Edited 3/23/19
“Prospective buyers are increasingly having difficulty finding affordable housing to buy.”
According to Zero Hedge, April 30, (https://www.zerohedge.com/news/2018-04-30/pending-home-sales-decline-4th-straight-month-weather-blamed). Housing stocks are down and prices are up. Bad news for first time home buyers, great news here in Kittitas County for builders and second home sellers.
From the article:
“It is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth,” he said.
“Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers — especially first-time buyers — will be left on the sidelines.”
Purchases dropped 5.6 percent in the Northeast, reflecting multiple winter storms…
“As anticipated, the multiple winter storms and unseasonably cold weather contributed to the decrease in contract signings in the Northeast.” As a reminder, economists consider pending sales a leading indicator because they track contract signings.
Further, according to a podcast (God Family and Country) hosted by 15th District Rep David Taylor in a conversation about growth in Yakima County, most of the land prices are driven by the lack of available land. Low availability equals higher prices. The issue is the same here in Kittitas County but with the proximity to the areas that produce home buyers – King, Pierce, Thurston and Snohomish counties – we are seeing the same issues in spades.
It is interesting that this is really a national phenomenon, with website Zero Hedge reporting that nationwide, in nearly 70% of US counties, first time home buyers can not afford the financing to buy a new (or even used) home with their current wage levels.
Prices up supply down, prices have rebounded to the pre-2008 recession levels. There is a basic construct here, and that is that housing prices are a supply and demand issue. Simple. Low supply vs. high demand equals higher prices.
On this site we have made a difference between affordable and attainable housing, the former being the ability to qualify for some level of public assistance, and the latter being the level at which the cost of a home exceeds 30% of yearly income for a two income working family.
The cities have the primary responsibility under the GMA to provide affordable housing. The cities have not fulfilled their responsibilities to provide this kind of housing – otherwise we would not be in this situation, would we?
It makes some kind of sense to have cities provide for affordable housing. People who qualify for those kinds of subsidies usually need urban-type services to support their lives – public transportation, help with utility bills, proximity to other social services – but the question of the attainable housing is left out of the conversation here in Washington State because the rural areas in counties, the areas that usually provide that kind of housing, are prohibited by the Growth Management Act from participating in providing attainable housing.
How? By mandating minimum lot sizes in the range of 5+ acres and placing so many regulatory burdens on builders that only the big guys (DR Horton for instance) can afford the densities that make building that kind of housing a profitable venture. The cost of the land pushes the price of a home beyond most working-class families to be able to afford a ‘house in the country’.
Now let’s be clear here. We’re not ragging on builders. You guys have had a hard 10 years n Kittitas County what with the water moratorium and all, so make it while you can. It will change just like every other boom and bust cycle. But when the high-end market disappears you will want to move into lower price (and lower margin) housing if there is a market there. The problem is that the state has precluded any kind of market in the attainable housing range.
More stats:
- Median level homes are NOT affordable to median wage earners in 68% of the US housing market.
- 41% of the housing market is not LESS affordable than its historical average
- 73% of markets report worsening affordability than a year ago
- Home prices are rising twice as quickly as wages in 83% of all US markets,
And, from CNBC (https://www.cnbc.com/2018/04/26/these-are-the-5-worst-housing-markets-for-millennials.html?recirc=taboolainternal)
“The inventory shortage is widespread, with the number of active listings this spring 8 percent lower compared with a year ago, while list prices are 8 percent higher. In the toughest cities, however, supply is nearly three times lower than in the rest of the nation. What is available is selling faster and bidding wars are pushing prices higher by about 14 percent.”
Duh. Get it together, Legislature. If you truly care about your constituents, get out of the way. If your own vision of Eastern Washington is to provide an environmental paradise for those of you who can afford to live in the aforementioned counties, you have succeeded. Beyond your wildest dreams.
Bruce Coe
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