The Puget Sound Business Journal reports on a potential challenge to the Seattle metro area’s vibrant tech cluster. Citing a study by Headlight Data that finds Seattle to be in the top four cities for popularity among millennials, the PSBJ adds,
…while millennials in other cities are starting to buy homes, Seattle’s young workers are struggling to afford to buy homes here.
The average Seattle millennial can afford to spend $200,000 to buy a home, which, in the current market, would buy about 539 square feet. That’s according to a SmartAsset study released last week, which took a look at buying power and trends among younger home buyers.
So young workers must defer home purchases in the metro area. As PSBJ reporter Emily Parkhurst writes,
As rents continue to rise in Seattle, that could become a problem for tech companies looking to attract workers to the city. One of the city’s big selling points right now is that it’s more affordable for younger people who are just starting out in their careers and are looking to buy homes and start families.
The concern is legitimate and widely noted. In March 2015 the California Legislative Analyst’s Office warned of the effects of high housing costs on the California economy.
In a 2014 survey of more than 200 business executives conducted by the Silicon Valley Leadership Group, 72 percent of them cited “housing costs for employees” as the most important challenge facing Silicon Valley businesses. Employee recruitment and retention, closely related to housing costs, was the second most frequently identified challenge.
Perhaps surprising to people reckoning with rising Seattle costs, the LAO reports,
…Seattle—a coastal metro with economic characteristics and average temperatures that are similar to California’s Bay Area metros—added new housing units at about twice the rate as San Francisco and San Jose over the last two decades. (Specifically, Seattle’s housing stock—its total number of housing units—grew at an average annual rate of 1.4 percent per year while San Francisco and San Jose’s housing stock grew by only 0.7 percent per year.)
Of course, being more affordable than Silicon Valley is an easy target to hit. In September, James Risley reported in Geek Wire, that housing concerns have grown in many major tech hubs.
Residents of Seattle, San Francisco, Denver and San Jose think now is a worse time to buy a house in their city than just six month ago.
Seattle is the most confident tech hub, with just over 50 percent of Seattleites optimistic about the housing market. But that’s down 6 points since January, when 57 percent thought it was a good time to buy a home, according to Zillow’s Housing Confidence Index.
Efforts are underway in Seattle to address rising housing costs. Successfully addressing the challenge will help sustain regional economic growth.