Industry News

New In Brief: September 2023

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  • Despite the cooling housing market, Seattle-area buyers now need to earn more money than a year ago to afford a starter home — typically priced in the low to mid-$500,000s according to the Seattle Times. Seattle-area householdsneed to make nearly $142,000 a year to afford a typical first home in the region, according to an analysis from Redfin. That’s an increase of 4% from last year, and well above King County’s median household income of about $106,000. The income needed to afford a starter home in the Seattle area climbed even as the price of a starter home dipped about 6%. That’s because prices haven’t fallen enough to offset higher mortgage rates. The average rate on a 30-year mortgage was nearly 7% in mid-June, up from 6% a year earlier and 3% in 2021, according to Freddie Mac. To define starter homes, Redfin considered the most affordable homes, but not those priced in the bottom 5%. In the Seattle metro area, covering King and Snohomish counties, those were homes with a median sale price of $535,000 between April and June. That median price would require a monthly mortgage payment of $3,545, according to Redfin’s analysis, assuming a 20% down payment and costs for interest, taxes and insurance. The report uses a common definition of affordability: spending no more than 30% of householdincome on housing payments. Seattle ranked seventh among 50 major metro areas for the most income necessary to afford a starter home. Every market where it costs more is located in California, including the top two, San Jose and San Francisco, where buyers need to make $245,000 and $241,000, respectively. Conversely, homebuyers need to make just $26,000 in Pittsburgh and $49,000 in Chicago. There are fewer homes for sale of all types in the Seattle area than in recent years. In King and Snohomish counties, about 3,500 total homes hit the market for sale in June, down 37% from the same time five years ago, according to the Northwest Multiple Listing Service. The number of starter homes listed for sale in King and Snohomish counties fell 42% from a year ago, according to Redfin. King County ranked among the least affordable counties in the state for first-time buyers, with a value of 40 in late 2022, the latest data available. Snohomish and Pierce counties also scored well below 100: 47 and 53, respectively. That measure assumes a 10% down payment, mortgage insurance and that the household spends no more than 25% of gross income on its mortgage payment.
  • new report from Seattle-based Redfin shows pending home sales in July rose 0.7% from June to the highest level since the start of the year. But there is a long way to go. Sales are still down 15.7% year over year — but the decline is slowing down, according to the report. Experts said the shock of rising mortgage rates has worn off, even as they hit a 22-year high, and they could go up. Experts also said recession fears are fading, but buyers are still finding it tough to break in to the housing market. According to Redfin, a homebuyer on a $3,000 monthly budget can comfortably spend $429,000 for a home with current mortgage rates. Those rates were nearly 2% lower last year, meaning the buyer could have spent $500,000 for a home. That equals a loss of $71,000 in buying power. This month, home-purchase applications hit their lowest level in 30-years. So, who’s buying? Realtors said most clients are families trying to move before the start of the school year. With some local school districts already back in class, that small pool may dry up. According to the National Association of REALTORS®, the only region where sales rose was in the west.
  • International buyers purchased 84,600 U.S. homes in the year ended in March, 2023 down 14% from the prior year, according to NAR. The dollar volume of residential real estate purchased by these buyers fell 9.6% to $53.3 billion, also a record low since 2011, according to the Wall Street Journal.
  • According to CNBC, the unit 3 nuclear reactor near Waynesboro, Georgia, has started commercial operation powering an estimated 500,000 homes and businesses with clean energy, meaning no greenhouse gasses are generated. The last time a nuclear reactor started delivering energy to the power grid was in October 2016, when the Tennessee Valley Authority began commercial operation of its Watts Bar Unit 2. PROGRESS! Around 29.1 GW of power will be added this year via solar: One gigawatt is enough energy to power about 700,000 homes. A fast-charging EV station operating at a power level of 1 GW, could charge approximately 1,000 electric vehicles simultaneously at a rate of 1,000 kWh per hour. While nuclear power is clean, there are environmental concerns related to the creation of radioactive wastes such as uranium mill tailings, spent (used) reactor fuel, and other radioactive wastes. Few want these housed in their backyard…. Nuclear reactors cost anywhere between $5-10 billion to build.
  • Washington ferry prices will rise twice over the next two years to ensure the state meets revenue requirements laid out in the new transportation budget. Both passenger and vehicle fares will increase 4.25% on Oct. 1 of this year. On Oct. 1, 2024, the prices will rise by 4.25% once again. Click here to see how the increase will impact fares by route. The Washington State Transportation Commission (WSTC) approved the increase at its hearing Thursday, Aug. 10. The 2023-2025 state transportation budget was passed by the state Legislature and enacted by Gov. Jay Inslee this year. The WSTC also approved an increase to the current discount for multi-ride passes by 1%. The additional discount for the multi-ride passes will expire on Sept. 30, 2025. According to the WTSC, 57% of Washington State Ferries’ operations are funded by fare revenues. The other 43% is funded from other tax revenues. The WTSC also adopted a policy change to the fuel surcharge rule to clarify that a fuel surcharge can only be implemented after review and approval.
  • The Wall Street Journal reported this week (mid-August) that the homelessness rate is up 11% across the country, and housing costs and evictions are prime factors, marking the biggest spike since the government started recording the data. This is after millions of dollars have been spent on a federal, state and local level, and construction of affordable housing has boomed. In King County, the executive’s office acknowledged it has received a little under $1 billion in federal funding for the Homeless, Housing, and Community Development Division since 2019. Yet the homeless rate went up 14% in the past year.
  • A newly published poll from Gallup (According to Gallup,) shows Americans feel safest to live in Dallas and Boston top the list. They feel the least safe in Chicago and Detroit. Views shifted notably since the last time Gallup asked the same question in 2006. The cities with the biggest negative changes in safety sentiment were Chicago, San Francisco, Minneapolis, and Seattle.
  • As the Biden administration makes billions of dollars available to remove millions of dangerous lead pipes that can contaminate drinking water and damage brain development in children, some states like Washington are turning down funds. Washington, Oregon, Maine and Alaska declined all or most of their federal funds in the first of five years that the mix of grants and loans is available, The Associated Press found. Some states are less prepared to pay for lead removal projects because, in many cases, the lead must first be found, experts said. And communities are hesitant to take out loans to search for their lead pipes. The Biden administration wants to remove all 9.2 million lead pipes carrying water to U.S. homes. Lead can lower IQ and create behavioral problems in children. The 2021 infrastructure law provides $15 billion to find and replace them. That money will help a lot, but it isn’t enough to get all the toxic pipes out of the ground. State programs distribute the federal funds to utilities. The Environmental Protection Agency said it is reviewing state requests to decline funds but did not provide a full list of states that have said no so far. That information will be available in October, officials said. States that declined first-year funds can still accept them during the remaining four years. Lead pipes are far more common in some states such as Michigan and Illinois, which each have hundreds of thousands. The harm there is clear. Flint’s lead crisis elevated lead in tap water to a national health issue. Residents of Benton Harbor, Michigan, drank water with too much lead for years until all their lead pipes were replaced. In response, however, Michigan is clamoring for as much money as it can get to remove lead. The states that declined funds have fewer problematic pipes, but that doesn’t mean lead isn’t an issue. There’s concern about lead in some Maine schools. Portland, Oregon, has struggled with high lead levels for years, although recent tests have been better and officials say the issue isn’t lead pipes, but household plumbing. Washington accepted $85,000 of $63 million it could have taken and said the decision was based on the limited number of water systems that wanted loans. The EPA estimates the state has 22,000 lead pipes. Oregon, which could have accepted $37 million, said inventories are going to be done with existing staff and resources, adding that utilities have no known lead lines. The EPA projected that the state has 3,530 lead pipes — a relatively small number — based in part on information collected from utilities. The location of many lead pipes is a mystery. The EPA is requiring communities to provide initial inventories of their lead pipes by October 2024. Maine, which banned lead pipes far earlier than most states, said other funds would be used for inventories and they didn’t have lead replacement projects ready to fund. Most states that rejected funding initially indicated they would probably ask for money in later years. To access the grants, there also needs to be demand for loans but utilities are hesitant to seek them out, according to Deirdre Finn, executive director of the Council of Infrastructure Financing Authorities, a group that represents the federally funded state programs that distribute infrastructure funds. Federal funds can only go to replacement projects that remove the entire lead pipe. Lead pipes run from the water main in the street to homes, but the ownership of the pipe is often split between the utility and homeowner.  The EPA offered early funds based on a state’s general drinking water infrastructure needs — not the number of lead pipes. The EPA later developed estimates of each state’s lead pipes to inform how future years of funding should be distributed. Therefore, some states were offered more early money than they can spend.
  • A coalition of rental property owners is suing the city of Kenmore over its renter laws, which the coalition says conflict with state law and are harmful to landlords. The Washington Business Properties Association’s lawsuit says Kenmore’s ordinances that City Council members passed last year to address a shortage of affordable rental housing should be invalidated. The ordinances, in part, require landlords to provide several months’ notice for certain rent hikes and also ban abusive, deceptive and unfair practices. The lawsuit was filed in King County Superior Court last week. In Kenmore, where the median rent for a one-bedroom apartment is $1,780, landlords must let renters know 120 days in advance if they plan to raise the rent more than 3%, and provide 180 days’ notice for rent increases of more than 10%. The state requirement is 60 days’ notice. Kenmore was among a handful of cities in the Seattle area that last year adopted ordinances dealing with issues tenants face amid an increasingly expensive housing market, like rent increase notices, deposits and evictions.

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