CoreLogic has recently released its findings from an analysis of 100 of the country’s top real estate markets to determine which areas are either “undervalued”, “at value” or “overvalued”. By comparing how income growth aligns with rising home prices, this report looks to determine if price growth can be sustained in the long run.

So what did they find? 40% of the metropolitan areas studied were considered overvalued using their model. This includes Las Vegas, Denver, LA, Miami, Washington DC, New York, Jersey City and Houston.

Boston, Chicago and San Francisco (can you believe it?) are considered to be at value.

With the struggle to find buildable land to boost inventory to meet demand, it is not a shock the Seattle Metro falls in the overvalued category. Spokane and Tri-cities are both considered at value, while Yakima is a winner for buyers as the only undervalued area north of Chico, CA and west of Casper, WY. (On a side note, it’s also home to James Beard award-winning tamales, so there’s that).

Does this mean we’re all doomed? No, probably not. Let’s not forget how strong our economy is right now when looking at key indicators like job growth and in-migration. While price growth will likely stabilize as more inventory comes on the market, this isn’t looking like 2007 all over again.

Fill out the form on CoreLogic’s website to view the free report.

Just for fun (and because I must secretly hate sunshine), I decided to use the information from the report Paul mentions above and compare it to an article I read in the PI from a few weeks back. My question was, “if our market conditions are pushing people out to other areas, how do those areas stack up in the CoreLogic report?”

What I found was every market mentioned in the PI story was also considered overvalued to CoreLogic, with the exception of San Diego and Chicago (“at value”). San Francisco proper is technically at value, however, most people from here would be moving to Silicon Valley and the East Bay (both overvalued), wouldn’t they?

So even though Seattle’s prices are toward the top in the country, is leaving really solving the problem in the long run if prices still outpace income where you’re going?

Last week we heard about the Seattle City Council’s plan to ease the affordable housing and homelessness situation. The plan is to impose a tax of 26 cents per hour per employee affecting 3% of Seattle’s largest businesses. $20M of the $75M they plan to raise with this tax will come from Amazon alone, so it’s not surprising Amazon has reacted quickly by halting construction of their new downtown tower, which puts 7,000 jobs in jeopardy. Over 131 other businesses have also objected in a letter sent to the city council stating it doesn’t make sense to punish the companies bringing more jobs to the region.

I think this quote from the letter sums it up nicely.

“This is like telling a classroom that the students who do the most homework will be singled out for detention.”

Blaming the lack of affordable housing on these businesses is just unfair. The reality is that we live in a geographically closed-off area with mountains on one side and water on the other. Land is scarce. The land we have that we can build on is only increasing in value.  In addition, the costs of materials are constantly rising, as are labor costs; not to mention there are the unbelievably onerous development costs placed on builders and developers. The end result is stratospheric prices.

Initiatives like “head taxes” end up driving out employers, their employees and all of the related industries major companies employ.

What could be some other solutions?

  • Ease the restrictions placed on condo developers
  • Repeal and replace the Growth Management Act
  • Expand and change the urban growth boundaries

California’s State Energy Commission is expected to approve new energy standards requiring solar panels on the roofs of most new homes, condos and apartment buildings from 2020 onward. This will make California the first state to have a solar panel requirement. While this would increase construction costs $25K – $35K, it would also give the builders “compliance credits” to help offset some of this. Homeowners will benefit by saving up to $60K in operating costs from the energy produced over the equipment’s expected lifespan of 25 years.

We have seen solar technology utilized more and more in Western Washington home building as well. Many builders are now offering solar as an option and some are even making it standard. In short, we’re moving even closer to having a solar component as the norm. Usually we are not too far behind California when it comes to these types of shifts.

Job growth and inward migration are two key factors we often look to when measuring the strength of our housing market. So, where are we in the big picture?

Recently the Bureau of Labor Statistics released their 2017 report of The Fastest Cities for Job Growth in 2017. While Seattle Metro settles in at #11 for year-over-year change, it’s #3 when you look at areas cracking 2M jobs. When combined with Seattle’s 1.9% wage growth, up over the national average of 1%, we can see the pretty, pretty picture.

So which jobs saw the biggest change in growth over the last year? Surprisingly, “the growth is spread across the spectrum,” according to the PI who recently released an article showing the 10 biggest winners and losers. In other words, it’s not just in one industry (like tech) influenced, which should make you feel good about regional stability.

Last week the Seattle City Council passed new parking reforms in an effort to reduce in-city traffic and carbon emissions. Under the past requirement, a developer did not have to include off-street parking in areas deemed to have “Frequent Transit Service”. The definition of what this means has been updated so now even more areas are included.

In addition, landlords can now offer their unused parking “unbundled” from a unit to people who aren’t tenants or work within the building. This should help to balance the parking oversupply and demand, in theory.

Chart  provided by Kiro 7

The number of spots per unit has already been steadily dropping from an average of 1.5 parking spots per new unit in 2004 to 0.6 last year, so the move is not too shocking. It will be interesting to see how the developers react to this new change.

Over here at TeamBuilder worldwide headquarters, we’re not sure what this entirely means. I can hear Hurme yelling from his office about the Law of Unintended Consequences. Affordability is an issue, for sure, and I don’t think this action solves it in any real substantiative way. Easing restrictions on zoning and repealing the Growth (un)Management Act – I can get behind that.

 

 

Count how many times in the next few weeks you hear or see the line, “Spring Has Sprung”. I’m not sure if any phrase is more overused this time of year and it makes me cringe. One thing that doesn’t make me cringe, however, is a positive sales forecast. You might say it gives me a spring in my step (that’s public enemy #2, by the way).

According to the NWMLS press release, we’re looking good heading into the big season. Despite the changing tax laws and climbing interest rates, sales have remained strong. Sure, pending sales are down a bit from last year because of lack of inventory, but new listings, closed sales, and selling prices all went up.

The press release goes on to talk about the effect of the surging job market, buyer sentiment and the role Kitsap is playing.

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Last year at PCBC we learned about of homes being 3D printed in 24 hours.  We were shown some photos, but now we get to see a video of the process and it’s pretty amazing.

ICON and housing non-profit New Story out of Austin, Texas have unveiled a 650 sqft. home consisting of a living room, kitchen, bedroom, bathroom and a shaded porch.  It can be completely built from nothing in less than 24 hours!  The cost you may ask? That’s less than $10K in the US.

The companies are currently planning a 100-home community in El Salvador providing a safe and affordable housing alternative for people in need.  Right now they are raising $600,000 to fund the planned community.  Construction will begin later in 2018 and families are expected to be moving in the 3rd quarter of 2019.

Donors can fully fund a home for only $4,000, which seems incredible considering what this will mean for the families to finally have their own place. I’m loving this!!

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We finally became fed up with a certain someone and kicked him out. So, I’m completely taking over this week. You’re welcome.

ANYWAY let’s get started!

As you will soon notice, if you haven’t already, the theme this week is all about change. As more and more people move here for various reasons (Amazon), we have to try to stay ahead of what this means for housing. The majority are young people at an early point in their careers who are unable to afford their own place despite having good jobs. This could open up some serious opportunities for forward-thinking builders.

Since it’s my show this week, I’m going to throw out a few of my own insane ideas:

  • Tiny Homes have been a popular trend for a while now, but we’ve yet to see a Tiny Home master-planned community here with the full amenities of other communities. Attempts throughout the country have been met with a number of zoning issues, but maybe the right visionary could come in and make an argument for these efficient, affordable neighborhoods.
  • Can homes be designed more effectively to be a source of income for their owners and offset some of the cost? Could options be added to make a home more Airbnb friendly or create more functional private spaces for renters within a single home space?
  • The National Building Museum has an interesting exhibit running right now exploring some new types of housing and innovations including “The Open House.” Their Resource Guide is a fascinating read or you can go to their website.

I may be crazy, but I have to believe some of these ideas will become commonplace in just a few short years. What are your thoughts?

Facebook has recently changed the way it functions requiring agents to directly interact in a more personal way and provide original content if they want to be noticed. It’s all in an effort to clean up the “spam bin” most people’s News Feeds have become.

Inman has 10 Facebook features you may not be aware of to help you brave this new environment and thrive in it. Here are a few in particular that stood out to me as especially helpful.

Sendible allows you to preset messages to clients and your circle. Never miss an important follow-up opportunity.

Facebook 360 now lets you add 360-degree pictures and video for another way to showcase a home or event.

Olympia is currently one of five test cities nationwide to be testing the Today In app function, which is intended to provide more locally relevant news and information to users. If you have a hard time thinking about how to start a conversation, this could be a good place to start.

Who knows, maybe one of these could spark a whole new strategy for you.