Housing Recovery

The Housing Recovery Is Leaving Out Most of America

Bloomberg

Patrick Clark

 

For further evidence of the uneven recovery among U.S. housing markets, how’s this: In the 10 most expensive U.S. metropolitan areas, median home values have increased by 63 percent since 2000, after adjusting for inflation. In the 10 cheapest metros, median values rose by just 3.6 percent.

That finding, and the others illustrated by the charts below, comes from the State of the Nation’s Housing, an annual report published Friday by Harvard University’s Joint Center For Housing Studies. While home prices have increased sharply in expensive coastal cities, plenty of urban centers are lagging behind. Home prices in 3 out of 5 metropolitan areas remain below their pre-recession peak, and home prices in low-income neighborhoods are faring even worse.

Meanwhile, the number of Americans spending 50 percent of their income on rent is near historic highs, something likely to get even worse if proposed budget cuts to the U.S. Department of Housing and Urban Development eliminate rental assistance for hundreds of thousands. Demand for rental units continues to rise, pushing rents higher.

The good news—such as it is—is that slow price appreciation in much of the country outside the hot metros means for-sale units there remain relatively affordable for more families.

Home prices increased in 97 out of the 100 largest metropolitan areas, according to the report. Nationally, nominal prices returned to the peaks they held before the Great Recession. But when you adjust for inflation, those prices are as much as 16 percent below past peaks. And appreciation hasn’t been evenly distributed: A May report from Trulia showed that nationally, just 1 in 3 homes has recovered peak value. The Harvard report, however, shows the price gains have been concentrated in high-income neighborhoods.

The flip side of low appreciation should be greater affordability for home buyers. Indeed, 59 percent of households in U.S. metros can afford to purchase the median home, the Harvard report stated, and in 1 in 5 metros, 75 percent can afford to buy. (In this case, the report defines affordability based on a 5 percent down-payment and monthly mortgage payments of no more than 36 percent of household income.)

But many local markets suffer from low inventory, the report notes, partly because of the sluggish pace of new construction: The U.S. added fewer housing units over the decade ending in 2016 than in any 10-year period since 1990.

And while a significant number of Americans spend half of their income on rent, that figure did tick down a bit in 2015, to 11.1 million. That’s still 49 percent more severely rent-burdened households compared with 2001. The vast majority of those households earn less than $30,000 a year.

Regardless of income, or whether they own or rent their homes, families that spend half their income on housing are forced to make sacrifices elsewhere in their budgets. When the poorest families pay less for housing, the extra money goes to necessities like health care. Among households that fall in the bottom 25 percent for total consumer spending, those that spent less than 30 percent of their income on housing spent three times as much on health care.

Those hoping for relief in the form of new rental stock may be waiting for a while. After growing by leaps following the foreclosure crisis, the nation’s stock of single-family rentals actually fell in 2015, the last year for which the report offers data. Low-rent units, meanwhile, are being replaced by more expensive offerings, the report said. That is where the money is.

Celebration for Dean Kellye Testy

I recently attended an event celebrating the achievements of Dean Kellye Testy, the outgoing Dean of the University of Washington School of Law.  Everyone in the U.W. School of Law community wishes her well.  She has been a terrific Dean.

Retirement Dinner

I recently attended a retirement dinner for Carole Grayson, my old boss at University of Washington Student Legal Services, who has also served as the head of the Senior Lawyers Section of the WSBA.  I thank Carole for her patience with me as a legal intern, and for the many powerful lessons she imparted to me regarding the practice of law.

Increase In Renters In U.S. Cities

Renters Now Rule Half of U.S. Cities

Patrick Clark Thu, Mar 23 2:00 AM PDT

Detroit was once known as a city where a working-class family could afford to own a home. Now it’s a city of renters.

Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years. Detroit isn’t alone, of course: The rate of U.S. home ownership fell steadily for a decade as the foreclosure crisis turned millions of owners into renters and tight housing markets made it hard for renters to buy homes. Demographic shifts—millennials (finally) moving out of their parents basements, for instance, or a rising Hispanic population—further fed the renter pool.

Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.

While U.S. home ownership ticked up in the second half of 2016, there are reasons to think the trend toward renting will continue. A 2015 report from the Urban Institute predicted that rentership would keep rising through 2030, thanks to demographic trends that include aging baby boomers who downsize into rentals.

In the shorter term, housing market dynamics will also play a role. Fewer than 1 million homes were on the market in the first quarter of 2017, the lowest number since Trulia began recording inventory data in 2012. The shortage makes it harder for renters to buy. Meanwhile, rental landlords, including large Wall Street players and mom-and-pop investors, continue to plow cash into single-family homes.

Those shifts are likely to present new challenges for cities unequipped to handle high rental populations. Detroit Future City, a nonprofit that highlighted Detroit’s shift in a report earlier this month, argues that the city needs an intentional strategy for dealing with the rising population of such households.

That could include providing new protections for renters or creating resources to help landlords keep properties in good repair. On a grander scale, the Center for Budget Policy & Priorities, a Washington-based research institute, published a proposal this month calling for a new tax credit for low-wage workers, seniors, and people for disabilities.

Most low-income families don’t rent by choice, said Nela Richardson, chief economist at Redfin. And plenty of higher-income households rent because they can’t afford to buy. “We don’t have enough affordable supply in either rental or for-sale markets,” said Richardson, adding that cities interested in promoting renter-friendly policies can rethink their zoning policies to encourage more construction.

At an even more basic level, city leaders should check old assumptions about the role renter households play in their communities, said Andrew Jakabovics, vice president for policy development at Enterprise Community Partners, an affordable housing nonprofit.

Homeowners have traditionally been regarded as more engaged, with more at stake in the long-term prospects of their neighborhood, Jakabovics said. That view can unfairly shortchange renters.

“It goes a long way just to make sure you’re valuing renters and making sure voices are heard when it’s time to allocate resources to schools or parks or transit lines,” he said.

Mentor-Mentee Reception

I had the privilege of attending the mentor-mentee reception at U.W. Law School again. It was great to meet so many new law students.  I always feel like the caliber of law students continues to increase, which makes me hopeful for the future of the legal profession and of the world.

New Rules for Clear Outs

Councilmembers Rob Johnson, Lisa Herbold, Mike O’Brien and Kshama Sawant unveiled legislation today that would revamp the City’s current practice of encampment sweeps, allowing for clear outs after the City fulfils certain conditions. The legislation was developed with the goal of protecting public safety and connecting the unhoused with permanent housing options. Councilmembers intend for this legislation to go through the legislative process in parallel to, and informed by, the work of the Mayor’s Unsanctioned Encampments Cleanup Protocols Task Force to ensure implementation before the winter months.

The legislation unveiled today has been amended to address concerns that have been aired in recent days, clarifying the City’s role in managing and clearing encampments. The new legislation would allow for encampment clear outs, with the following conditions:
• Outdoor living spaces in locations deemed unsuitable or unsafe are to be cleared with 48 hours notice, and the City must offer an alternative location for people to relocate;
• Camping on sidewalks, rights of way, school grounds, private property, highway overpasses, among other unsuitable locations, would not be allowed;
• For outdoor living areas that are not deemed unsafe, unsuitable, or hazardous, residents will be cleared out only after being offered an adequate and accessible housing option with at least 30 days advance written notice;
• Outdoor living spaces that have garbage accumulation and/or presence of unsanitary elements would be qualified as hazardous. Before clearing out the space, the City must first attempt to remedy the hazardous situation (for example, garbage containers, sharps containers, portable restrooms);
• Removed personal property must be catalogued and kept for a minimum of 90 days at storage locations accessible by public transit which operate beyond normal business hours;
• A 10 member advisory committee be created to provide recommendations on the City’s ongoing removal and impoundment actions;
• Further amendments will be considered through the Council’s legislative process.

Current City protocol provides homeless residents 72 hours notice before each sweep occurs and access to outreach workers to connect to shelter and services. In practice, the notice has sometimes been as little as 24 hours, and an outreach worker often does not have available shelters or services to offer to individuals that meet their needs. Personal belongings are either disposed of or sent to a facility in an industrial area for pickup.

A Seattle Times story recently illustrated problems with the City’s current outdoor living space cleanup protocol, including improperly destroyed personal belongings, inconsistency in cleanup notice and scheduling, unsuitable access to confiscated belongings, and exacerbating trauma onto marginalized populations.

According to the Human Services Department, the City has conducted 441 cleanups, or “sweeps” of outdoor living spaces since the declaration of the State of Emergency on Homelessness last November. During those cleanups only 126 people were connected with shelter or housing while outreach workers actually engaged 1,852 individuals. The ineffectiveness of the current protocols is also depicted in the fact that many outdoor living space cleanups are done multiple times Because of repeat processes, the City constrains its resources and the proposed legislation will help stabilize those situations to ensure neighborhood safety and health.

Councilmember Lisa Herbold (District 1, West Seattle & South Park) said, “People are sleeping outside because they have no place to go, and that’s the reality. This legislation is meant to set the parameters for what is safe and what isn’t, and it’s largely intended to inspire the City to get serious about providing stable housing opportunities for people living on the streets.”

Councilmember Rob Johnson (District 4, Northeast Seattle) said, “Reforms to the current approach are necessary to ensure we are treating our unsheltered neighbors with decency and respect. While recent steps have been made toward increasing the affordable housing stock in Seattle (such as passing the Mandatory Housing Affordability Residential framework last month), we must work in the meantime to enact better, more compassionate short term solutions. I look forward to working collaboratively with the Mayor’s taskforce, advocates, and members from the business community to make sure that we come up with an effective plan to this complex issue. ”

“If our larger goal is to transition unsheltered people and families into permanent housing, then continually displacing them, destabilizing their lives, and compromising relationships and connections to services is not producing the results we need,” said Councilmember Mike O’Brien (District 6, Northwest Seattle). “Many community members have approached me with concerns about increased garbage, human waste, and needles in their neighborhoods, which is why this legislation will require that the City provide sharps containers, public restrooms, and garbage pickup for those sites where we find unsanitary conditions. We all deserve clean and safe neighborhoods.”

Councilmember Kshama Sawant (District 3, Central Seattle) said, “Spending millions of dollars moving homeless people from one street corner to another is inhumane and ineffective. Instead, this money should be directed towards basic services and shelter. Also, the $160 million slated for a new North Police Precinct should be used to build a 1,000 units of city-owned affordable rental housing. The Council needs to address the root causes of the homelessness crisis and the lack of affordable housing.”

The legislation was developed in collaboration with advocacy organizations and homeless service providers who have the on-the-ground work experience in case management for the unsheltered, including the Seattle/King County Coalition on Homelessness ACLU of Washington, Columbia Legal Services, Public Defender Association, Seattle Community Law Association, Real Change, and people experiencing homelessness.

Councilmembers are requesting that the legislation be initially considered in the Council’s Human Services & Public Health Committee on September 14 at 2 p.m.

 

Tenants’ Rights Legislation

“Today’s vote is a significant step towards increasing fair access to rental housing,” said Councilmember Lisa Herbold. According to Seattle’s Renting Crisis Report from the Washington Community Action Network, “48% of individuals who pay for rent with Social Security Disability Insurance or Social Security retirement income said that discrimination prevents them from having successful rental applications.”

Councilmember Kshama Sawant said, “The movement of tenants in Seattle continues to win victories toward a full-fledged Tenants’ Bill of Rights. Thank you to Councilmember Herbold and tenant activists for this important protection against housing discrimination.”

Councilmember Mike O’Brien applauded the bill. “We are living through a housing affordability crisis. It’s essential to protect low-income renters from being displaced. Today’s legislation is directly based on what we heard from communities most impacted by discriminatory landlord practices.”

Sponsored by Councilmember Herbold, the Source of Income Discrimination legislation was unanimously voted out of the Civil Rights, Utilities, Economic Development and Arts Committee. Currently it is illegal to discriminate against a prospective renter whose primary source of income is a Section 8 voucher.  This bill expands the legally protected classes to include alternate sources of income such as a pension, Social Security, unemployment, child support or any other governmental or non-profit subsidy.

The Committee discussed the bill on May 24 and June 14. In light of these discussions, the legislation was amended to add further protections:

  1. First-Come, First-Served Screening Practice

Prevents housing providers from giving applicants with alternative sources of income a lower priority. It requires landlords to review applications one at a time, on a first-come, first-served basis.

  1. New Eviction Protections

Ensures that tenants can fully utilize community resources to prevent eviction. Landlords will be required to accept pledges from community-based organizations to remedy nonpayment of rent if funds are received within 5 days of an eviction notice.

  1. Preferred Employer Programs Banned

Encourages landlords to offer non-discriminatory move-in incentives. In 2015, both media and community members reported discounts on deposits and other move-in fees for rental applicants working for preferred employers. The Seattle Office of Civil Rights recently concluded that some preferred employer programs that provide discounts or other terms and conditions in rental housing to certain groups over others may constitute discrimination under Seattle’s Open Housing Ordinance (SMC 14.08).

 

 

 

Completion of King County Dispute Resolution Center’s Mediation Practicum

I am very proud of having graduated from the King County Dispute Resolution Center’s Mediation Practicum, and I look forward to continuing to mediate community mediations at the Dispute Resolution Center.  The Practicum has been a rigorous, but rewarding two-year experience.  I also want to thank all of my instructors in the Practicum for their wisdom, kindness, and patience.

Speaking at Solo and Small Firm Practice Class University of Washington School of Law

Once again I spoke to the Solo and Small Firm Practice Class at the University of Washington School of Law.  The students are very inquisitive.  The subjects of my speaking were broadly-career paths, business plans, and marketing.  The students presented business plans at the beginning of class which were as detailed and professional as any business plans I have ever seen.  I am strongly encouraged that the next generation of lawyers will be even more talented than their predecessors, and hope that they use this talent to improve the world, both inside and outside of the legal system.

-->