GIMME SHELTER: AMERICA’S HOUSING PROBLEM WORSENS

This country is struggling – mightily – to put enough roofs over the heads of Americans. This is not one person’s alarmist view. The numbers are powerful as the situation worsens. 

Housing inventory nationwide flipped from oversupply to undersupply about a dozen years ago when consumers and the banking industry began to slowly rebound financially from the Great Recession. We are now experiencing historic shortages.

In March 2023, we had an undersupply of 1.7M homes (for sale and rent combined), according to insights from John Burns Research and Consulting. A year later, the same real estate consultancy estimates the number has expanded to 2.1M, a jump of 24%.

This appears to be a conservative estimate. Other experts have put the figure in the 3M-5M range, particularly when including Americans who are financially forced to live with non-relatives and may be more difficult to track. Many thousands of adults are living with friends and co-workers without attaching their names to a deed or lease.

“We need to talk about it the right way,” said Marci Rossell, a noted economist in the U.S. “Call it ‘shelter,’ call it a ‘roof over people’s heads.’ We need more apartments; we need more everything.”

America’s shortfall is most acute with the most vulnerable, as affordable housing inventory has been shrinking for decades. Builders are trying to catch up and, according to federal officials, there are more housing units under construction today than at any time in the last 50 years. An annual survey released this month by the Federal Reserve Bank of New York said renters put the probability of ever owning a home at 40%, down from 44% last year.

The issue has received the attention of Congress, where a group of lawmakers last week announced a new Bipartisan Congressional Real Estate Caucus, which said it will prioritize the lack of housing affordability and inventory nationwide.

Officials in this Washington estimate the state will need more than 1M new homes by 2044 to meet demand. About 64% of those homes are needed in King, Snohomish, Pierce and Kitsap counties, the state forecasts. That’s thanks to a population growth projection of 1.6M more people – or another two Seattles – in our region by 2050.

Even with aggressive changes to state and local zoning and fewer obstacles for building developers, the highly regarded Urban Institute estimates that by 2044 the Puget Sound region will fall short of demand by 140K homes.

Many residents struggle to find and keep a home that they can afford, accentuated by soaring housing prices since the start of the pandemic in 2020. Researchers for Harvard University’s Joint Center for Housing Studies claim the median price for a single-family home in King and Pierce counties combined was 7.3 times higher than the median household income – a record imbalance.

King is home to about 42% of the state’s affordable housing units and forecasters now believe Washington will need to increase the share to about half of its total supply. Homes considered “affordable” tend to be at or below 80% of median family income levels and only 23,877 units have been constructed across the state since 2020 – about 3.3K shy of the current need.

A survey in March of 700 Seattle voters said affordability is their third-most critical concern in the city, and it’s steadily rising. Their top concerns – homelessness and public safety – are slowly falling.

It’s difficult to know when oversupply will return in the U.S. but, rather sadly, it may require the slow die-off of a generation before that will occur.

Baby Boomers – those born between 1946 and 1964 who total 72M in the U.S. today – may hold the keys (literally and figuratively) to the housing conundrum. They still have a significant impact on various aspects of society, including the housing market, healthcare and the economy while living more independently later in life.

Boomers today are aged 60-78; a full 10,000 of them are reaching age 65 every day. By 2035, they will be between 73 and 91. Data experts mapped out this cohort’s gradual decline – from about 32M in 2022 to 23M in 2035, or approximately 9.2M fewer Boomer households in the U.S., likely freeing up a bundle of housing supply.

The rate of decline is modest for the next few years – a natural rising tide rather than a silver tsunami. It picks up pace in the 2030s.

As we face the challenges of the housing shortage and affordability crisis, it’s clear that we need innovative solutions and a concerted effort from policymakers, builders and communities to address this pressing issue. Government planners in our four-county region have until the end of this year to revise and then implement by mid-2025 their Comprehensive Plans for growth management to provide adequate space for housing, transportation and services (among many other aspects) to all its residents for the next 20 years.

Questions are already being asked over whether revisions to this plan will be enough to fully address the housing crisis. That is particularly a concern in some pockets of the region – such as recent examples in Kenmore and Redmond – where NIMBYism wishes to prevail.

The impact of the housing shortage is profound, but by working together, we can ensure that every American has access to safe, affordable housing. It’s time to take comprehensive action at all levels of government and industry and build a brighter future for all.



SETTLEMENT FOLLOW-UP

A judge has preliminarily approved the $418M antitrust class-action settlement involving sellers’ compensation to brokers/agents in residential real estate sales. News of the settlement and its impact topped last month’s newsletter.

Final details still need to be ironed out, but U.S. District Court Judge Stephen Bough said in late April that the settlement was “fair, reasonable and adequate.”

Bough presided over a trial last year that ended in a $1.8B (yes, with a “B”) verdict against the National Association of Realtors® (NAR). Sellers accused NAR and other defendants of unlawfully inflating compensation paid to agents to bring financially qualified buyers to homes.

Potential members of the class action can send objections or comments about the settlement to the court. The judge has scheduled a follow-up hearing for Nov. 26, when the settlement could be completed, and many of the changes noted in the agreement will take effect on Aug. 17, according to a statement this month from NAR. (Timeline)



BY THE NUMBERS 

>> Homeownership is unaffordable for 73% of Washington families, based on the median-priced home of $640,000. This is from a study released by the Building Industry Association of Washington, which noted that 78% of King County households find homeownership unaffordable.

>> Issaquah is ranked among all U.S. cities at the top of Homebuyer’s list in terms of its share of homes bought by older Millennials. A full 64% of this cohort, aged 35-44, purchased in ZIP code 98029, ranked just ahead of Pleasanton, Calif. Household incomes in Issaquah – the Trailhead City and corporate HQ to Costco – average $435K and the property values are about $2.39M.

>> In total, 308.9K single-family homes and condos in the U.S. were flipped last year, down 29% from 2022 and the largest annual drop since 2008. That’s according to a report from ATTOM Data Solutions, which noted Seattle metro was the second-most active major market (1M+ population) for flipped homes purchased by investors with financing, at 56.1%, behind only San Diego (56.4%).

>> All-cash purchases accounted for 38% of U.S. home sales in 2023, the highest level since 2014. That’s up from 36% of sales in 2022 but far from the peak this century of 45% in 2011, according to ATTOM.

>> The number of people working in downtown Seattle offices is about 52% of the daily foot traffic seen in 2019 – a year before the start of the pandemic. That’s according to March data from the Downtown Seattle Association Revitalization Dashboard.



MAY HOUSING UPDATE

Even after a few weeks of mortgage rate jumps, the Seattle/King County housing market is displaying surprising strength. Every key data point from the Northwest Multiple Listing Service (MLS) gained ground against the previous month – as often happens with the spring housing season taking stride – including the number of new and active listings, homes going under contract and final sales. Prices rose, too, to near-record highs.

We are seeing more homes for sale in submarkets – except for Mercer Island and Woodinville, where active listings are down 30%+ – compared with a year ago. The favorable boost in supply is the result of fewer buyers and sellers compared with most spring seasons. A rare, two-fisted punch of higher prices and interest rates is bruising the market at a time when activity is usually robust. 

King County as a whole is swimming in 30% more listings (3439) and 20% additional homes available at the start of the month (2768) compared with data from a year ago.

Read a detailed assessment of our housing market in my most recent blog post: Housing Data – Including Prices – Jump in Latest Market Review 

Condo prices were wildly mixed in our county last month compared to a year ago. April’s median price was 22% lower in Shoreline while 22% higher in Redmond. Prices in Kirkland surged 38% YoY while they were unchanged in Bellevue.

This graphic – which you can click to expand – is presented every month, rotating among three home groups. Next month, we will look at the combination of single-family, townhome and condo prices by city.



CONDO NEWS

Bellevue’s condo market continues to stand out from the rest. Much talk has been devoted to a twin-tower, luxury condo/hotel project nearing the finish line in Avenue Bellevue. There’s another big story unfolding nearby.

Mari is expected to open its doors this summer for residents in a luxury boutique condo just north of Avenue Bellevue. Mari is a 20-story, 138-unit, mixed-use building with great amenities – 24/7 concierge, top-floor SkyClub lounge and SkyDeck rooftop, private dining area with kitchen, Zen library, fitness center, yoga studio and dedicated areas for the pooch. 

The sales team is offering hard-hat tours and special insights into the interiors and other key aspects surrounding the Bellevue lifestyle. What an opportunity to live in a beautiful city! Contact me to schedule a visit.

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Are you looking to make a statement in your next home? Set your sights about 450 feet into the sky at one of the tallest buildings in Seattle, then add a special feature that no other high-rise homeowner can claim.

The B.C.-based developer of First Light announced it will deploy its construction crane to raise a McLaren Elva from the street into an 1841 sq. ft., 3-bedroom penthouse on the 45th floor of this ultra-luxury condo. Fun fact: the open-roof Elva is a nod to the French “Elle Va,” meaning “she goes.”

Westbank recently conducted a similar piece of fanfare in a new Vancouver high-rise, with the addition of a vintage Porsche within the 58th-floor penthouse at The Butterfly.

About 150 Elva speedsters exist in the world. The V8, twin-turbo, two-door can go 0-60mph in 2.7 seconds – when not parked in a penthouse high atop a gleaming new urban condo. This specially designed British supercar comes with a super price tag – about $1.7M.

Westbank is offering the Elva with the purchase of the last available First Light penthouse. Price: $5.1M ($2770/sq. ft.), though the home is not currently listed on the MLS. The abode also includes a 492 sq. ft. wrap-around balcony as well as a custom chandelier by glass artists John Hogan and Bec Brittain.

First Light stands 48 stories, including a two-level amenity package at the top. A second Elva is planned to be hoisted atop the signature rooftop pool deck.

About three-quarters of the 459 residences are under contract with a target opening late this year. First Light, with its future address of 2000 3rd Avenue, is the last major Seattle condo project in the pipeline.

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We are seeing a boost in sales activity at Insignia Towers, the 698-unit community on the eastern edge of Belltown. The reason, beyond the seasonal spring burst of new listings, may be tied to a recent legal settlement between Insignia’s Homeowners Association and Bosa Development Washington on a litany of building defect claims.

Proceedings have lasted more than two years to help resolve claims of questionable workmanship affecting windows, ventilation and other items. All has apparently been settled before reaching trial, according to the HOA and its building management company. There were no details of the resolution.

This is welcome news for both buyers and sellers, as most lenders will deny mortgage applications on a condo in active litigation. The risks associated with losing a claim could cost an association millions of dollars – and no lender, nor buyer, wishes to be entangled in a financially imperiled HOA.

With the settlement, a wave of new listings hit the market in the past several weeks. As of this writing there are 15 homes on the market after 13 sales so far this year. Another two homes are under contract and should be in the sold column in a matter of days. Only 27 Insignia homes were sold in all of 2023 and 29 the year before.



LUXURY LIVING

You might frown when learning that a home more than a century old is on the market seeking a few million dollars, but age is less relevant when most of the structure has received a shot from the fountain of youth. That is the case for this 4-bedroom, 3.25-bathroom, 3930 sq. ft., 2-story home with basement accessory dwelling unit in North Capitol Hill. The home was reimagined by architect Wittman Estes and developed by DowBuilt. Contemporary meets classic in this well-executed home within the old-growth trees. The abode includes a sauna, spa tub, smart-home technology and is wired for a generator. The listing video is mesmerizing. List price: $3.39M ($864/sq. ft.). Sorry, but last week the home found a buyer and is listed as Pending Inspection.

Let’s jump the lake and visit a trio of Eastside homes, starting with this 4-bed, 4-bath, 4990 sq. ft., 2015-built, 2-story home (with basement) along 63 ft. of Kirkland waterfront. Check out the coffered ceiling across the open-plan kitchen and living area that delivers ample Lake Washington views, the same vista offered from the main bedroom a floor above. And the walls of windows – wow! The estate of George Osborne Jr., founder of Redmond-based Osborne Construction, is selling the home. List: $14.99M ($3005/sq. ft.). 

Down the road to Medina, this manse is magical – a 5-bed, 4.75-bath, 5546 sq. ft., 2-story, carriage-style stunner. Built in 1929, the residence had a complete makeover in 2001 with wonderful features – bedroom fireplace, built-ins, skylights, massive outdoor pool and spa tub. The visionaries behind the upgrade were Scott and Ally Svenson, who went on to found MOD Pizza. List: $10.8M ($1947/sq. ft.).

We conclude this month’s tour with an update on the Wilson home near Meydenbauer Bay in Bellevue. That’s Russell and Ciara Wilson if you weren’t tracking the buzz! A little more than two years ago, the couple put two adjacent properties on the market, seeking some $36M for the pair. A vacant piece of land with 110 ft. of waterfront sold within a month for $9.75M. The larger parcel with the Wilson’s 6-bed, 5.25-bath, 11,104 sq. ft. mansion and 164 ft. of lakefront needed a smidge more than two years to secure a buyer and the property should close in the coming weeks. The listing video showcased the property quite well. List: $24.9M ($2242/sq. ft.), down from the original price of $28M.



What else is happening in and around your Seattle?

Celebrating Norway, May 17
Did you know Seattle celebrates Norway’s heritage every year? It’s true! Ballard, home to the National Nordic Museum, parties every May 17th for Norway’s Constitution Day – and this is the 50th anniversary event in our city. Come and enjoy a traditional luncheon in the museum (12pm) and kid-focused activities and music nearby (from 10am) Plus, enjoy the parade with marching bands, Norwegian costumes and led by Grand Marshall Torleiv Opland, deputy ambassador to the Norwegian Embassy in the U.S. (Anticipated route) 6pm.

Anime Convention, May 18-19
Anime Impulse comes to Seattle for the first time! A popular fixture in California, the colorful and playful event features cosplay, manga, video games, artists, vendors and industry guests. Visit the Seattle Convention Center (705 Pike St.) for fun and excitement. Tickets. 11am-7pm.

University Street Fair, May 18-19
The U District welcomes more than 50,000 people to a massive event that includes food, drink, arts & crafts and plenty of live music. Marking its 53rd year, this is the longest-running street fair in the nation, starting in 1970 as a means to heal a community that was witness to protests and violence tied to the Vietnam War. What a perfect time to hold such a gathering in 2024. Stroll up and down The Ave – which is closed for 10 blocks during the event – and find ideal gifts for yourself or a special friend. Parking can be difficult, so try taking another mode of transportation. Sat., 11am-7pm; Sun. 11am-6pm.

Folklife, May 24-27
Celebrate traditional arts by attending some of the hundreds of dance and musical performances, workshops and panel discussions by contributors from around the world. Northwest Folklife Festival is a Seattle classic, with this year’s theme: Meraki, which blends passion, soul and love to deliver meaningful moments of art. In its 53rd year, the event is a perfect use for the expansive Seattle Center campus. Free. Donations encouraged.

Memorial Day Ceremonies, May 27
Memorial Day is a solemn occasion when the nation comes together to honor and remember the brave men and women who made the ultimate sacrifice while serving in the armed forces. Ceremonies will be held throughout our region:

  • Evergreen Washelli Cemetery (11111 Aurora Ave. N.) in Seattle honors veterans of war with a flag placement at 10am and service at the Doughboy Statue at 11am – an event that started in 1927. (see my video blog post). 
  • Volunteers and family members of the buried are honored at Tahoma National Cemetery in Kent; hand-crafted commemorative tokens are laid at interment locations of the fallen. 9am.
  • Hundreds meet at Library Park in Mill Creek (9am) and Veterans Park in Lynnwood for a remembrance (11am).

Street Band Fest, May 31-June 2
High energy will be on full display at HONK! Fest West. This immersive, family friendly festival dedicated to the activation of public space delivers fun street bands from around the world – on Friday in Georgetown (1205 S. Vale St.), 6pm; Saturday in Columbia City (4721 Rainier Ave. S.), 12pm; and the Central District (201 20th Ave. S.), 12pm, on Sunday. Free.

Special Short Film Festival, June 1-2
Seattle’s Science Fiction + Fantasy Short Film Festival brings together the work of film artists from around the world for premieres, future cult films and cutting-edge cinema – all on Saturday at SIFF Cinema Egyptian (805 E. Pine St.). 3pm. It’s followed by a showcase of the best youth-made films – on Sunday at SIFF Cinema Uptown (511 Queen Anne Ave. N.). 12:30pm.

On Your Bike!, June 8-9
The Eastside will be a bike-riding feast this weekend. The Lake to Lake Bike Ride starts and finishes on Saturday at Robinswood Park Playground (14915 SE 22nd St., Bellevue); the 24-mile ride starts at 9am and the 8-mile event begins at 12:15pm. The Snoqualmie area hosts a full weekend of mountain biking, including ride trails, skills tests, as well as food & drink at the Evergreen Mountain Bike Festival in Raging River State Forest near the Rattlesnake Mountain Trail parking lot (37580 Winery Rd., North Bend). Kids 12 and under are free. Sat., 9am-6pm; Sun., 9am-4pm.

Boats, Boats and More Boats, June 14-16
Tour dozens of classic yachts at Bell Harbor Rendezvous, Bell Harbor Marina (Pier 66, 2203 Alaskan Way, Seattle). Please wear soft-soled shoes. Free. 2pm. Two miles to the northeast, on Saturday and Sunday, enjoy the Classic Workboat Show, featuring tours of classic and modern working boats (tugs, fishing boats, research vessels and others), engine demonstrations, as well as a beer garden. It can be found in and around Lake Union Park (860 Terry Ave. N, Seattle). Free. 10am-4pm.

Events are subject to change. Please check with venues to confirm times and possible health-safety recommendations.



In case you missed it….

We recently completed another April – the first wave of spring (Seattleites might have missed it this year, though!) and a season of renewal. It’s also a time to celebrate our planet and learn to live more sustainably, more responsibly.

My Living the Dream blog spent the month spotlighting topics on living more sustainably. Here is a rundown of the four-part Earth Month series:

Thanks for your support! Please consider me when you or someone you know is looking for help with buying or selling a home. I am here to help!

Will