Seattle had one of the fastest growing housing markets in the country when tech giants like Amazon and Microsoft were hiring in droves. But with the current layoff environment, the housing market has cooled.
According to a report by Redfin, home sales are down 42.2% year-on-year while prices are up 7.6%. A similar study by RE/MAX shows that Seattle’s active housing stock rose 130% year over year in October, the largest increase on record in 2022.
Mass tech layoffs could spell disaster for Seattle
The current median home selling price is $675,000, down from April’s high of $757,750.
As the market continues to cool, Windermere Real Estate chief economist Matthew Gardner took to The Gee and Ursula Show to discuss why he thinks the downturn won’t last.
“I’m going to argue the fact that because so many of us have refinanced our homes through COVID, we won’t see a massive downward correction in home prices,” Gardner said.
“By my calculations, there are probably 25 million homeowner households with mortgage rates of 3% or less,” he continued. “Do you want to lose the mortgage interest? A lot of people won’t move because of that, I think.”
Gardner said that means supply will be limited, but demand will still be out there.
“That can actually lead to price stability or even push prices back up again, I think we’ll probably see that in the second half of next year,” Gardner predicted.
However, a prolonged recession is likely as the country continues to be plagued by record-high inflation. In Seattle, the CPI showed food prices were nearly 12% higher year-over-year.
“The problem is, every time the [Federal Reserve] That did to slow down the economy, we’re in recession. They’re remarkably bad at such soft landings, because they start raising rates too late and keep them going for too long.
“So will there be a recession? That means we could lose jobs across the country. My final forecast is probably about 1.5 million job cuts in America.”
Gardner believes the reason so many companies are downsizing is that the direction they will be headed in the immediate future is not clear. This is partly due to the shift from full remote work that began in early 2020 with the pandemic, but now employers are trying to get employees back into the office.
Gardner believes the overall impact of layoffs will be limited, noting that the pandemic has seen lower interest rates on government loans, causing the industry to go too far.
The readjustment brings the labor market closer to where it was in 2020 at the start of the pandemic. That’s not to discount the indirect jobs created by technology growth, which are also likely to decline.
“Now you could say, ‘This is going to be awful.’ We’re so tech-centric here in Seattle. But if you think about the pandemic, a month from now most of these jobs will be in the information sector.
“They lost 800 jobs but they got them all back the following month and have added more than 20,000 since then. So we see how the fat is cut. However, given the increase we’ve seen, we’d lose a fifth [of the ] 10-15,000 jobs, that will take us back to where we were half an hour ago.”