According to the U.S. Census Bureau, the Greater Seattle area is one of the most robust economies in the United States. Incomes, job growth, and employment rates in the region have all beat the national averages for the last several years running.
Seattle’s economic growth has resulted in an unprecedented demand for housing which cannot be met easily in this supply-constrained region. With high demand and limited supply comes investment opportunities in the region that are hard to match.
Stable Economic Growth Throughout the Puget Sound Region
Seattle is home to some of the largest companies in the world and, as a result, the Puget Sound region is consistently one of the most resilient local economies in our country. Companies like Amazon, Starbucks, Alaska Airlines, Boeing, Microsoft, Costco, Paccar, Weyerhaeuser, Expeditors, Expedia, Tableau, and many more all call Seattle their home.
Not only is the scale of these companies impressive, but the diversification across the technology, infrastructure, transportation, and retail sectors, among others, buoys this region as one of the most resilient economies even during times of economic turbulence.
Although some of these companies call Seattle proper their home, many are located in the nearby suburbs. Most recently, even those located in urban Seattle have expanded their presence to the suburban markets of Puget Sound. This has driven an exciting trend whereby the center of our market, Seattle, has remained a strong economic engine that has fueled growth to the boundaries of Puget Sound.
From 2010 to 2020, Seattle’s population growth rate was 23.8%, the highest among large U.S. cities. Seattle’s unemployment rate as of November 2020, despite the COVID-19 pandemic, was 4.5%, while the national average was 6.7%. Finally, the median income in Washington in 2019 was $82,454, the 8th highest among all states in the U.S. and 28% higher than the national average.
All of these factors together — strong population growth, employment opportunities, and income — have led to forecasted population growth for the Puget Sound region’s counties (King, Kitsap, Pierce, and Snohomish) of 10.5% between 2020 and 2030.
Real Estate Investing Opportunities in the Suburbs
With the Cascade Mountains to the east and the waters of the Puget Sound to the west, the Puget Sound region has a very tight urban growth boundary which places a chokehold on development. Leadership in the region has recognized this challenge and has responded with the largest public transportation project in the country.
A light rail project will soon link Seattle to Everett in the north, Tacoma to the south, and Redmond to the east. This new transportation option will take commuting times from well over an hour in some cases to less than 30 minutes. The light rail will open up the suburban markets, not only to commuters, but it will also spawn further corporate expansion into these suburban communities that will create jobs and drive local demand for housing.
Housing prices have soared over the last decade across the region. Single-family residential properties are seeing price bidding today that is resulting in sales at 20% to 30% above the asking price, and inventories across the region settled in at all-time lows. With homeownership out of reach for many, demand for rental housing has steadily increased and real estate investment firms have responded by concentrating on building new apartment buildings in the urban core of Seattle and Bellevue.
But today, more than ever, the demand for housing in the region is felt most acutely in the suburbs where little to no new supply has been added. With continued population growth and limited supply forecasted in the future, this trend is likely to continue, keeping the region positioned as one of the top rental housing investment markets in the country.
Our Approach to Multifamily Investing in the Puget Sound Region
CEP Multifamily has a 20-year track record of identifying core-plus real estate investment opportunities in the suburban and secondary markets around the majors MSAs in the Puget Sound region. While others are just waking up to the return potential of suburban apartments, we have spent 20 years exclusively focused on owning and operating suburban multifamily investments in the Puget Sound region.
CEP has been consistently delivering strong, risk-adjusted returns for our investors through a healthy balance of passive income (cash flow from operations) and appreciation earned over the hold period. We make long-term investments and secure 7-10 year fixed-rate debt on the multifamily properties we acquire. Our Core Plus investment strategy protects investors from the cycle of real estate markets while capitalizing on the long-term return opportunities presented by this unique economy on the shores of Puget Sound.
For more information on real estate investments sponsored through CEP Multifamily, please click here.
