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Nothing To Buy, Nothing To Rent

Nothing to buy, nothing to rent:’ Some Americans are stuck in housing limbo

By Vera Gibbons

From Yahoo Money

When Rebecca DiLorenzo’s landlord of 14 months informed her that he would be raising the rent by $300 a month on the apartment in East Greenwich, Rhode Island, she shares with her fiancé, Kyle, she started to look around for a place to buy.

“Our mindset last spring was, ‘We’re getting married, we need to buy a house’ and for a while we were going to open houses every weekend, but the market was just getting crazier and crazier,” she said.

After getting outbid on four houses — by as much as $50,000 — DiLorenzo knew they needed a Plan B. “We didn’t want to stay in our rental because it would have cost almost double what a mortgage would have been, but we also didn’t want to buy a house we really couldn’t afford,” she said.

Priced out of both the sales and rental market, the soon-to-be newlyweds are now living with family until things settle down.

This scenario is becoming increasingly familiar, said Rick Sharga, executive vice president of RealtyTrac, a real estate information company.

“First there was nothing to buy and now there’s nothing to rent,” he said. “The eviction ban has also frozen a lot of inventory that would have otherwise come to market.”

Availability is limited across the board, said Jay Parsons, deputy chief economist for RealPage, a leading provider of home rental analytics. “Apartment occupancy is now at the highest level in at least three decades, and it’s a similar story in single-family rentals,” Parsons said.

“There’s a great reshuffling under way and everyone’s moving all at once,” said Nicole Bachaud, an economic data analyst with Zillow. This includes workers moving out of shared situations and transitioning back to the office, ‘digital nomads’ exploring new locations now that they have more guidance from their employers, and new grads moving for their first jobs.

Competition is pushing rents higher in places like Phoenix, Riverside in California, Tampa, South Florida (especially West Palm Beach and Fort Lauderdale, but even Miami as well), Atlanta, Memphis, as well as Texas, the Carolinas, and most of the Sun Belt and Mountain regions, according to Parsons.

“It’s bonkers,” said Jeff Andrews, data journalist at Zumper, a national rental listing platform. “In ‘normal’ times you see steady growth in any given market, but the rent increases that are happening now — and the intensity and pace of it — is unprecedented. It’s not something we’ve ever seen in the U.S.”

In some markets, prices are increasing daily. Nowhere is this more apparent than in markets that were hit the hardest and are now rebounding quickly, such as New York City.

“Things started turning around in April as the city reopened, and now everything’s going in a ‘New York minute,’” said Brown Harris Stevens’ Justine Bray, who has worked in real estate in city for 27 years. “It’s insane.”

Recently, Bray was working with a client in Thailand who was eyeing an apartment in New York City’s Murray Hill.

“This apartment went from $5,164 to $5,559, then $5,715, $5,882, $5,929,” she recalled. “So every day my client was waking up and seeing it was costing more. We ended up getting it in July for a little over $6,200.”

Prices are escalating even after contracts have been signed.

Pam Crocker recently experienced this firsthand when she put in an offer — at full asking price — for a luxury two-bedroom rental apartment on Manhattan’s Upper East Side. After making a deposit (including first months’ rent plus security), and signing the lease, she waited patiently for the owner who had accepted the offer to countersign.

“There was one delay after the next and they kept telling me there were all these other higher offers,” Crocker said. “I was getting annoyed to the point where I almost backed out, but I had my heart set on this apartment.”

It ended up costing her $1,200 more per month than the initially accepted offer. “I’ve done a lot of real estate transactions and owned villas in Jamaica, but had never been jerked around like this,” said Crocker.

When will things simmer down? Soon, Parsons said.

“What we’re seeing right now in the for-sale housing market is likely a sign of things to come in rental housing later this year,” Parsons said, “where the market goes from ‘really, really hot’ to just ‘hot.’”

Portland Approves Option To Have Landlords Pay Tenant Relocation Fee

By Everton Bailey Jr.

From The Oregonian

Portland landlords must pay to move residential tenants who can’t afford any rent increase after the City Council unanimously agreed Wednesday to temporarily modify its renter relocation assistance policy.

The rule goes into effect immediately and applies to any rent increase between September and March 31, 2021. Tenants must provide written notice they can’t afford the higher rate and will need to move.

The previous policy applied only to rent increases of 10% or more. The rule calls for landlords to pay between $2,900 to $4,500 to help tenants move. The City Council plans to discuss later this year whether to keep the temporary revision through March or extend it further.

Portland requires landlords to give tenants at least 90 days’ notice of any rent increase. With the new rules, city leaders said landlords will have the option to rescind any September rent increase and refund any increased rent paid by the tenant. To qualify, tenants must provide written notice that they need assistance either 45 days after being given notice of the rent increase or until Sept. 30, whichever period is longer.

The proposal was announced by Mayor Ted Wheeler last week and the policy change was crafted by members of his office and the Portland Housing Bureau. He said it was necessary to help keep renters in their homes amid the coronavirus pandemic as the statewide eviction moratorium is slated to end Sept. 30.

If the deadline on the moratorium isn’t extended, March 31 marks the end of the six-month grace period for Oregonians to pay all of their outstanding rental payments. Wheeler and other council members acknowledged the new rule could further burden landlords and that even this provision and rent assistance funds from the city won’t be enough to more fully address issues faced by tenants and landlords without more significant state and federal aid.

“I want to be crystal clear about this. We aren’t saving anybody,” Wheeler said. “We’re temporarily suspending the coming eviction tidal wave and the potential loss of local building owners and landlords.”

Rent increases disproportionally impact households of color, city officials said. According to city data of around 264,000 Portland households, 47% are renters and the other 53% are homeowners. But 43% of white households in the Portland area are renters while as many as 74% of Black households rent.

Commissioner Chloe Eudaly, who was the architect behind the original relocation assistance policy, said she was disappointed rent and mortgage forgiveness programs haven’t caught traction among state and federal legislators. She said she felt the city had to prioritize more vulnerable Portlanders, noting that renters typically have fewer financial resources than landlords and rent increases without the option of relocation assistance would be “a recipe for displacement.”

“I want to assert that in this moment of crisis, when we know that half of our renters were cost-burdened before COVID, we can’t balance landlord housing pressures on the backs of renters,” Eudaly said.

She also noted that the rule change doesn’t ban landlords from raising rent and that increases can still take place in the city for tenants who can afford it.

There was no public testimony on the proposal before the City Council vote. Wednesday marked the first City Council meeting with five members as Commissioner Dan Ryan took part. He was sworn in last week.

Ryan was elected last month to serve the remaining two years on the term of late Commissioner Nick Fish, who died in January of cancer.

Cincinnati’s Bold New Law Could Help Renters Survive The Eviction Crisis

By Liza Ramrayka

From HuffPost

Cincinnati native and resident Jeneya Lawrence dreams of living in a house with a garden big enough to fit a trampoline for her two young children, on a street with neighbors from diverse communities.

The 28-year-old community health worker and single mom is determined to stay in Cincinnati, near family and friends, despite gentrification and seeing average rents double over the past decade. When Lawrence found a rental unit earlier this year with separate bedrooms for her 12-year-old son and 9-year-old daughter, close to good schools and her work, she couldn’t believe her luck. Then the landlord asked for a $1,300 security deposit in advance.

“I just did not have that. I asked him if I could split it over two payments but he said no,” explained Lawrence, who then had to wait another six months to find a rental in a less-convenient location where she could afford the deposit.

Lawrence’s story is a familiar one for many lower-income renters across the U.S., who have found it increasingly difficult to find homes as the housing crisis tightens its grip on cities across the country.

But Cincinnati is trying to do something to ease the burden. In April this year, it became the first city in the U.S. to require landlords to accept alternatives to a security deposit. Cincinnati’s bold move has been hailed as a way to disrupt a broken system for renters. Other cities and states are now also offering deposit alternatives to make housing more accessible to low-income renters.

The new program, dubbed “renters’ choice,” came into effect too late for Lawrence to benefit from it when she was last looking to move. But she hopes it will make it easier for her and other lower-income renters to find homes in the future.

The program could also level the playing field for the city’s homeless population, said Kevin Finn, president and CEO of Strategies To End Homelessness.

“On any given day, we have 200 families that have a first month’s rent but they still can’t find an apartment,” he said. “Having a more realistic arrangement for what the deposit looks like will make it much easier to get those households into an apartment.”

Homelessness in Cincinnati disproportionately affects the city’s Black community (62% of the homeless population) and people under the age of 35 (55% of the homeless population). And the number of unhoused people is expected to increase this year and next due to the effects of COVID-19 on job losses and evictions.

Even before COVID-19 hit the U.S., millions of low-income renters were struggling. Nationwide, there should be at least 7 million more homes for those who earn the least. “For every 10 of the lowest-income renters, there are fewer than four apartments that are affordable and available to them,” Diane Yentel, president and CEO at the National Low Income Housing Coalition, told HuffPost.

The pandemic has exacerbated the situation. More than 40% of low- and moderate-income households in the U.S. said they had no emergency savings, while over 12% would not be able to pay for a $400 emergency expense, according to an April survey published by Brookings.

The Coronavirus Aid, Relief and Economic Security (CARES) Act, passed in March, added a weekly $600 federal supplement to unemployment payments and implemented a federal eviction moratorium. But both provisions expired in July.

More than 1 in 5 renters were behind on payments in July, and widespread evictions are expected unless states extend moratoriums or introduce rental assistance. The replacement lost wages benefit ― reliant on joint funding with states ― offers claimants a maximum $400 a week.

Cincinnati resident Seth Weber lost his job in March when the restaurant he worked at was shuttered due to COVID-19. He got work at a bakery — but the bakery burned down in August. He’ll be counting on unemployment benefits to make his monthly rent of $700. But Cincinnati is looking at an eviction crisis, and he’s aware that this fate could be just around the corner for him.

“That’s the worst thing a tenant can face,” said Weber, a volunteer for Cincinnati Tenants’ Union. “Once you have an eviction on your record, you’re only going to be able to get into substandard housing.”

Many renters avoid getting an eviction on their records by downgrading their housing ― perhaps moving from a two-bedroom to a one-bedroom ― but doing so requires having enough money saved to put down a security deposit. “The new legislation will help them be able to get into less-expensive housing and avoid getting an eviction on their record,” said Finn.

The new legislation could come in handy if Weber has to move soon to avoid eviction.

Councilmember P.G. Sittenfeld (D) introduced the legislation last November after reaching out to local tenants and landlords to address the city’s need for more affordable homes. He says renters’ choice will give low-income renters greater access to housing in a city where median household monthly income is around $2,800, and a two- or three-bedroom apartment can cost $1,000 or more.

“The ‘north star’ for me throughout the crafting of this legislation was how can we remove an upfront barrier that is the traditional, steep, cash security deposit?” he said. “And can we replace it with something that lets people get into the housing they desire, while also still giving landlords the protection they need?”

For many people, especially those on limited incomes, it has long been all but impossible to find the cash for security deposits — often, one or even two months’ rent — that landlords require upfront but which aren’t covered by a tenant’s Section 8 housing support voucher.

“When you have such limited income, any extra expense ― such as security deposits or requirements to pay the first and last month’s rent upfront ― can be an insurmountable hurdle to finding an apartment you can afford,” said Yentel.

Cincinnati’s renters’ choice legislation applies to all landlords with 25 units or more and offers three options: an insurance premium, in which the tenant pays a small monthly, nonrefundable fee instead of an upfront deposit; an installment plan to spread the deposit equally over six months (or more if the landlord agrees); or a reduced security deposit, paid upfront, of no more than half the monthly rent.

Sittenfeld says security deposit insurance could mean a tenant paying just $5 a month to protect the landlord against damages or rent default, instead of a $1,000 security deposit. “I don’t pay $100,000 a year in health insurance premiums anticipating that I’m going to have a catastrophic heart attack. You pay a little bit each month, then it’s pooled risk.”

The “ongoing economic repercussions” of the pandemic — with thousands out of work or underemployed — only serve to highlight the need for renters’ choice legislation in Cincinnati, and across the country, says Sittenfeld.

Elected officials, nonprofits, and landlord groups are collaborating to publicize the new rules. “While it is still early on, we’re optimistic that the legislation will be successful in ensuring renters have the ability to secure an apartment without a large upfront cash security deposit,” said Sittenfeld, “and look forward to seeing the legislation expand across the country to help renters in cities large and small.”

Cincinnati’s legislation is part of a wider movement to disrupt what is arguably an outdated system, particularly where low-income housing is scarce.

New legislation in Virginia allows landlords to accept damage insurance in lieu of a security deposit. In Pennsylvania, a proposed amendment would require landlords to offer security deposit alternatives such as installment payments or insurance. (Both laws cap the sum of deposits and insurance at two months’ rent.) Representatives from several other cities and states including Alabama and North Carolina have committed to introducing renters’ choice legislation.

In 2019, New York state passed a law to cap security deposits to one month’s rent and require deposit return within 14 days. In March of this year, New York Gov. Andrew Cuomo’s pandemic-related executive order required landlords to allow certain tenants to use their security deposits to pay rent that is in arrears or due and to replenish the security deposit over time or “retain insurance that provides relief for the landlord in lieu of the monthly security deposit replenishment.”

Some landlords argue that an insurance-based system would create more problems since they’d have to extract funds from an insurer rather than having cash in hand to make any repairs necessary at the end of the lease. Charles Tassell, chief operating officer of the National Real Estate Investors Association, commented recently: “I’ve got to deal with an insurance claim and get my attorneys involved. And they’ve got their high-priced attorneys in-house.”

And others warn that over a year or more, the total paid in nonrefundable insurance premiums could exceed the upfront security deposit and that renters may be unaware that such insurance does not cover them against damages or repairs that exceed the policy’s coverage.

Weber worries that because the policy only applies to landlords with more than 25 units, it limits choices for tenants.

Finn adds that while tenants are learning of their options from housing nonprofits, landlords may still be in the dark, so cities and states need to do more to educate them about their new responsibilities.

Yentel says alternatives to security deposits provide creative and much-needed additional assistance to get families into homes. However, she argues that there is an urgent need to tackle the underlying issues contributing to the housing crisis. Solutions include more sustained, substantial federal investment in the Section 8 voucher program so all those in need receive help, and building more housing for low-income people through programs such as the National Housing Trust Fund.

In Cincinnati, where there is a 40,000-unit housing deficit, the city is hoping to help low-income renters with several new building projects. These include the Willkommen and Perseverance developments supported by the nonprofit Cincinnati Center City Development Corporation, which is working in partnership with the city to set aside 101 affordable rental units for those making 50-80% of the Cincinnati area median income.

Lawrence — who is still seeking out a rental that checks all the boxes — is optimistic that Cincinnati’s recent renters’ choice legislation will offer renters like her access to homes like these next time they need to move.

“I’m happy that we can pick where we want to stay but also have three options on the money side,” she said. “This time, I will look at places where I have the stores I need, the schools convenient for my children. As long as property owners are open-minded and not money-hungry, it won’t be hard.”

Seattle City Council Passes Bill Aiming To Prevent Evictions After Moratorium Is Lifted

By Becca Savransky, SeattlePI, Wednesday, May 6, 2020

Seattle City Council this week passed a bill offering more protections to prevent tenants unable to pay their rent from being evicted after the city and statewide eviction moratoriums are lifted.

The bill — passed in a 9-0 vote by the council — gives tenants a defense to use in eviction proceedings relating to not being able to pay rent for six months after Seattle’s moratorium on residential evictions is lifted. The moratorium is currently in effect through June 4. The bill is aimed at helping to keep the thousands of people impacted by the spread of the novel coronavirus safely housed.

“This legislation before us today can help people stay housed and that is the bottom line,” Council President M. Lorena González said during a council meeting.

The bill expands on the city’s just cause eviction ordinance, creating an addition tool a tenant can use in eviction court proceedings. The eviction defense applies to tenants who have been financially impacted by the pandemic and have therefore been unable to pay their rent.

“What we are doing is we are enhancing existing landlord and tenant laws to benefit tenants who are going to need additional time to get their feet grounded and to be able to continue to dig out of this economic crisis,” González said.

Under the bill, landlords can still take actions associated with evictions, but tenants can use this as a defense in court. Tenants will also still accrue debt and will be expected to pay the rent that is owed.

“Providing a defense to eviction for certain causes is necessary as an additional step to protect public health to support stable housing, decrease the likelihood that individuals and families will fall into homelessness, and decrease exposure while the COVID-19 emergency exists,” the legislation said.

Councilmember Andrew Lewis said rent relief continues to be a priority for the city, but there are hundreds of thousands of people across the state who are unemployed and need help during this crisis.

“As one of the two renters on the council, I think it’s critical that we extend protection to renters in this time to make sure that we can keep people inside, especially in a time of uncertainty, in addition to public health threats,” he said during a council meeting.

“We are in a period of immense and extreme uncertainty regarding how people are going to immediately make their rent and it puts a lot of Washingtonians in a position where, while they could ordinarily be able to pay their rent on time, it might take some folks a little bit more time to do it.”

During the council meeting, council members acknowledged this is just one piece of the relief people need due to the coronavirus outbreak. Rent assistance, along with more affordable housing, is still desperately needed in the city and across the county.

The novel coronavirus outbreak has led to thousands of people across the region losing their jobs. Without a steady income, workers have struggled to pay for rent and other basic expenses. More than half a million people across Washington have applied for unemployment benefits since the pandemic started.

In March, Seattle Mayor Jenny Durkan issued an emergency order to temporarily stop evictions in Seattle for residents, nonprofits and some small businesses. Gov. Jay Inslee shortly after issued a statewide moratorium on evictions for people who weren’t able to pay rent. In April, he extended the moratorium through June 4. But under the eviction moratorium, people will still accrue debt and are expected to pay the rent owed after the moratorium is lifted.

Several nonprofits have rental assistance programs in place to help people pay their rent and avoid eviction, but with a growing need, those programs have been overwhelmed.

United Way of King County last month launched an expanded rental assistance program with a $5 million investment to help people behind on their April rent. Within days, the program had thousands more applications than it had the funds to serve.

Last week, Inslee announced he was extending the state’s stay-at-home order through May 31 and would continue with a phased approach to reopening the economy. The state’s plan means many people will likely be out of work for some time longer, as industries gradually reopen at limited capacities over the next several months.

Inslee has also warned if the state sees another jump in cases and hospitalization, restrictions could be put back into place. The most recent data from the Washington State Department of Health shows more than 15,000 confirmed cases of the virus

Rent Is Too High In U.S. Cities

The rent is just too darn high in these U.S. cities

By Adriana Belmonte,Yahoo Money

The cost of rent in the U.S., particularly in certain metro areas, is too darn high.

Nearly half of U.S. rental households are spending more than the recommended 30% of their income on rent, according to a report from Apartment List. (The national rate went from 49.5% in 2017 to 49.7% in 2018.)

And according to Apartment List, “in 19 of the nation’s 25 largest metros, a household earning the median renter income would be cost-burdened by the median rent. Of the 100 largest metros, the median renter would be burdened in 64 metros.”

Among the biggest metros in the U.S., Miami has the highest cost burden rate at 62.7% — this means that 62.7% of its renters are spending more than the recommended 30% on rent. Not far behind is New Orleans at 60.1% The two largest metros in the U.S. by population, New York and Los Angeles, are at 52.2% and 56.9% respectively. Given their size, NYC and LA house the highest number of cost-burdened individuals.

“Certainly, the worst offenders — places like Los Angeles, Boston, San Diego, Miami — these are places where it’s not always easy to build as many houses as you’d like, but also their economies have been very strong, so the increases in rental [costs] become an unfortunate byproduct of that,” Igor Popov, chief economist at Apartment List, told Yahoo Finance.

By state, Florida has the highest cost burden rate at 56.5%. Other high cost-burdened states include New York, New Jersey, California, Colorado, Louisiana, and Connecticut — notably places along the coasts.

“We’re seeing that especially coastal cities — where adding new housing is difficult but economies are booming — those are the places where affordability issues are stacking up the most,” Popov said. “With that said, it is a national problem so even cities that aren’t necessarily in the housing affordability debate every day still have a lot of renters who are struggling.”

Because of high rents in many of these cities, residents often turn to surrounding areas to reside for more financially feasible places to live. This is the case of Riverside, Calif., a city near Los Angeles, where the median rent accounts for approximately 36% of a person’s income.

“Riverside is actually seeing a lot of people who are migrating from the LA metro in search of more affordable options, but that demand is, in turn, driving up the price there as well,” Popov said.

‘I guess we went in the wrong direction’

Supply and demand wasn’t the only factor that affected the increase in rent-burdened households last year. Rental increases also outpaced wage growth in 2018, the first time since 2011.

“There’s a lot of factors for why that might be but on a very macro level, I think this economic expansion has been one that hasn’t [benefited] low-income households very well,” Popov said. “That shift was a bit surprising especially given that … we’ve seen a lot of high-income renters flooding in the rental market. In some ways, they’ve been padding the stats, so to speak, because they’ve come in and they’ve typically been able to afford their rentals, so they’ve made it look like things are getting better but this year, I guess we went in the wrong direction.”

From 2017 to 2018, there were nearly 300,000 more cost-burdened rental households throughout the U.S., which Popov described as “a big change in the number of people that have gone from being able to afford their housing to technically living in a place that they’re unable to afford.”

“You risk them moving away and that could both affect the economy and the economic diversity of a city when the renters move away, and you risk not being able to attract talent to grow the economy, and you risk not having basically that next generation being able to come and move to the city to keep it vibrant,” Popov said. “I think of this on a city-by-city basis and on that level, there are a lot of markets where maybe the flag isn’t being raised for the first time — maybe it’s been raised for a while.”

Seattle Now Most Expensive Renter City, Outside California, Census Data Shows

July 30, 2019 at 6:00 am

By Gene Balk

Seattle Times Columnist

Seattle rents are on the rise again, after a brief respite. And that shouldn’t come as much of a surprise, because that’s what rents do around here — they go up, and they go up fast.

At the start of the decade, Seattle ranked just outside the Top 10 among big U.S. cities for the cost of rent and utilities. Now, we’re fourth. In fact, Seattle has become the nation’s most expensive big city for renters outside of California.

According to survey data from the U.S. Census Bureau, the median rent and utilities paid in the city of Seattle hit $1,555 in 2017, across all sizes and types of rental units. Among the 50 most populous U.S. cities, the only three where renters pay more are San Jose, San Francisco and San Diego.

The median rent is the midway point — half of all renters pay more, and half pay less.

The last time I wrote about this date, which was in 2014,, it was to report that Seattle had broken onto the list of Top 10 most expensive big cities for renters for the first time. That seemed like a big deal at the time, but it turns out, that was only the beginning of our ascent up the rankings.

Since then, we’ve knocked off a bunch of high-price cities, climbing past Los Angeles, Washington, D.C., and even New York. Then, last year, we leapfrogged Boston to hit fourth place behind those three absurdly expensive Golden State locales. Can you imagine how high rents would be here if it didn’t drizzle for nine straight months a year?

And Seattle actually ranks ahead of San Diego as the third most-expensive city for renters if you only look at the costs for one-bedroom units, with a median of $1,455.

There are a lot of ways to measure rental costs, and the census data is very different from those reports that just look at market-rate apartments. The census data is based on surveys, and it presents a current snapshot of renters across the spectrum — from tenants in luxury units to those in older-stock housing, who are paying significantly less than market rate. It includes people in affordable and subsidized housing, and even people who get a break in their rent in exchange for doing work around the building.

In some cities, it also includes people living in rent-controlled and rent-stabilized apartments — not in Seattle, of course, since we don’t have any of those. But New York, for example, has more than 1 million such units, and San Francisco also has a substantial number. That’s part of the reason the census data for those two city’s median rents is lower than you might think.

Bringing rent control to Seattle is one of the signature issues for City Councilmember Kshama Sawant.

The census data represents what’s called “gross rent.” That means that the cost of utilities, if they are not covered by the landlord, are included in the dollar amount. This allows for a better comparison of the rental costs between units where the tenants have to pay the utilities separately and those where the utilities are folded into the rent.

In Seattle, at the start of the decade, the median rent and utilities was just $990. The increase of $565 by 2017 ranks second among the 50 largest cities, only behind San Jose, where the costs went up by $738.

Seattle also ranks second if you look at the increase in rents as a percent change — our 57% jump in rental costs since 2010 ranks just behind Denver’s 59%.

Rent and utilities have gone up in every big city, which isn’t surprising. But there are places it’s been much gentler for renters than in Seattle. In both Detroit and New Orleans, the increases have been less than 10% since the start of the decade. Virginia Beach, Memphis and Milwaukee are only a bit above 10%.

Many Seattle tenants have certainly been slapped with severe rent hikes, which has contributed to the city’s fast-rising median. But there’s another factor that’s probably more significant: We’ve had an unprecedented apartment construction boom that’s added thousands of high-priced new luxury units to our housing stock. Seattle has a higher precentage of new-construction apartments than any other big U.S. city.

Of course, rents wouldn’t be going up so fast in Seattle if incomes weren’t leading the way. The new class of renters in Seattle are higher income, and they can afford to pay more.

The Census Bureau also produces data that compares median rents and utilities with income, and it illustrates how the two have kept pace with each other. In 2017, the median rent in Seattle ate up 29% of household income. That’s basically unchanged from where it was in 2010.

And while rents are a lot lower in Miami or Detroit, for example, so are incomes. The median rent in those cities is nearly 40% of household income.

But that’s small consolation if you’re among the folks who don’t work in tech or some other high-paying industry, and you’re trying to make ends meet in Seattle. Census data shows that in nearly one out of five rental units in the city, at least half of the household income goes just to paying the rent and utilities.

New Apartments Designed To Help Shrinking Middle Class

Bucking the luxury housing trend, $500M in new apartments designed to help Seattle’s shrinking middle class

Mike Rosenberg
Seattle Times business reporter
Two Seattle firms are putting $500 million into building “workforce apartments” rather than the luxury units now sprouting all over. Spectrum Development and Laird Norton Properties will focus on areas like First Hill and Pioneer Square where rents are becoming out of reach.

Seattle’s record apartment construction boom almost exclusively has produced luxury buildings — the kind with $2,000 rents accompanied by concierge services, high-end appliances and yoga rooms. That’s left a huge void for middle-class renters looking for regular housing.

Now two Seattle companies are making plans to put $500 million into building new apartments aimed at firefighters, teachers and other midlevel workers.

And they’ll focus the development in urban areas where people want to live but rents are becoming out of reach: in neighborhoods near transit, schools and shops, in places like First Hill and Pioneer Square.

The initial projects are just being planned now, and the first units are scheduled to open in 2019, with others likely to debut over the following five years at various locations.

As part of the deal, Laird Norton will leverage up to $150 million of its own money to borrow additional funds. The partners also plan to save on big land costs by giving property owners a partial stake in their projects. Spectrum has completed more than a dozen urban projects like the rebuilt Publix Hotel and apartments over its nine years in Seattle. Laird Norton, which traces its roots back to partners in the original Weyerhaeuser timber operation, is venturing into development for the first time but owns hundreds of completed buildings across the country.

Spectrum and Laird Norton insist their plans make good business sense, but say their main motivation is to help ensure the middle class won’t be pushed out of Seattle any further.

Already, just this decade, the number of people living in the city who make above $75,000 has grown 11 times faster than those making less than that — partially because those with lower pay are moving out to somewhere cheaper.

“Where are our teachers and health-care professionals going to live in this city?” said Jake McKinstry, a principal at Spectrum. “We want the people who contribute so much to be able to live here.”

The need is huge: About 92 percent of the 31,000 new market-rate apartments that have opened in Seattle this decade have been luxury units, with an average rent  just under $2,000 a month, according to the rental firm RealPage.

Only 2,400 workforce housing units have been built this decade in Seattle. Those apartments have rents that average about $1,300 a month, RealPage found.

Spectrum and Laird Norton estimate their rents will be somewhere in between.

Two workforce apartment buildings built by Spectrum last year in First Hill included one-bedrooms ranging from $1,200 to $1,800, depending on the size. The typical new luxury-building unit in that neighborhood averages $2,000 a month, though across all types of apartments, the average is $1,650.

At the first building planned by the partnership — the 80-unit Canton Lofts at Third Avenue South and South Washington Street, at Pioneer Square — a new loft (basically a two-story studio) will be aimed at people making the median income. Rent starting in summer 2019 will be $1,600 — also cheaper than the average new building there, but pricier than most old buildings.

At those rents, someone earning the city’s median income would spend about 30 percent of their pay on rent, which is the standard recommended limit nationally to be considered affordable. Many renters wind up paying a higher percentage of their income on rent, eating into other costs like health care.

And they hope to arrange deals with property owners to save on upfront costs, since buying properties for development can cost tens of millions of dollars.

At the Canton Lofts, landowners and philanthropists John and Shari Behnke contributed the property in exchange for being long-term co-owners in the project. The developers also sweetened the deal for the landowners, who have donated to the arts in the past, by deciding to lease a small retail space in the project to the local nonprofit Path with Art.

Jeff Vincent, CEO of Laird Norton Properties, said the business case for investing in this type of housing hinges on long-term returns, which they expect to be 6 to 8 percent.

While many developers sell their buildings quickly after opening, Vincent said the partners see workforce housing as a slow, steady profit maker.

That’s still a contrarian view. The banks and investors that generally finance apartment construction remain focused on the luxury buildings that have proved to be good moneymakers in recent years.

McKinstry said that before connecting with Laird Norton, his firm had trouble finding a willing partner with the money to allow Spectrum to embark on its workforce housing plan.

Some neighborhoods, like South Lake Union, already have land costs so high that Spectrum and Laird Norton say they’ll be off-limits for their purposes.

Peter Orser, a former homebuilder who is now chair of the University of Washington’s Runstad Center for Real Estate Studies, said building new housing for middle-class people is very difficult in a place like Seattle, where land and construction costs are so high. But if developers are able to meet the conditions laid out by Spectrum and Laird Norton — like small buildings with no underground parking or luxury perks, and landowners and borrowers willing to take smaller initial profits — then it could work.

“If you can do all those things, I think you got a shot at being able to keep your rents lower,” Orser said. “I think they might be on to something.”

“If it was easy (to build workforce housing), people would be doing it,” Orser said. “Because, frankly, the risk is lower — there are many more renters making 100 percent of the median income than 200 percent. At some point you’re going to run out of people making $123,000.”

Greg Willet, RealPage’s chief economist, concurs: “I certainly would expect a bulk of development to remain focused on that luxury product.”

How other developers react to the deal is important because the 1,000 units planned in the joint venture, while significant, won’t alter the apartment boom on its own.

The city is on track to get as many as 60,000 new apartments this decade, more than in the previous 50 years combined. But about one-third of those units haven’t been built yet, meaning developers still have time to decide how fancy they want their buildings to be.

“We would like others to join us and expand beyond the $500 million,” Vincent said. “Why can’t the industry and private landowners turn this into a billion-dollar initiative to develop workforce housing?”

“We think there’s a big part of our population that can’t afford luxury,” Ferris said. “It’s something our community really needs. Otherwise, they’re getting pushed out.”

Grant added: “We’re really committed to this area, civically. We all have deep roots here.”

Vincent said he signed on in part because of what he saw in a past professional life in Chicago, where some neighborhoods grew expensive and homogeneous. He said he didn’t want to see gentrification take hold here any more than it already has.

The joint venture may also look at building student housing as part of its plans, another big need locally that universities have struggled to keep up with.

Vincent noted the student housing is particularly important because so many of the new, high-paying jobs here require four-year degrees, but not everyone can afford the expenses of getting one. As a result, he said, the region imports a lot of its tech talent, from places like California and overseas.

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.

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).

 

 

 

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