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The Housing Market Is Slowing Down And That’s A Bad Sign For The Economy

By Amanda Fung

Yahoo Finance

A number of key reports on housing data released in recent days are on a downward trend. Both existing and new home sales in the U.S. were down in June, and their previous month’s results were revised lowered. The lackluster sales data caused homebuilder confidence to plummet to its lowest level in 10 months Wednesday.

“The housing market has been losing momentum for several months,” said Stifel Chief Economist Lindsey Piegza, referring to a slump in housing starts, building permits, and sales during the second quarter. “Housing is a solid gauge of the overall health of the economy; weakness in housing raises a large red flag regarding the sustainability of domestic growth heading into the second half of the year.”

The U.S. Commerce Department said the sale of new U.S. single-family homes in June fell 5.3% to a seasonally adjusted rate of 631,000 — an eight-month low — and the previous month’s results were revised lower. While new home sales only account for 10% of the market, the latest existing home sales results weren’t any better.

Existing home sales fell for the third straight month in June. Existing home sales slipped 0.6% to a seasonally adjusted annual rate of 5.38 million units last month, down 2.2% from June 2017, according to the National Association of Realtors (NAR). May’s sales pace was revised down to 5.41 million units from 5.43 million units.

“Existing home sales help drive other sectors of the economy including consumer confidence and spending, as well as construction and lending activity,” Piegza said.

“Chronically low inventory is choking sales,” said Jonathan Miller, president and CEO of Miller Samuel Inc., a real estate appraisal firm, adding that higher-cost housing markets such as New York City and San Francisco are seeing a slowdown in sales more so because of homebuyers’ uncertainty over the Trump administration’s federal tax reform.

Inventory levels have fallen for three consecutive years and for eight of the past 10 years, according to Lawrence Yun, NAR’s chief economist. At the current sales pace, it would take 4.3 months to exhaust the total inventory of homes for sale; six months is considered a balanced market.

“Throw in rising mortgage rates… that isn’t helpful in terms of sales activity,” Miller said. While the rate increases are currently nominal for Americans living paycheck to paycheck, it’s enough to sway a person’s decision to make that home purchase. On Thursday, the average rate on a 30-year, fixed-rate mortgage rose to 4.54% from 4.52%, a week earlier, according to mortgage buyer Freddie Mac, adding that long-term loan rates have been running at their highest levels in seven years.

“Affordability pressures are increasingly a concern in many markets, as the combination of continuous price gains and higher mortgage rates appear to be giving more prospective buyers a pause,” said Freddie Mac Chief Economist Sam Khater in a press statement.

The slow sales activity is particularly perplexing because spring tends to be the busiest time of year since it’s known as buying season. Moreover, the economy has been humming along: The U.S. economy grew by an annualized rate of 4.1% in the second quarter — the fastest growth since the third quarter of 2014. 

The housing affordability crisis

The problem is wage growth. When you adjust for inflation, wages haven’t risen in a decade, experts note. As the lack of inventory drives home prices up, affordability becomes an issue. Wages aren’t keeping pace and consumers are priced out of markets by 6%-8% — depending on which home price index you look at, in terms of home values and wages, according to Piegza.

Median home prices in the U.S. have increased annually for 76 straight months (a little over 6.3 years), according to the NAR. In June, the median price of an existing home was $276,900, up 5.2% from the same time last year.

But experts expect prices to follow other housing data. “Home prices are the kaboose of the train,” Miller said. “You’ll’ see prices soften this year.”

We may already be seeing signs of prices leveling off. Standard & Poor’s said that its S&P CoreLogic Case-Shiller national home price index posted a 6.4% annual gain in April, down from 6.5% from a month earlier. May results will be released July 31. Meanwhile, the FHFA House Price Index rose 0.2% in May, one-tenth of a percentage point less than expected, according to Bloomberg.

“While we’re not seeing the rug pulled out of the housing market, there are clear signs and a reason for caution,” Piegza said.

 

U.S. Housing Market Headed For Worst Slowdown In Years

by Prashant Gopal and Shobhana Chandra

Bloomberg

They were fed up with Seattle’s home bidding wars. They were only in their late 20s but had already lost two battles and were ready to renew with their landlord. Then, in May, their agent called.

Suddenly, Redfin’s Shoshana Godwin told the couple, sellers were getting jumpy, even here in the hottest of markets. Homes that should have vanished in days were sitting on the market for weeks. There was a three-bedroom fixer-upper just north of the city going for $550,000, down from more than $600,000. They made the leap in early June and had closed by the end of the month, for list price.

The U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch.

“This could be the very beginning of a turning point,” said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles, in an interview. He stressed that he isn’t ready to make that call yet.

The Data

A slew of figures released over the past three days gives ample evidence of at least a cooling. 

Existing-home sales dropped in June for a third straight month. Purchases of new homes are at their slowest pace in eight months. Inventory, which plunged for years, has begun to grow again as buyers move to the sidelines, sapping the fuel for surging home values. Prices for existing homes climbed 6.4 percent in May, the smallest year-over-year gain since early 2017, and have gained the least over three months since 2012, according to the Federal Housing Finance Agency.

“Home prices are plateauing,” said Ed Stansfield, chief property economist at Capital Economics Ltd. in London. “People are saying: Let’s just bide our time, there’s no great rush. If we wait six or nine months we’re not going to lose out on getting a foot on the ladder.” That means “we’re now looking at a period in which prices move more or less sideways, or increase no more quickly than growth in incomes, over the next few years.”

Stansfield projects a 5 percent gain this year and a 3 percent increase in 2019. That compares with 10.7 percent in 2005, shortly before the crash.

Supply Lines

Some of the most expensive markets, where sales are falling under the weight of prices, are now seeing substantial increases in supply, according to Redfin Corp. In San Jose, California, inventory was up 12 percent in June from a year earlier. It rose 24 percent in Seattle and 32 percent in Portland, Oregon. Those big jumps are from low numbers, so the housing crunch is still a serious problem.

“Inventory has increased quite a bit,” Godwin, the Seattle agent, said. “We’re seeing less competition.”

Dustin Miller, an agent with Windermere Realty Trust in Portland, said he’s trying to manage sellers’ expectations, something he hasn’t had to do since the end of the last housing boom. One customer, a baby boomer moving to a new home across the state, expected to have buyers fighting over her house. She got one bid, below her asking price.

“Buyers want to shop and take some time, as opposed to having to rush and throw offers in,” Miller said. “It’s the market correcting itself. At some point, you hit a peak of momentum, and then things level off.”

This new wariness was noticeable in the latest consumer-sentiment data from the University of Michigan. In its preliminary July survey, 65 percent of Americans said it’s a good time to buy a home, the lowest since 2008, when the economy was still in recession.

Still, market watchers note that the housing sector has strong support from a healthy labor market and steady economic growth, which indicates a stabilizing trend for home prices rather than anything close to the experience of the crisis, when property values plunged.

“The rate of home sales, new and existing, has probably peaked,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “But it’s not going to roll over. It will gently decline.”

New Record

S&P CoreLogic Case-Shiller data hint at the softening. The 20-city index of property values rose 6.6 percent in the 12 months ending in April. After seasonal adjustments, the gauge posted its smallest monthly increase in 10 months, with New York, San Francisco and Washington reporting declines.

Homeownership still remains out of reach for many Americans, especially for first-time and younger buyers. For existing homes, the median price climbed in June to a record $276,900, while properties typically stayed on the market for 26 days, unchanged from the prior three months, according to the National Association of Realtors.

“Affordability is becoming a major headache for homebuyers,” said Lawrence Yun, the association’s chief economist. “You are seeing home sales rising in Alabama, where things are affordable. But in places like California, people aren’t buying.”

In addition, “no one knows how far and how fast” borrowing costs may rise as the Federal Reserve raises interest rates, Stansfield said. Lenders and borrowers alike are less likely to let credit spiral out of control than in 2005 and 2006. And with financing tighter and wage gains in check, “there’s not much scope for prices to continue to increase sustainably” at recent rates, he said.

The cooling, in turn, could curb housing starts, “because builders tend to only build what they think they can confidently sell,” Stansfield said. At the same time, he said, “it will decrease the risk of a bust.”

The U.S. Housing Market Has An Inventory Problem

The US housing market has an inventory problem

By Myles Udland
Yahoo Finance
In April, existing home sales fell 2.5% to an annualized rate of 5.46 million. On its own, this is not a remarkable story.

What is more notable is the persistence of a trend that has come to define the U.S. housing market since it bottomed in 2012. And that is the lack of supply.

In April, the median existing home price rose 5.3% over the prior year, the 74th straight month there’s been an annual increase in the price of already-built homes, according to the data from the National Association of Realtors.

Additionally, the amount of homes for sale fell over the prior year for the 35th consecutive month to a total of 1.8 million.

At the current selling rate, which in April hit an annualized pace of 5.46 million, there are just 4 months of unsold inventory on the market and homes were for sale for just 26 days in April with 57% of homes sold remaining listed for less than a month.

“Inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford,” said Lawrence Yun, chief economist for the NAR.

“What is available for sale is going under contract at a rapid pace. Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”

So while one of the most pervasive economic memes of the post-crisis period has been of the basement-dwelling millennial —with this week’s not doing the generation any favors— improvements in the labor market and wages haven’t been enough to overcome a housing market that is disadvantaging new entrants. Namely, millennials looking to own their first home.

“With mortgage rates and home prices continuing to climb, an increase in housing supply is absolutely crucial to keeping affordability conditions from further deterioration,” said Yun. “The current pace of price appreciation far above incomes is not sustainable in the long run.”

Tight Supply, Rising Prices Undercut U.S. Home Sales

Tight supply, rising prices undercut on U.S. home sales

By Lucia Mutikani,Reuters

WASHINGTON (Reuters) – U.S. home sales unexpectedly fell in January, leading to the biggest year-on-year decline in more than three years, as a chronic shortage of houses lifted prices and kept first-time buyers out of the market.

The supply squeeze and rising mortgage interest rates are stoking fears of a lackluster spring selling season. The second straight monthly drop in home sales reported by National Association of Realtors on Wednesday added to weak retail sales and industrial production in January in suggesting slower economic growth in the first quarter.

“There may be some headwinds ahead for home resales with rising mortgage costs affecting how much the buyer can afford and this could put a damper on existing home sales and take some of the wind out of the economy’s sails,” said Chris Rupkey, chief economist at MUFG in New York.

Existing home sales dropped 3.2 percent to a seasonally adjusted annual rate of 5.38 million units last month, with purchases declining in all four regions. Economists polled by Reuters had forecast home sales rising 0.9 percent to a rate of 5.60 million units in January.

Existing home sales, which account for about 90 percent of U.S. home sales, declined 4.8 percent on a year-on-year basis in January. That was the biggest year-on-year drop since August 2014. The weakness in home sales is largely a function of supply constraints rather than a lack of demand, which is being driven by a robust labor market.

The shortage of properties is concentrated at the lower end of the market. While the number of previously-owned homes on the market rose 4.1 percent to 1.52 million units in January, housing inventory was down 9.5 percent from a year ago.

That was also the lowest inventory for January on record. Supply has declined for 32 straight months on a year-on-year basis. At January’s sales pace, it would take 3.4 months to exhaust the current inventory, up from 3.2 months in December.

A six-to-seven-month supply is viewed as a healthy balance between supply and demand. The median house price increased 5.8 percent from a year ago to $240,500 in January, marking the 71st consecutive month of year-on-year price gains.

The PHLX housing index <.HGX> was trading higher, tracking a broadly firmer U.S. stock market. The dollar <.DXY> strengthened against a basket of currencies as yields on shorter-dated U.S. Treasuries rose.

 

ECONOMIC GROWTH RISK

“It looks likely that real residential investment will decline in the first quarter and we see downside risk to our forecast for 2.5 percent real GDP growth during the quarter,” said Daniel Silver, an economist at JPMorgan in New York.

The economy grew at a 2.6 percent annualized rate in the fourth quarter. Making housing expensive for some first-time home buyers, the 30-year fixed mortgage rate rose to an average of 4.38 percent last week, the highest level since April 2014, according to data from mortgage finance agency Freddie Mac. It was up from 4.32 percent in the prior week.

Mortgage rates are increasing in tandem with U.S. government bond yields on worries about rising inflation. In contrast, wage growth remains stuck below 3 percent on an annual basis despite the unemployment rate being at a 17-year low of 4.1 percent.

“We have hoped that the rise in rates motivates home buyers to act soon but the move in rates may have been so drastic that they are now waiting to see if rates start to make a move down,” said Brian Surgener, a senior vice president at BBMC Mortgage in Lombard, Illinois.

“Americans are not saving more and as home prices rise more of a down payment will be needed. So with more savings needed and payments increasing many home shoppers may be back on the fence until we see one of these trends turn around.”

A separate report from the Mortgage Bankers Association on Wednesday showed applications for loans to buy a home decreased 6 percent last week from a week earlier. There are also worries that caps on the deduction for mortgage interest following a recent overhaul of the tax code could hurt demand for houses.

First-time buyers accounted for 29 percent of transactions in January, down from 32 percent in December and 33 percent a year ago. Economists and realtors say a 40 percent share of first-time buyers is needed for a robust housing market.

Economists expect supply to remain tight this year, which together with pricey home loans could result in modest home sales growth in 2018.

But housing supply could improve in the coming months as government data last week showed the number of homes under construction surged to near a 10-1/2-year high in January. Single-family home completions were the highest since June 2008.

In January, houses typically stayed on the market for 42 days, up from 40 days in December and down from 50 days a year ago. Forty-three percent of homes sold in January were on the market for less than a month.

 

(Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama)

Mortgage Rates Climb To A Nearly Four-Year Peak

US mortgage rates climb to a nearly 4-year peak

By AP Economics Writer

WASHINGTON (AP) — Long-term U.S. mortgage rates jumped this week to their highest level in nearly four years, a sign that the prospect of higher inflation is steadily increasing the cost of borrowing to buy a home.

Mortgage buyer Freddie Mac said Thursday that the average rate on 30-year, fixed-rate mortgages rose to 4.38 percent this week, up from 4.32 percent last week and the highest since April 2014.

The rate on 15-year, fixed-rate loans rose to 3.84 percent from 3.77 percent last week.

Recent wage gains and rising prices are stoking concerns about inflation picking up, which has caused investors to seek higher interest rates. Mortgage rates are closely aligned with the yield on 10-year U.S. Treasury notes, which has climbed above 2.90 percent from 2.78 percent just two weeks ago.

The low mortgage rates had eased some of the price pressures facing would-be homebuyers. The shrinking inventory of sales listings has caused prices to increase at roughly double the gains in average hourly earnings, making it harder to save for a down payment and purchase a home.

But homebuyers had the benefit of average 30-year mortgages that were 3.78 percent in September. If mortgage rates keep rising at a quick pace, it could limit what people can afford to pay and cause demand for housing to fall.

Teachers Village In Newark

There’s a brilliant $150 million ‘Teachers Village’ in Newark

from Yahoo Finance! by Melody Hahm Thu, Feb 1 12:56 PM PST

There’s a luxurious 400,000-square-foot complex in downtown Newark with a consignment store, nail salon, fitness center and cupcake shop. At first glance, it might appear to be a glossy page out of a playbook to revitalize the city.

But, the former parking lots were transformed with a very specific demographic in mind. The six buildings actually make up Teachers Village, a new development of three charter schools, a daycare facility, residential apartments marketed to and subsidized for teachers, and retail space that accommodates 20 different businesses.

“I love being around other educators because we can share stories, talk, and learn from each other. One of my neighbors is the head of the Essex County Community College. We’ve been able to work out some things with my middle school kids, introducing them to the idea of college. It’s nice to have this kind of pipeline,” she said. “Plus, the gyms are really nice,” said Irene Hall, Principal of Discovery Charter School, who lives at Teachers Village.

The $150 million, five-year-long project is the brainchild of Ron Beit, founding partner and CEO of Newark-based RBH Group. Having previously focused on commercial and residential projects across Newark, Beit first started playing around with the idea of a Teachers Village in 2007.

“We had a front row seat to the struggles that teachers were facing. We saw that teachers were coming to teach from all over the region, and I got inspired. Once we scratched beneath the surface, we found that only about 15% of teachers lived in Newark,” Beit told Yahoo Finance.

With the help of state tax credits and investments from high net worth individuals and institutional investors like Goldman Sachs, TD Bank and Prudential, RBH Group embarked on a mission to create a space where teachers could live comfortably without feeling burdened by the cost.

Reduced rates for teachers

Teacher’s Village has 204 residential units ranging from studios averaging at $1,000 per month to two-bedrooms that go for $1,900 a month. Seventy percent of the rooms are specifically reserved for teachers and priced 10%-15% cheaper than the aforementioned market rates.

The remaining 30% of the units are open to all others (who have to pay full price). This was part of the financing arrangement, likely to hedge against too many vacancies and underwhelming demand from teachers.

The outreach extends beyond those who work at the charter schools in the neighborhood. The surrounding area houses six different universities, making up a community of 50,000 people.

The mission was to create a vibrant community that operates 24 hours a day, seven days a week.

“When we first started constructing our master plan, the first phase was thinking through the residential, retail and commercial components. With 92% surface parking lot, how could we create a community? We quickly became fixated on housing for teachers and schools would fit the commercial criteria,” said Beit.

After district schools passed on the opportunity to move their schools into the development, Beit connected with three existing charter schools that needed more space and better facilities. They then built a new early childhood learning center for an additional 1,000 students.

Hall, who lives in a one-bedroom unit, said she’s the only Discovery Charter employee who lives in the Village. She hopes to see more of these communities for fellow teachers. Just like popping down the hallway of your college dorm to chat with a classmate, Hall said she’s been able to collaborate with like-minded folks who are just a few doors away.

“It’s a beautiful space. Before, [Discovery Charter] was in the bottom of an alleyway. While we had fixed it up nicely, this is a major upgrade and a great opportunity. It was a no-brainer, really,” she said. “It brings a lot of attention to the school and we love being a part of this community.”

Addressing the plight of teachers

It’s a universally shared sentiment — educators like Hall are responsible for molding the future minds of America and are therefore invaluable members of society. Yet, they aren’t well compensated.

The average salary of a U.S. high school teacher is $58,030. Middle-school teachers make about $54,720 annually. The average starting salary is closer to $36,000 and often additional degrees or certificate programs are required to earn far beyond that threshold. The vast majority make too much to qualify for low-income housing but not enough to live comfortably.

More than one-third of U.S. households live in rental housing. And while the overall market for renters has started to cool down, Americans aren’t feeling flush with cash.

One-half of all renters, or about 20.8 million individuals, are currently cost burdened, which means more than 30% of their income is used on rent and utilities, according to data from Harvard’s Joint Center for Housing Studies.

“Cost burden is common among lower-income folks, but if you look back at the last few years, that burden has extended up the ladder to moderate-income renters — those making between $30,000 and $75,000 per household,” said Whitney Airgood-Obrycki of Harvard. Among renters who work in the field of education,22.1% are moderately burned and 13% are severely burdened.

Of course, teachers aren’t alone in feeling overwhelmed by the cost of living, but they are a group that is hit the hardest, said Stockton Williams, Urban Land Institute’s executive director of the Terwilliger Center for Housing.

“The challenge of housing affordability is that a lot of urban school districts are contending with the real barrier of attracting and retaining teachers. It’s part of a much broader story of housing affordability for big segments of the workforce,” he said.

Retaining talent

According to the Learning Policy institute, 90% of open teaching positions are created by teachers who leave the profession. One-third of teachers are retiring, but the other two-thirds leave for other reasons.

“In the high cost urban areas, there’s evidence that the sheer cost of living near these schools is one major reason teachers leave the profession,” said Williams.

And projects like Newark’s Teachers Village are the first step toward providing a practical solution that ultimately helps schools attract and retain talent.

“If urban school districts and individual schools are motivated to keep teachers, they need to enable as many as possible to live near the school. If there are a wider array of housing choices, it’ll help with recruiting new teachers,” he pointed out.

On paper, teachers appear to have it easy with short work days and summers off. In reality, teachers are stretched thin with limited resources and have to put in hours before and after school to make lesson plans, grade papers, attend development trainings, and meet with parents.

“So many teachers work many more hours, on the weekends, early in the morning, late at night. The most dedicated teachers are at the school round the clock. By offering closer housing choices, this makes their lives a little bit easier,” said Williams.

Is this a scalable model?

While Newark’s project is the largest to-date, teacher neighborhoods have been sprouting up across the country over the last few years.

In Baltimore, a former tin can manufacturer has been gutted and transformed into 40 units for teachers, complete with exposed brick walls and bamboo floors.

Last year, the city of San Francisco committed $44 million in public funds toward building 100 to 150 affordable housing units for teachers.

Indianapolis’ school house block

In Indianapolis, a small nonprofit, Near East Area Renewal (NEAR), is working to get teachers on the path toward homeownership. Collaborating with Mayor Joe Hogsett, who ran for office in 2015 promising subsidized housing for teachers, NEAR worked with several contractors to break ground on the project in November. The organization received $2.6 million through a housing partnership with the city and a $500,000 grant from the U.S. Department of Housing and Urban Development.

The project includes 24 houses that will be rehabilitated or built in a two-block area in St. Clair Place, a neighborhood just east of downtown Indianapolis. Homes will be priced between $130,000 and $180,000. The median value of a home in Indianapolis is $142,300, but NEAR Executive Director John Franklin Hay said houses in St. Clair skew higher and are selling in the $200,000s.

There are two layers of income restrictions — teachers who make less than 120% of Marion County’s median income ($58,000 a year for a single person) are eligible to purchase half of the homes; those who make less than 80% of the county’s median income ($39,000 a year for a single person) can apply to buy the other half.

“Most of Indy’s public schools are within a 3-mile radius of downtown. Teachers can’t afford to live anywhere near downtown. They can’t find safe or adequate housing and have to go way out in the suburbs, driving one and a half hours each way. That’s the perspective we’ve heard,” Hay told Yahoo Finance. “Our interest is in helping teachers plant their roots here and to make it a great place to live.”

Teachers are required to live at their homes for a minimum of five years and will be fined if they sell or transfer the property before then.

The first homes will be available in April, and so far, 120 teachers have attended information sessions and expressed interest, and 13 have submitted applications.

Coming to a city near you?

After its success in Newark, RBH Group is venturing outside New Jersey to develop similar residential units for teachers across America. Beit has even trademarked the name Teachers Village. Currently, RBH has two projects under construction — one in downtown Hartford, Conns., and one in East Humboldt Park in Chicago. Neither development incorporates schools in the complex like the one in Newark.

“Having schools is not a traveling part of our model. But there will be a value-added component at each of our Teachers Villages. We’ll offer all kinds of coursework for the communities that we build in. Our vision is that you can sit in a European-style piazza, sipping on a cappuccino and learn in one space,” said Beit.

In each new market, RBH Group is working with local developers to help with occupancy, design, construction and financing.

“We always looked at this as a dual mission project — community impact with respect to recruiting and retaining teachers, but the other aspect is to catalyze economic development,” said Beit.

 

Seattle Is The Hottest Housing Market of 2017 In U.S.

The hottest housing market of 2017

Yahoo Finance
by Amanda Fung

Not only is Washington’s largest city home to internet juggernaut Amazon, it also holds the title for the city with the fastest-growing home prices. Since September 2016, Seattle has been leading the S&P CoreLogic Case Shiller Home Price 20-City Composite Index and has maintained that spot each month. There’s no doubt that Amazon has been fueling the city’s real estate market but population and job growth coupled with high demand and low inventory are also lifting prices.

“Seattle is consistently outpacing the rest of the country,” said Lawrence Yun, chief economist at the National Association of Realtors. “High-tech workers are concentrated or were concentrated in the San Francisco, Silicon Valley area where prices got way too high. Seattle provides an alternative for people.”

Median sales price in Seattle was $478,500 in the third quarter of this year, up 13.4% from the same time last year, according to the NAR. That’s not exactly cheap since the median sales price in the U.S. was $254,000, but it’s still half of the price of a home in San Francisco, where the median sales price was $900,000.

Seattle has been at a 5.9% annual price increase or greater since November 2011, “that’s when mostly everything had bottomed out,” and at a 10.5% increase or more for a year and past three quarters, said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

 “Home prices are driven by population and employment,” said Blitzer.

For the first time since 2013, Seattle had the fastest one-year population growth rate, 3.1%, among the 50 most populous cities in the U.S. in 2016, according to an analysis of U.S. Census Bureau data by The Seattle Times. Since the start of the decade, Seattle added an average 15,658 people a year, and in 2016 it topped 700,000.

Meanwhile the unemployment rate has been below the national rate, hovering around 3% for a few years now. Job growth has been strong mainly due to tech companies like Amazon. It helps that  Starbucks is also headquartered in Seattle and Microsoft’s home is in nearby Redmond, Wash. Microsoft recently revealed multibillion-dollar plans to redevelop its 500-acre campus. Last year, Amazon had the most job postings in Seattle with 19,766 openings to fill, according to job market data provider Burning Glass Technologies. The University of Washington and Starbucks were far behind with 5,156 and 1,992 job postings, respectively.

“We see evidence that these large companies with a lot of employees contribute to a strong housing market,” said Sarah Mikhitarian, an economist at Zillow, an online real estate database company headquartered in Seattle. “The strong labor market drives people to want to live there. At the same time, strong jobs put more pressure on price of homes.”

According to Amazon’s website, 15% of its employees live in Seattle and 20% of its workers walk to work. Microsoft didn’t break out how many workers it has in Seattle, but its website said the company has 47,121 in the Puget Sound Washington.

Amazon’s fortune “flows down to employees who have extra financial resources to purchase property,” said Yun.

Tech workers are flocking to Seattle

Seattlehas become a top destination for professionals in the tech industry, not just folks who want to work for Amazon. Seattle tech firms added 23,575 jobs in 2015 and 2016, accounting for 93% of all office jobs in the city created during that time period, according to a report by real estate firm CBRE. The total number of tech jobs created topped any other major office market in the U.S.

It helps that tech workers who live in Seattle appear to have more disposable income than those situated in other metropolises. A report by LinkedIn and Zillow found that Seattle tech workers who own their homes can expect to have about $2,000 more in disposable income each month than tech workers in the Bay Area. Seattle tech workers keep an average of 59% of their income after paying taxes and housing, while San Francisco Bay Area tech workers pocket only 37%. Those figures made Seattle the No. 1 “sweet spot” for tech workers looking for a job and housing.

High demand, low inventory

But it’s not easy to find a home to buy in Seattle. There’s a scarcity of homes for sale in Seattle. Eighty percent to 90% of new home listings sell within the first 30 days of the posting, normally only 30% of listings sell, said Lennox Scott,  chairman and CEO of brokerage John L. Scott Real Estate.

“Buyers are waiting for each new listing to come on the market,” said Scott. “We are down to about 15 days of inventory in the mid-price range [$500,000-$600,000] of homes.”

Similarly, even first-time homebuyers will have a hard time finding a place to buy. There are 35% fewer homes online than a year ago in the entry-level range, homes with a median sale price of $293,000, according to Zillow. And Seattle isn’t exactly the go-to city to find a deal on your first home. An entry-level home in the U.S. is almost half the price of Seattle home at $118,200.

“That shows you how hot the Seattle market is,” said Mikhitarian.

Further exacerbating the supply of for-sale homes in the market is the lack of new condo developments. A majority of new construction in Seattle is for apartments for rent. That’s where investor money has been focused on, said Scott, who added that there isn’t much activity in condo projects.

As a result homeowners are hesitant to put their place on the market in fear of not being able to find a new home to buy before someone snaps up their current home, said Scott. “There’s seller gridlock,” he said. Most think home prices will remain elevated since the city is still considered affordable compared with the nation’s other tech hubs and inventory will remain low. However, a slow down of tech hiring may change things. According to the Seattle Times, the city’s largest employer Amazon may be pulling back a little in their hometown. During the week of Dec. 3, Amazon had 3,503 job postings–the lowest in three years and down from more than 9,000 just six months earlier.

Sign of a slight cooling down

Most think home prices will remain elevated since the city is still considered affordable compared with the nation’s other tech hubs and inventory will remain low. However, a slow down of tech hiring may change things. According to the Seattle Times, the city’s largest employer Amazon may be pulling back a little in their hometown. During the week of Dec. 3, Amazon had 3,503 job postings–the lowest in three years and down from more than 9,000 just six months earlier.

But, so far, all signs indicate that the city’s housing market will remain sustainable. There might be a slight slowdown, given that employment growth is projected to slow through 2020. NAR’s Yun said we may see single-digit rate of appreciation instead of double digits in 2018.

 “The Seattle market is a magnet because of its natural beauty,” said Scott, touting the city’s mild temperatures and lush environment. “That’s why individuals like to move here when they do have a job opportunity. It is an attractive city.”

It’s called the Emerald City for a reason.

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.

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.

 

Brooklyn Man Builds Igloo In Backyard And Lists It On Airbnb

 

Brooklyn man builds igloo in backyard and lists it on Airbnb; website takes it down

BY Molly Crane-newman, Nancy Dillon

NEW YORK DAILY NEWS

Updated: Tuesday, January 26, 2016, 8:26 AM

He built a romantic “boutique” igloo in his Brooklyn backyard – then got the cold shoulder from Airbnb when he listed it for $200 per night.

Patrick Horton used the vast quantities of powder from the weekend’s historic storm to build the artisanal accommodations outside his actual residence on India St. in Greenpoint.

“We figured someone might want to take their Tinder date there and would be willing to pay for it. How many girls could say that they were taken on a date in an urban igloo? Not many,” Horton, 28, told the Daily News.

EAST COAST RECKONING WITH ‘TOP 10 SNOWSTORM’

Patrick H. Horton

Patrick Horton built this igloo outside his residence on India St. in Greenpoint.

Sadly for the aspiring proprietor, Airbnb.com iced his listing in a matter of hours Sunday, leading him to consider other options, he said.

“I think we’ll try to put it on Craigslist. We might even offer a Tinder special. Maybe throw in some Usher (background music) and a bottle of wine,” he joked Monday.

The heart-melting hideaway includes two candles for ambience, puffy pillows, animal print blankets over a tarp and even some landscaping in the form of a small tree placed near the entrance, he told The News.

Dripping with ingenuity and alt-lifestyle aura lays this Snowpocalypse’s most desirable getaway,” Horton wrote for the quickly yanked Airbnb ad.

“Built completely by hand all natural,” he said. “Come experience this chic dome-style bungalow with Bae.”

Horton even offered to throw in some shampoo.

Patrick H. Horton

“Come experience this chic dome-style bungalow with Bae,” Horton wrote on Airbnb.com before the website yanked his listing.

“We are happy to see that you guys are staying busy and having fun during Blizpocalypse. Unfortunately, your igloo, while very well constructed, has failed to meet our occupancy standards and has been removed from search results,” a rejection letter from Airbnb said.

“As an appreciator of fine igloos around the world, I did want to offer you a coupon that you can use to book your first reservation as a guest,” the letter said. “Be sure to pick a place with running water, electricity, and a roof that doesn’t melt.”

Horton was disappointed, especially considering other igloos do rent rooms on the website, he said.

“It’s way stronger than we thought,” he argued to The News. “We had four or five people in there last night. Even if you bump up against the wall, nothing falls on you. The walls are two feet thick.”

An advertising art director originally from Seattle, Horton said he and his two roommates cooked up the idea for the igloo at least two months ago, watched how-to videos online and waited for enough snow to fall.

“Unfortunately, your igloo, while very well constructed, has failed to meet our occupancy standards and has been removed from search results,” a rejection letter sent by Airbnb says.

“We had obviously never done it before, but we had fun with it, drank a couple beers,” he said.

They spent about four hours building a hard-packed pile about eight feet high on Saturday and then let it harden overnight, he said.

After another four hours spent digging out the interior Sunday and adding the finishing touches, they listed the cozy cave online.

Patrick H. Horton

The igloo was still standing Monday, he told The News, and he considered listing it on Craigslist.com.

“It was a joke, but we’re straddling the line between being satirical and serious,” he said Monday. “If someone wanted to pay $200, I would have done it. But I probably would have made fun of them.”

Horton claimed five people showed interest during the igloo’s brief window on Airbnb, but he lost the ability to contact them when the listing was deactivated.

“It was all disappeared,” he said with a laugh.

He admitted he doesn’t have igloo insurance.

“Even if it did fall, it wouldn’t kill you,” he said, mulling the idea of sleeping inside the structure himself Monday night. “Well, check back with me tomorrow.”

ndillon@nydailynews.com

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