The Boeing Company's plan to move the 787 Dreamliner program to South Carolina has created shock and some panic; however, amongst us Snohomish County locals the writing has been on the wall.
The 787 program has been slowly outsourced, a topic of displeasure within my circle of friends and a discussion for another time, to South Carolina over the years.
When the most recent news broke of the planned move, there was immediate discussion on the impact to the local economy due to possible mass layoffs and increased unemployment throughout the county's aerospace industry and eventually, how those economic factors will drive down housing values.
Being Boeing is a major local employer and its employees direct their income back into the local towns and businesses; there is no doubt that losing the 787 program to Charleston will have some economic impact.
Yet, will the perceived mass exodus impact home values?
In my opinion, Boeing moving the 787 program to South Carolina will not impact Snohomish County home values.
A few factors: existing and projected available housing inventory as well as some speculation regarding the 737 Max program.
Existing Snohomish County Housing Inventory
Following the sub-prime crash of 2007, Snohomish County experienced a surge of homes and properties for sale unlike anything seen in prior years. During that time, homeowners watched property values plummet while the area saw rising unemployment rates. However, on the flip side, buyers were able to purchase affordable, to down-right cheap, homes as foreclosures and short sales.
When the housing market started its recovery, that same housing market also became synonymous with the decline of available homes for sale. In January 2009 there were 8,271 homes for sale where as November 2020 had 1,464.
Why is this important?
Many who've purchased homes during the recession now have low mortgage balances and house payments that its caused many to decide that a move is not worthwhile. It can be difficult to come to terms with giving up a low payment for a small gain in square footage which keeps housing inventory low - even though interest rates are at the lowest of the lows.
But if there is a mass exodus of Boeing employees to South Carolina won't that trigger enough homes to become available and cause declining homes values?
Reviewing the Months Supply of Inventory (Closed) the graph shows back in September 2009 the housing supply was at 12.4 months compared to November 2020's of 1.2 months.
*Monthly housing supply is measured by how many months it takes to sell all the available homes without anymore coming for sale. A balanced housing market, where neither the seller nor the buyer have a negotiating advantage, is approximately 6 months.
Snohomish County has been experiencing a seller's market since late 2012 when inventory dropped below that 6 month threshold. Even though housing inventory declined to favor sellers there were still many good deals to be found.
The housing inventory decline is a major factor in why housing prices have surged and multiple offer situations, aka ... bidding wars, are more common place. To cause a housing market shift, then Snohomish County would have to have 4,000-5,000 of homes listed for sale in the near future.
But what if a lot of homes became for sale and flooded the market; wouldn't that cause home prices to decline?
If 4,000 hit the market tomorrow then yes, Snohomish County would more than likely experience a declining home prices due to massively increased housing levels and economic uncertainty. However, a mass influx of homes is unlikely because the relocation program will not be instantaneous.
Speculation on the 737 Program
As all of us locals know, the 737 program has faced its share of challenges, setbacks, and now planes that have been parked face a refurbishing problem. Though sad, it could almost be a blessing in disguise.
Here is where speculation begins.
With the 787 program scheduled to leave that will free up valuable building/manufacturing space at Boeing's Everett plant which can be used to correct the 737's flaws and return the fleet to service.
If this indeed is the case, those folks who choose not relocate with the 787 program could see future opportunities on the 737 program in Everett. There is a highly skilled workforce right here in Snohomish County that Boeing can, and should, take advantage of in my opinion.
But what about Renton's 737 employees?
Yes, Renton will face its own workforce and housing challenges.
However, Renton (used loosely) has a housing shortage and could benefit from having a bit more housing inventory as well. So, if south end folks list their homes for sale and relocate to Snohomish County then there may be more options for south end home buyers. Also, if south end residents relocate to Snohomish County then there could be more homes to choose from with folks selling and relocating to South Carolina.
Additional Graphs on Current Housing in Snohomish County
Median Sales Price
Since early 2012 the median sales price has climbed from $220,000 to $512,500.
Price Per Square Foot
The same house that once could be purchased for $124 per square foot now will cost $276 per square foot.
Median Days on Market
Remember when 60 days on market was normal? I do and now many are accustomed to these shortmarket times with the median days on market being a nominal 7 days across the County.