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Stupid Legislative "Solutions"

Here’s an article that appeared in the Everett Herald a few weeks ago about yet another misguided legislative attempt to solve the “housing crisis.”

One of the bills Nathan Gorton is backing in the Legislature this year sounds like it makes too much sense to do anything but go down in flames.

What he’d like to see passed is a measure that would require cities to do what it takes to build enough homes each year to cover the number of new jobs they’re expected to create. …he’d like communities to provide homes for their own work force because it would stick fewer cars on the freeway for the morning commute.

I suppose if people were robots programmed to live only in the closest available place to where they work, legislation to that effect would indeed “make sense.” However, as some of us are aware, people do not necessarily live in close proximity to their workplace, even if they can. Even the richest man on the planet, who can clearly choose to live anywhere he wants prefers to live with a 5-mile stretch of overcrowded SR-520 between his home and office.

Housing is important to Gorton. He’s the new executive officer for the Snohomish County Camano Association of Realtors based in Everett.

Gorton noted Friday that three years ago, the median price for a home in Snohomish County was $220,000. Now it’s $356,000.

“If you’re a homeowner, it’s a great thing,” he said. “But we think we almost reaching a crisis point.”

Oh we’re reaching a crisis point all right, but not for the reason that home salesman Mr. Gorton is implying. Home prices have experienced such a steep ascent not because of a lack of legislation, but because of fly-by-night lending and pyramid scheme psychology.

Gorton said that from 1993 to 2000, King County added 237,000 jobs and 75,000 homes. Obviously, many of those workers had to look for a home somewhere else. There isn’t a statistic handy, but conventional wisdom tells us that many of those workers bought a home in Snohomish County, where the prices are typically $50,000 less.

“That drives up housing prices outside King County and puts a lot of cars on the road,” said Gorton, noting he’s already hearing of Seattle workers who are buying homes in Whatcom County and making a very long commute each day.

Because there are simply no homes left from Seattle all the way to Bellingham. Right. Give me a break.

That brings us back to House Bill 1726.

“It says if you’re going to bring in a lot of jobs, let’s do better with planning where you’ll put those folks,” Gorton said.

He thinks it will help keep home prices down and reduce freeway congestion, which he notes should make it a lot easier for businesses to recruit new employees. And you certainly don’t need to be a business to want to reduce traffic and make it possible for people to buy homes.

Maybe it’s just me, but Mr. Gorton’s comments seem to have the same disingenuous feeling as the It’s A Priority campaign—which incidentally is a project of the Washington Realtors, a group which Mr. Gorton is a member of. Hmm.

P.S. (Check out the latest Google search results for It’s A Priority. I love it.)

(Mike Benbow, Everett Herald, 02.26.2007)

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

20 comments:

  1. 1
    Grivetti says:

    I call 2007 House Bill 1726 the ‘Chumpster Bill’.

    If you really want to solve the housing crisis, put some teeth in legislation that attacks the ARM/no-doc/i.o. lending industry that’s fueled the mania.

    Any bill advertised by the REIC is NOT to the benefit of the consumer. Realtors only make money off the sale of homes, the higher the price the better… affordable housing?

    They could give a rip

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  2. 2
    redmondjp says:

    Speaking of legislative solutions, there’s a good one right in this state which would require new construction and major remodels (where remodeling cost >50% home value) to come with a warranty, a ‘lemon law’ of sorts for the housing market. Makes sense for the largest purchase of one’s life.

    OF COURSE, the builders are fighting it tooth and nail. Which is pretty funny, as if they are doing their job correctly (as they claim they are already), they have nothing to fear by offering a warranty on their work.

    Here is a link to the story as reported yesterday on Komo TV and radio news.

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  3. 3
    Eric D. says:

    Funny how you completely ignored the Southward migration into Pierce County that’s happening as well. There’s going to be a whole lot of condos in Tacoma this summer looking for people to buy them (and most people who live and work in Tacoma can’t afford them).

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  4. 4
    Richard says:

    Ha. I suppose we should have torn down 60,000 homes after the dot-com boeing bust a few years ago – just to keep things in balance.

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  5. 5
    Pegasus says:

    Amazing how the clowns can get the legislature to design a bill around a “crisis” that will do nothing but line their own pockets and that of their friends.

    I think the public would be better served if this bozo would design a bill that dealt with the “crap” that has infiltrated the Seattle area and there are not enough rest rooms to handle the overflow. Must build more outhouses to handle the bullsheet artists.

    Flush when done! Buh-bye Nathan Gorton.

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  6. 6
    David says:

    Hey, more house building and urban density? I don’t see a problem with that.

    Bigger supply == lower bottom.

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  7. 7
    confused says:

    redmondjp-

    All laws/restrictions on builders only penalize the good ones. Bad ones are long gone and don’t care. It makes trial lawyers rich and does NOT help the consumer. Laws are necessary. Are there any cars that have a 10 year defect warranty issued by the state? A house is not a perfect product. It settles. It cracks and eventually it breaks. What are the defined lines of warranty? What should the builder be responsible for? For all ten years? Who is going to decide that? Who is going to pay that bureacracy to decide that? This is a total nightmare.

    I could go on and on and on. Have you heard of the Growth Management Act? Easy money ahs brought out the shoddy workers not the building industry. Bad builders go bankrupt. You don’t need laws.

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  8. 8
    Don Greenup says:

    Increasing density through zoning changes and making a permit as easy to get welfare. I have done plats that take 2 to 3 years to punch through the system. Absurd and THAT adds to housing costs. Its called risk premium…..

    Something also has to be done with property taxes. I agree with you that exotic loans and excess liquidity – easy Al contributed to the ramp up in home prices but restrictions on land and developement are a culprit.

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  9. 9
    Jillayne says:

    I was seated next to Nathan Gorton at a dinner a couple of years ago. I bet Dave Gossett that Nathan was related to Slade and won the bet.
    Nathan is very young.

    Confused:
    Builders ought to offer more than just the standard one year. I blogged about this over on the Seattle PI RE Profs blog. They can add the cost of a better warranty on to the price of the home. If the consumer wants it, there’s no way the builder is going to pay for it. He/she will pass the cost on to the consumer in the form of a slightly higher sales price.

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  10. 10
    Richard says:

    As percentage of the purchase price, cars can get far more abused during the warranty period than a home possibly could.

    Why is a 4 year warranty standard on a car, but rare on a home?

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  11. 11
    Mikhail says:

    I predict that the legislation Nathan, and his like, will be proposing in a couple years will be quite different. Something along the lines of outlawing the sale of properties for less than the 5 year moving average for their area. In fact, maybe there will be calls for a COMPLETE moratorium on building to finally stop the glut…

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  12. 12
    confused says:

    jillayne-

    2 years isn’t uncommon. And most restrcitions/regulations are passed onto the consumer. That is the problem with “affordable housing”. What I am saying is that house is NOT a car. You can warranty a blender or a car. A house is not a perfect good. You are dealing with wood, nails, plater, plastic, metal. There are no corners in a house. It is not square. Do you know what an attorney will say is “deffective”.

    Insurance will go through the roof, those that can get it. And it will all be passed onto the cosumer. The legislation isn’t asking to increase the warranty. It is stating that the builder cover the house for the 10 year duration.

    No one is stopping anyone from getting the ecxtended warranty on a home. You want it for free. The comparison of a car to a home is a bit simplistic.

    I believe builders should build quality products. A warranty never replaces the due diligence a home owner needs to do before buying new construction. I would never buy a Soundbuilt house with a 30 year warranty. And what happens when they don’t call the homeowner back. There are many builders that don’t honor the 1 year warranty.

    I have heard lawsuits over cracks in the pavement. Guess what concrete cracks. We live in teh northwest and its gonna have cracks in it.

    Don’t think it is a magic pill. Any legislation however “good” has its headaches.

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  13. 13
    redmondjp says:

    confused said: A warranty never replaces the due diligence a home owner needs to do before buying new construction. I would never buy a Soundbuilt house with a 30 year warranty.

    OK, so what you are saying is that the purchaser must know ahead of time if they are buying crap or not. Please explain how they are supposed to do this–it’s not very easy to look underneath floors and inside walls when you do a walk-through. And how are you supposed to know if the contractor properly compacted the soil underneath the footings?

    It’s easy to say that it’s the buyers’ responsibility, but it’s not realistic. Were the buyers of 1999-2004 Honda Odyssey minivans supposed to be able to determine that there was a design defect in their automatic transmissions that would cause them to prematurely grenade before they bought them? Are buyers of Windows Vista supposed to go through every line of code in order to check for bugs or security issues? Get real.

    I have been a long-time proponent of smaller government, but as I get older and wiser I can see that there is a delicate balance between the so-called “free-market” and government regulation and/or oversight.

    No gov’t oversight and no morality = Enron and the raping of SW electrical customers for untold millions of dollars. Yeah, free market worked there, didn’t it?

    Too much gov’t regulation = Sound Transit or the military, or [insert your favorite gov’t boondoggle project or dept. here] . . . The other end of the spectrum isn’t pretty either, and screws the public out of just as much money.

    So I’m not saying that the legislation will be perfect, nor that it will not create new and different problems. Just that some degree of protection should be afforded to new homebuyers, for the MOST EXPENSIVE purchase of their entire life–if you get it when you buy a $10K Kia, shouldn’t you also get it when you buy a $1M McMansion?

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  14. 14
    confused says:

    redmondjp-

    First of all, you get one of the best warranties around when you buy a sweater at Nordstroms. Smaller items have smaller costs associated. Comparing a death trap car deffect to a leaky house is a terrible comparison. Why not compare your 401k instead? I don’t think you realize the hard costs you are talking about just becuase someone doesn’t think it is perfect. Which is what you will get when attorneys get a hold of this bill and how it is written.

    I believe in laws and government. You have valid points. And I do believe in accountability on both ends, not only companies but individuals as well.

    I think are differences lie in what the warranty covers. I feel you think if the roof leaks it should be covered and I agree. Unfortunately, I see people try and hold the builder over a barrel to fix the smallest mundane thing. You have home owners that want you to fix their “rat” problem. Buying a house is not like buying a sweater at Nordstroms. It is not a guarantee that all things will be perfect. It just isn’t realty. That is much different than buying a house that shouldn’t fall apart.

    I should note that there are multiple consultants involved in the sale of a new house. It is not like the buyer pulls up and say ,”I want the blue one”. There are inspectors, apprasiers, agents, field managers and realtors for both sides. A bank is giving you the money to buy the house. They don’t want you buying a piece of junk.

    The bad apples are few and far between. I feel this legislation will make all of us pay for their mistakes. Oh and last time I checked a house never killed anyone.

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  15. 15
    redmondjp says:

    Oh and last time I checked a house never killed anyone.

    Ever heard of toxic mold?

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  16. 16
    confused says:

    Well, I stand corrected. The Wicked Witch of the East was killed by a falling house. I totally forgot about that.

    So, what do you want to do hold the mold liable? Are you an attorney?

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  17. 17
    redmondjp says:

    So, what do you want to do hold the mold liable? Are you an attorney?

    No, I’m not.

    Are you a builder of shoddy houses?

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  18. 18
    Jillayne says:

    Hi Confused,

    There’s a builder on the eastside offering a lifetime warranty on homes he builds.

    Obviously this drives up the price. Awesome warranties ARE avail…in the upper end price range.

    A new law will hopefully tip the scales of justice back towards the consumer. Maybe they could compromise. Instead of 10 years, what do you think about 5 years?

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  19. 19
    confused says:

    I work for one.

    I have to ask which builder has a lifetime warranty. That really doesn’t make sense. No offense but do they just replace the roof every 30 years?

    The thing I keep coming back to is affordability. You can make a solid gold toothpick. Lexus cna make a car too quiet. You have to be able to sell it. If you guys are all in the million + range great. I am more an advocate for first time homebuyers actaully being able to buy a home in reality, not on a blog site.

    5 years would seem more reasonable but once again if you are talking structural defects sure. Plumbing and electrical, sure. A creek in the floorboards? no. You would spend every spare moment going back to these houses for 5 years.

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  20. 20
    Jillayne says:

    Hi Confused,

    Thanks for not slamming me. My mistake; I apologize.

    A 10 year warranty.

    http://www.chaffeyhomes.com/insidechaffey/index.cgi?id=61

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