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.
I was slightly off in the timing, but I was right about the weather punishing me for declaring Autumn’s arrival last week. And it’s expected to get warmer tomorrow? Seattle, you and I need to have a serious conversation about appropriate temperature choices for late September.
I suppose it makes sense, though, given the Case-Shiller numbers. As always, the Seattle Bubble has a great analysis, and looks at the local market trends in comparison with national trends for an illuminating picture. Growing that much faster than the national rate is interesting, but I’m not convinced it’s the kind of interesting that’s good. All real estate is local, but national trends have a tendency to correct local anomalies.
At least we’re doing our part to put that market heat to work combating the weather heat. Seattle is ranking pretty well nationally for LEED-certified residential building. Those are buildings that are certified for their “greenness” focusing mostly on energy efficiency. I’ve been a big fan of the current building trends prompted by LEED-certification because in addition to being more environmentally friendly, the construction is frequently higher quality, with better noise control, than the typical construction trends of the ’90’s and aughts.
Autumn is here and we have the drizzle to prove it! I understand that this isn’t a universal opinion, but I am quite pleased to have the return of the chilly damp that is Seattle at its best. (Watch it get sunny and shoot up to the 80’s this weekend just to spite me.)
MyNorthwest has a slightly fluffy article about how apartment building trends in Seattle are preventing condo building. Or maybe it’s about how difficulties around condo development in Settle are causing that problem. It’s a little light on actual content, but does capture the very warranted feeling that there’s a gaping hole where the entry-level housing market ought to be. Useful if you’re looking to capture the flavor of the current market and aren’t fussed about details.
Less fluffy and more interesting, this article from HousingViews takes a look at the effect of the tax Vancouver instituted on non-resident foreign buyers in 2016. News of the tax was received in some quarters with the assumption that those buyers would leave Vancouver and come to Seattle. From the data presented in that article, it looks to me like they stayed in Vancouver, they just stopped paying as much on the houses to be there. (Price growth slowed, but transaction rates didn’t.)
If you’re more interested in the infrastructure we already have, Curbed did a ranking of Seattle neighborhoods to find the ones that make car-free life the easiest. They look at transit access, walkability, and bikability. It’s a handy guide, especially if you’re interested in details about upcoming transit shifts for some of the neighborhoods discussed.
There’s a statewide report about the market for the second quarter out from the UW center for real estate research. Most of it is what you’d expect; low inventory, rising prices, and King County standing out for both. I’m paying particular attention to the details at the end about building permits. In a market so desperate for an increase in inventory, seeing new permits down 8% is a bummer.
The Case-Shiller numbers for May-June are out, and there aren’t any huge surprises there, either. We’re still in the fuzzy are-we-aren’t-we territory around whether the market is starting to bubble, but it’s looking more and more like we did embark into bubble lands in the spring.
It might be interesting to take a look at the effects of flood insurance programs on housing. We’re not seeing much flooding in Seattle, despite setting records both for rainfall, and stretches of time without rainfall, this year. Still, good food for thought.
Zillow released a report on the number of million dollar zip codes across the country and Seattle gets some attention. While the Bay area dominates the million dollar zip code range, Seattle gets special attention for doubling its number since the housing peak in 2007. Keep in mind that these numbers are being judged based on the Zestimate, which is a fraught metric.
Continuing with the spate of stories about the state of the local renter market, a new study using census data indicates that every generational group in Seattle has a significant portion of people who are overburdened by the rent. The report looked at the proportion of income spent in rent for three different age groups by people who rent instead of owning. While the different groups had very different rates of homeownership, they were all fairly similarly burdened by their rent.
Related to the theme of Seattle’s growth from the last several weeks, Seatac is growing, too. The south terminal has been undersized for quite some time, and the new terminal is expected to double its capacity. The hope is that this will reduce delays and crowding in a way that significantly improves the Seatac experience. Hurray!
Another area has approved the MHA upzone plan. The first portions of the Central District, focusing primarily near 23rd St. and Jackson. This is part of the city-wide plan to create areas where developers can take advantage of increased zoning limits in exchange for contributing to the affordable housing stock in the city. The University District and portions of downtown have already been through the process, and the rest of the city will go through it between now and the end of the year.
Case-Shiller numbers for March are out and it’s more of the same. I’m waiting on the numbers for June (I’m still dancing about inventory going up), but we have a little to wait for those still.
In objectively cheerful news, the Fremont Solstice parade is safe for another year. This is relevant since it was in danger due to a lack of real estate; specifically, they couldn’t find anywhere to affordably store their floats. Seattle City Light saved the day. It’s a summer miracle!
This is a big week for market reports. Top of it is Abodo’s report on the state of the millennial market. Unsurprisingly, it shows that home ownership for millennials is down compared to historical trends. More interesting is that it traces this trend back ten years to well before millennials entered the market. It also has a good breakdown of how long millennials have to save in order to have a down payment for the median priced home. (Hint: It’s a long time.) The data seems to show that if people want more millennials in the market, wage increases and competitive low downpayment programs would probably go further than blaming avocado toast.
That news dovetails nicely (?) with the Case-Shiller numbers for April, showing that Seattle prices are up 12.9% year over year. That’s over 2% faster than the national rate of growth, and according to the data, the fastest growth in the country. Median prices are up, inventory is still down, and there’s not really much sign of this changing.
At least renters in Seattle are about to get some help with keeping their voter registration up to date.
The news this week is all about renting. Seattle is one of the few places in the country where the current median rent wouldn’t cover the mortgage on the median priced home according to a study from Zillow. Most of the time in most places, median rents and mortgage payments are commensurate, or the rents are higher. The Seattle market just keeps finding new ways to stay special. That doesn’t mean that buying can’t be the right choice for somebody renting in the current market, but it does mean the current market is challenging, and there may need to be reasons other than strictly budgetary ones at play to make renting a good choice for a buyer.
Which makes the timing of this article from Curbed Seattle on the best neighborhoods in the area to rent in fortuitously timed. They have several different categories based on your main priority in your neighborhood, and include a category for the best burb to rent in. Even if you’re stalwart in your property ownership, it’s a handy article just to see how your neighborhood stacks up from a renter’s-eye-view.
The burbs category in the Curbed article is especially handy in light of this article from rentcafe.com blog breaking down the growth rates for renters in 20 metropolitan cities and comparing it to the rates of growth in the suburbs. In most cases, including Seattle, the burbs are adding renters faster than their urban centers. That’s particularly surprising given the stereotype of people renting in the city, but moving to the burbs when they buy. Market norms and trends a generation from now probably aren’t going to look much like they traditionally did before the housing crisis, and this is a striking example of where those differences are going to come from.
Bertha is on track to finish tunneling this week. I’m not going to lie, Bertha completing her project is going to feel like the end of an era to me. I might have to do an honorary reading the The Little Engine that Could in her honor when she makes it through.
Everybody knows Seattle is growing. We’ve got a number for how much. Adding around 1000 people per week is a little daunting to think about, especially when I start wondering where to put them. No wonder inventory is so low.
All of that probably explains why Seattle prices are setting records for all time highs. Now is a good time to sell, not just because you’ll get a good price, but because please, pretty please, we need the inventory 🙂
Next week, we’ll see whether Bertha made it!