Last night, Redfin Builder Services, our full-service new construction sales and marketing team, held its second State of the Market event at Redfin HQ. The gathering brought together homebuilders, developers and industry specialists to discuss how new construction sales and homebuyers are faring in Seattle’s red-hot market.
Redfin CEO Glenn Kelman kicked off the event, and discussed how Redfin and builders can work together to help make the Seattle region stronger, more affordable and more diverse by building new housing with data-driven insights.
“How can we figure out that future, together? You want to know where to build, what to build, how much to charge, and there’s a data-driven answer to that,” said Kelman. “When websites change where holes in the ground get dug and how high buildings go up, that fulfills our vision of online technology making a difference in the real world.”
After the introduction from Kelman, Kate Knight, Redfin Builder Services national manager, painted a picture of a strong regional housing market driven by sustained buyer demand, but held back by a chronic lack of inventory.
“The fundamental demand drivers: job growth, income growth and in-migration all look great in the six-county area, and we’re seeing Millennial buyers enter the market in larger numbers in recent months,” said Knight. “The result – we’re forecasting ongoing demand, but our obstacle going into the future is building inventory to meet the demand. This is not just about affordable homes, or homes designed for aging in place. We need more housing supply, period.”
Seattle’s booming tech sector, growing transportation, trade and health services industries and lower unemployment rate have resulted in income growth. Seattle’s median household income increased by nearly $10,000 over the past year, the biggest increase among the 50 most populous U.S. cities. While the forecast for household income and employment looks bright, there are issues that need to be addressed in Seattle.
Seattle has had an inventory shortage for years, and while we have gotten better, there is still a gap between buyer demand and homes for sale. The demand and supply imbalance results in new inventory coming on at higher price points, as well as bidding wars on existing homes for sale. Seattle buyers are already worried about affordability, and the result is buyers making tradeoffs during the homebuying decision.
The top compromises buyers are making are either paying more than planned, or searching in a different neighborhood. Things like buying in a lower-rated school district and buying in less walkable or transit-friendly communities ranked the lowest.
So what’s the takeaway for builders?
Builders’ best options are either to build more expensive inventory, or build to unmet demand in areas where homebuyers are looking but aren’t necessarily the current hotspots. Redfin Builder Services examined areas with increased interest on Redfin.com to find the next booming areas for homebuyers, and areas like Black Diamond, Renton, Kent and Lynnwood saw the biggest increase in home searches.
Builders should also make it easy for buyers to make decisions online, because buyers are starting to make offers without actually visiting properties in person. The result is more and more buyers reporting that the online experience, speed and responsiveness of data and agents are the most important factors when searching for homes in today’s market. Redfin even added “minutes on market” to account for the growing need for speed and accuracy in a competitive market like Seattle.
Kate Knight and Tana Lehman, Seattle market manager for Redfin Builder Services, concluded the event by congratulating current Redfin Builder Services clients Azure Northwest, Othello Partners and Victory Partners on their recent success, and announcing new projects coming online in spring 2017. They also answered questions from the audience about the Seattle real estate market.
For more information about Redfin Builder Services, check out https://www.redfin.com/blog/services/builder-services. If you’re a builder and you’d like to work with us, please email email@example.com.
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