing workers, engineers, and high tech workers flush with cash that they have been sitting on.Home prices have stopped declining. New construction developments are also booming. What happened was builders were snapping up property to develop in the 2000's and then the bottom dropped out. Having over paid, and with no hope of building the high density, high price, crappilly built 2 bedroom 2 bathroom 2 car garage townhome communities they planned (under the banner of green living by having an ecologically friendly compressed footprint) they walked away from the properties. The banks took them over and they've been trying to sell them for pennies on the dollar. In late 2010, they started to sell for the cheap. And that "cheap" land (cheap land is also an oxymoron in Puget Sound were a 4,000 square foot lot in the suburbs will command $80,000 to $100,000 even today) has equated into lower building costs.Instead of crappy townhomes, the latest building strategy here is building single family homes, where you own the land under them, deed them as condos as far as Washington RCW is concerned, have a HOA, build the houses on smaller lots (twenty foot fire code required separation), and build them well. The McMansion builders that survived are now building 1,800 to 2,500 square foot homes in the area, and they can't build them fast enough.Want to save $100,000 - go into the REO market - which is also exploding. Last month, 50% of sales in King County were foreclosures, pre-foreclosures, or short sales. In Snohomish County it was 60%. In Pierce County it was 56%.The foreclosures have created a boom in itself. Mosler Lofts when built was THE address in Belltown for Seattle to live. It is an architecturally attractive building with Frasier grade views of the Space Needle and the water (the view on Frasier would actually be impossible and was Photoshopped). Units that were selling for $565K are now selling for $220K. Bad for the previous owner, good for the current one (and really bad for existing owners).I read all these headlines of impending doom and look at the sign posts up ahead. INRIX says traffic volume is slowing down. Economic activity globally is slowing down. Europe is on the brink. The weak Yen is killing, KILLING, Japan. Consumer confidence is down and one of the coal mine canaries, Cisco, is reporting that business and government are backing off on buying networking infrastructure, even at a time where fiber optic broad brand is rolling across the United States like 1800's barbed wire across the plains and we are entering the game changing phase of "cloud computing."But there is an optimism here in Puget Sound. Our bubble. Our fortress. Traffic is as bad as ever. If you're buying in the under $400K range you're deal with multiple bids and give and takes. Do a check on TrueCar pricing for vehicles like the Kia Soul or Chevy Camaro in a Puget Sound zip code. They're selling for above sticker - there is no deal.Yet under the surface there is current of the have nots - and for them things have definitely gotten worse. Also the state is basically broke, and tax rolls are down.But in a micro view we're living in a bubble, flying above the storm that appears to be brewing all around us.
But in a micro view we're living in a bubble, flying above the storm that appears to be brewing all around us. Well spoken. New York City feels the same way, for the most part.
San Francisco too - I'm so busy with work my head is exploding. And companies can't hire fast enough.
<Sorry, you can only recommend a post to the Best of once.>Wow! great read full of information about the area. I spent two weeks in a downtown Seattle apartment a few years ago so I know at least some of the areas that you are talking about.
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