HOUSING AND THE CARBON CONUNDRUM
Happy spring! If you’re looking for something fun to do on a day off, check out the Skagit County Tulip Festival in and around Mt. Vernon, Wash. (pictured). The sights will dazzle your eyes!
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In the spirit of the season and to mark Earth Month, this newsletter examines the question of sustainability and meeting goals to reduce carbon dioxide emissions.
It is frustrating to many that we continue to rely so heavily on gas-powered cars, SUVs and trucks. Although efforts are underway to shift consumer preferences from pump to (electric) plug, the pace of conversion appears sluggish.
Exacerbating the problem is the growing challenge facing less-fortunate households forced to live further and further from job centers.
One of the true, root causes of this carbon/commute conundrum is simple: Too few homes are built where people want to live.
Hard-working, middle-class Americans cannot afford to live today in high-productivity zones such as in cities in King County.
Across Washington, 60% of low-income and 23% of middle-income households are burdened by housing costs, compared to only 6% of high-income households. A full 33% of King County households, or roughly 300K, spend 30% or more a month of their income on housing costs.
Meanwhile, this state’s commute times are higher than the U.S. average; 63% of Washingtonians have a commute of 40+ minutes, compared with 33% across the country. Building more housing in the right places will help reduce average commute times and emissions as individuals spend fewer minutes on the road.
It can be maddening. Even while we live in a country that encourages homeownership, America has fewer dwellings per thousand inhabitants than the European Union.
I mentioned the term “steering” in last month’s newsletter – you know, the illegal act of leading people in one direction or another when buying a home. Well, there is a different type of steering that I am advocating for today.
We need to steer away from a vehicle-dependent lifestyle. To address many people’s insatiable appetite for driving, we must accelerate the switch to electric vehicles. (Did you see what I did there?) Speaking of Europe, major cities – from Porto to Prague – encourage the masses to use public transportation, bikes and walking over the use of vehicles.
Portland – the City of Bridges, for crying out loud! – is working toward reducing the number of parking spaces required in new developments while adding more resources to support walking, cycling and public transport. The goal: reduce the city’s carbon footprint.
Why not us?
Start with urban centers, such as Bellevue and Seattle. Instead of driving a few blocks to the Safeway or Bartell, lace up those sneakers and walk to purchase the necessities. Instead of being a constant chauffeur for the kids, let them bike to soccer practice or at least carpool the little ones whenever possible.
This is the only way to change our collective mindset to reduce pollution – all for a higher quality of life and the betterment of humanity. It’s not too late to change.
Happy Earth Month!
OLYMPIAN SHIFT ON HOUSING
Lawmakers in Olympia, where they are finishing a 3-month session, have delivered bipartisan support on an incredible 22 pieces of housing-related legislation and are seeking the governor’s signature. Some of the most notable of that group:
- Exempting the sale and leaseback of property by a seller from the residential landlord-tenant act when the seller agrees to a written lease of no more than three months at closing.
- Easing rules that limit the construction of accessory dwelling units as well as incentivize the rental of ADUs to low-income households.
- Consolidating the construction-permit process and establishing project-review deadlines.
- Requiring a services agreement of 60 days (negotiable) between home buyers and their broker, similar to existing arrangements with sellers.
- Creating a program and funding to address the history of housing discrimination from racially restrictive real estate covenants – an issue we at John L. Scott Real Estate have been pushing to address for years.
- House Bill 1110 will require most cities, depending on population, to increase density in residential areas with duplex, triplex and fourplex homes where only single-family housing was permitted and even sixplexes within a quarter-mile of transit hubs and light rail stations. A portion of these multifamily homes must be put toward renting or selling affordable housing. The specifics are still being discussed between House and Senate lawmakers (as of April 14). The shortage of both market-rate and affordable housing has helped to keep home prices buoyant, prompting state and local governments to ease zoning restrictions on residential development. The Seattle Times summarized the still-fluid legislation as of late last week.
Our region is at a critical juncture and desperately needs more housing. An editorial in The Times – co-written by chamber of commerce CEOs from Seattle, Snohomish County and Pierce County – put it best when describing the potential consequences:
“We will lose future generations of talent, future innovators and future leaders, as well as much-needed teachers, nurses and entrepreneurs to communities where housing is more affordable if we don’t see progress soon.”
Meantime, lawmakers were addressing how to fund all matters of government. An $8.3B bipartisan House Capital Budget proposal would set a state record for construction funding. Some of the highlights:
- $4.6B in new state bonds
- $3.16B in federal, local and dedicated state funds
- $704M for affordable housing and home upgrades
Then there is Gov. Jay Inslee’s proposal to borrow billions to fund housing construction. If approved by both chambers, voters will get to decide on its fate this November.
Lawmakers had until April 12 to pass legislation in both chambers and now must iron out differences between House and Senate versions before sending the measures to the governor’s desk. The session is scheduled to end on April 23 and we will update you in next month’s newsletter.
BY THE NUMBERS
>> Seattle metro experienced one of the most profitable years on record for home sellers, according to figures compiled by ATTOM Data Solutions. Raw profits on median-priced home sales in 2022 topped $100K in half of all U.S. metros. Leading the way were the California cities of San Jose ($621,000), San Francisco ($473,000) and San Diego ($295,000), with Seattle ($304,063) squeezing in at No. 3. The average national profit margin of $112K represented a 51% return on investment for sellers, up from 45% the previous year.
>> Seattle metro (which includes Everett and Tacoma) experienced a 33% decline in new mortgages between Q3 of 2022 and Q4. That ranks the fifth-highest percentage decline among cities with populations of at least 1M. Honolulu topped the list with a 48% quarterly drop in new mortgage completions, according to ATTOM, with Tampa having the smallest decline among large cities at 15%. Lenders issued 1.5M residential mortgages in Q4, the lowest number since Q1 of 2014.
>> Washington has been selected as the best state to retire in, according to research by Global Residence Index. Measuring seven factors – such as life expectancy, environmental quality and Medicaid spending – the Evergreen State finished at the top. Minnesota and Massachusetts were Nos. 2 and 3. Alabama was last.
>> A review of seasonal residential sales history in the U.S. shows Washington and Wisconsin have the sharpest imbalance of transactions on a typical year. The two northern states average about 36% of annual sales each year in Q2 – the national average is 31% – and only about 16% of sales in Q4. The states with the most consistent sales from quarter to quarter are, unsurprisingly, in warm climes of Hawaii and Florida.
>> Seattle was named the third-best city in the U.S. for digital infrastructure by ProptechOS. The real estate tech company examined 11 areas to determine smart city scores; it looked at broadband internet speeds, tech jobs, electric vehicle charging locations and more. On a 1-100 scale, the Emerald City registered a score of 73.3. Austin, Texas (75.4), and Los Angeles (74.5) topped the list.
>> Seattle has the smallest apartment units on average in the U.S., according to a report from RentCafe. The Emerald City’s new-build apartment units averaged 659 sq. ft. in 2023 – a loss of 30 sq. ft. in the last 10 years. The average size of all apartments in Seattle was 689 sq. ft., tied with San Francisco for the smallest units in the nation. Portland, Ore., and Queens, NY, were tied for second smallest of new-built apartments at 681 sq. ft. Tallahassee, Fla., boasts the most space, with new apartment units averaging 1182 sq. ft.