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Puget Sound Real Estate: Boeing and the Housing Market
Boeing employs about 12,000 people down in Renton, and another 30,000 up in Everett. Overall, Boeing employs just over 60,000 people in Washington State, and supports a network of over 1,500 aerospace-related suppliers and vendors who employ over 130,000 Washington Residents. Ultimately, aerospace is a $70 billion industry here in Washington State, and is paramount to the local housing market. So when bad news hits Boeing, bad news hits us all.
Boeing pays its people well – from the high 5 figures to the low 6 figures here in Western Washington (plus bonuses). These incomes are sufficient for home-ownership, and therefore have the ability to move housing markets. Now, Boeing pays these people by selling planes. You know what’s not good for selling planes? Door plugs blowing out because someone down in Renton forgot to bolt it back in after removing it temporarily for inspection. Events like this can earn a company a lot of unwanted attention, which can then unearth other issues making it even harder to sell planes. I’ve been reading about Boeing’s Safety Exemption request for its MAX 7 for a couple months now. It looked like they were going to get it, but after this most recent incident, I’m not so sure. ICYMI: Boeing was petitioning the FAA to exempt the MAX 7’s engine anti-ice system from certain safety standards it currently fails to meet. In summary, there’s a flaw in the system that could cause the inlet at the front end of the pod surrounding the engine to overheat and break up…which could then send shrapnel into the fuselage or tail of the plane, potentially causing catastrophic loss of life. That sounds like a plane I don’t want to be on. Boeing argues the scenario of it overheating and blowing up is extremely improbable, and that reminding the pilots to turn off the system when not needed should suffice. Dennis Tajer, spokesperson for the Allied Pilots Association which represents 15,000 American Airlines pilots disagrees, saying that with no alert on the instrument panel to tell the pilots the system should be turned off, we should not be in a situation where we’re simply depending on the pilots to not forget to do so. Honestly, I’d have to agree with that. Afterall, it’s two pilots on two separate flights that didn’t know they could turn off the MCAS system that led to those tragic crashes a few years back. Who’s to say that every single 737 pilot around the world will remember or know that they need to turn off the anti-ice system when not needed as well?
Here’s the scary part (and hopefully I’m just missing something here): The MAXs currently flying already operate under this same exemption. SAY WHAAAA?!?! That’s right, part of Boeing’s argument is that they’ve already logged 6.5 million flight hours without incident. Look, if you sit at the Craps table long enough, eventually someone’s going to roll a seven. My fear is that after earning a new spotlight on quality (or lack thereof), opposition could mount on this front, and put a halt to MAX production altogether until this anti-ice system has a permanent fix. Already Boeing had its hand slapped in the sense that they aren’t able to move forward with their 737 production-increase plans…will FAA regulators get even tougher on Big B? We don’t know. But as things are now, the FAA is allowing Boeing to produce MAXs at their current monthly rate, they just can’t increase from that rate which derails Boeing’s plans of opening a fourth 737 production line in Everett until further notice. For context: Boeing was planning to produce about 58 737s per month by October 2025. Boeing delivered 396 737s in 2023 (which averages out to 33 planes per month last year), but ended the year with 737 production in the low to mid 40s per month. This production-cap and increased attention around its faulty anti-ice system is not good news for a major employer of Puget Sound Homeowners and future buyers, but there’s one huge datapoint that offers the Puget Sound Housing Market some massive reassurance: 4,031.
Take it Home
Boeing has had better days, and Boeing WILL have better days in the years to come, but they gotta get their culture right and back on track STAT! Luckily, they have a 4,031 plane backlog of 737 orders. At a run rate of 42ish planes per month, that equates to about 8 years of work (assuming cancellations don’t outpace new orders in the short run). So that’s awesome news. Also awesome is how well Airbus is doing. Sounds weird to say that, but Airbus has 11.7 years of backlog. Said another way, if you’re an airline ordering Airbus planes, you won’t get them until 2036 (when my current 8 year old is nearing college graduation!), so maybe you re-evaluate placing your order with Boeing? Without many other serious competitors in the global aerospace industry (China has COMAC, and Brazil as Embraer, but those are considerably smaller companies than Boeing or Airbus), Boeing is fortunate enough to have the opportunity to get things straightened out and back on track. There could be rougher days in the months to come, but assuming Boeing’s culture of excellence and quality get back on track, the longterm health of Boeing is strong, and its impact on the Puget Sound Housing market will be positive.
SOURCE: Kyle Bergquist
