If you’re looking for a different kind of good news in the market, you can find it from this Housing Views analysis of the flow-of-funds data from the Federal Reserve. It finds that, nationally, home equity wealth is at a high. What that means is that the money owners could turn on selling their homes, after paying off their mortgage, is at a high. Given that less than a decade ago a startling percentage of homeowners had negative equity, meaning the amount they owed on their mortgages was more than they could get if they sold their house, that’s actually pretty great news. The analysis is looking at the whole country, so of course there will be local differences, and some areas do still have an unhealthy level of low and negative equity wealth, but it’s nice to see a national trend that indicates home owners are in a fairly comfortable situation, relatively independent of what the market will pay for their homes.
In more local news, the Seattle City Council passed a tax on short term rentals. It’s not yet active and the implementation details are still forthcoming, but it’s a measure explicitly meant to target the Air BnB market. The fund will go toward affordable housing, which is handy. It’ll be something investors in the local market will want to watch, though I suspect it isn’t going to have a significant impact on revenue for the AirBnB crowd.
Perhaps related to the previous news item, Curbed Seattle pulled out the locally relevant bits of an Apartment List report. According to it, nearly half the renters in the Seattle area were cost burdened, meaning they spent more than 30% of their income on housing. That 30% figure is the magic number that a healthy budget spends on housing, and is what banks use as a target when deciding how much of a mortgage you qualify for. The article does a good job of putting the numbers in context, both nationally and historically, so I’d suggest checking it out.
Curbd Seattle has the roundup of rental listing prices for November. Overall, it looks like rent is up a bit year-over-year and flat or slightly down as compared to September, which is in line with a lot of what we’ve seen over the course of the last year. Despite the slower, flatter rate of rents this year, the effects of rent increases are still being felt across the city, including a uptick in homelessness. If rents remain relatively flat this may wind up easing some of the pressure on the purchase market’s inventory by allowing potential buyers to continue renting rather than enter the market. It’s not the best way to correct the market, and it isn’t enough by itself, but it’s something that could have enough of an impact to be worth watching.
And the market is in need of some correcting. The sellers have all the advantages in this current market, with a continuing trend of quick sales and rising prices. I’m going to take the 11% year over year increase in inventory and cling to that as some good news. Realistically, most sellers are buyers, too, so a balanced market will make everybody happy.
If you know Seattle, you know it’s a fairly literary city, but now it’s internationally recognized as such. UNESCO has designated Seattle as a City of Literature, after a years-long campaign by locals for the recognition. This confirms me in my strategy of establishing knowledge of a neighborhood by knowing where, from any given house, I’d go for grocery shopping, tea drinking, and book buying.
The Case-Shiller numbers for August are out, and price increases are still going strong. “Strong” in this case means 11.3% compared to August of 2016. If you’re distressed by that, this article from the Seattle Times might help put things in perspective. It compares the Seattle market for housing (buying and renting) to San Francisco’s market, and the comparison generally comes off favorably for Seattle. That said, having perspective doesn’t mean you won’t still be distressed; “San Francisco is worse” doesn’t mean things aren’t rough here.
This one caught me by surprise: Florida is one of the top places people arriving in Seattle hail from. Our weather is objectively better than theirs, so I can understand the impulse. Welcome, Floridians!