In the 1980s, the Puget Sound was home to a huge timber industry. But, our economic growth also hinged on booming companies like Boeing, Nordstroms, Costco, and Paccar. With the addition of Microsoft, Starbucks and Amazon, our economy has only continued to grow and this perpetual growth has left many of us natives to wonder:
“Can the economy, and thus the real estate market, here in the Puget Sound continue at the growth trajectory that we’ve seen the last 30 years?”
The answer is yes! The Puget Sound is emerging as a world class trading center with a leading presence on exports and international business. A market built on lumber, ships, and airplanes has transformed itself yet again into software, e-commerce and trade with China. A new generation of household names are emerging from the Seattle cloud cover, including Zillow, Refin, Porch, Zulily, WalkScore, and OfferUp.
More than 800 multinational firms are based in Washington, employing more than 160,000 workers. The region’s diversified economic base, tech-job growth, relative affordability and quality of life make the Puget Sound an entrepreneurial ecosystem that is developing into a force that will likely surpass San Francisco, Boston and Los Angeles.
Skip Whitney, Kidder Mathews’ head of China Services (San Francisco), thinks Seattle will remain near the top of the list of most sought-after cities for foreign capital even after the current real-estate uptick wanes. “I think it’s the beginning that will continue indefinitely,” Whitney said.
Although our stable, growing economy is certainly the main attraction for long-term Seattle investors, there are other factors continuing to drive demand and appreciation. For example, Washington’s supply of water and power has spurred the expansion of data centers all across central Washington. The Columbia River system offers some of the cheapest renewable energy available in the nation. Washington also offers tax advantages to real estate investors that few other states can offer. There is no State Corporate Income Tax or State Personal Income Tax in Washington and, with proper tax planning, you don’t have to pay income tax in Washington either.
Affordability is also a factor in the sustained growth in the Puget Sound area. We have not seen the kind of outrageous prices common in certain regions of California and the east coast. However, given the local geography, the boom is expected to happen soon. With mountains on one side and water on the other, there is only so much land available to develop in the Puget Sound area. Further, there are now many “growth protection” regulations in effect, restricting the extent to which real estate development can continue.
Ben Miller of FundRise sums up the trend as follows: “If we invest in locations with stable or rising demand and own properties at a lower cost basis than the competition, over time our investments should experience stronger than average performance.”