SEATTLE - A new report by Zillow says part of the increase in home prices next year could be because policies enacted by President-elect Donald Trump.
Zilllow is predicting that if Trump enacts tougher immigration policies, it could lead to a continued labor shortage to build homes, meaning those costs would be passed on to the consumer.
“With President-Elect Trump taking a much tougher stance on immigration policy and potentially thinking about having less immigrants legally enter the U.S., and even deporting some – or making it harder for some to stay here – that will certainly shrink the labor pool,” said Zillow’s chief economist, Svenja Gudell.
Gudell said the construction industry is dominated by people from immigrant communities. If tougher policies produce a slowing of legal immigration, as well as a difficulty in people with work visas gaining citizenship, for example, fewer people will be available for construction.
Seattle, like other cities, is already seeing a construction labor shortage. With tougher immigration policies exacerbating that scarcity, construction wages may rise to entice more workers, thereby making the cost of new homes increase.
But other factors will also contribute to the rising price of new homes.
“Not only is it hard to come by new folks to actually help build homes, but actually also find land, pass different regulations, and the cost of regulation has been quite burdensome as well,” Gudell said.
Throughout Snohomish, King and Pierce counties, all home values will continue to increase in 2017, but not at the pace they had appreciated before.
Gudell said while homes have been appreciating at about 12 percent in the Puget Sound area this year, they will increase by 7 percent in 2017.
Zillow says a rise in home prices next year can also be blamed on rising construction wages.
Overall, the company said it expects more millennials to become homeowners in 2017 as the percentage of people who drive to work will rise for the first time in a decade.
Zillow argues that more homeowners will move into suburbs for housing even as urban development continues to grow and commute times will increase in the Seattle metro area.
On the rental front, Zillow says it predicts income growth and fewer rent hikes means renting will be the most affordable it's been in two years.
But Snohomish, King and Pierce counties will see less relief than the rest of the country. Rents in these areas grew by about 9 percent this year, and they will still rise in 2017 at a rate of 7 percent.
We're still waiting on Trump's final policies on the economy and immigration.
All of that could have an effect on what the public could either pay or see in home values.
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