Case-Shiller Tiers: Rate of Home Price Growth Slows Slightly

Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:

  • Low Tier: < $328,245 (up 1.0%)
  • Mid Tier: $328,245 – $522,635
  • Hi Tier: > $522,635 (up 0.8%)

First up is the straight graph of the index from January 2000 through August 2016.

Case-Shiller Tiered Index - Seattle

Here’s a zoom-in, showing just the last year:

Case-Shiller Tiered Index - Seattle

All three tiers are up month-over-month, but the rate of increase is slowing for the low and middle tiers.

Between July and August, the low tier increased 0.7 percent, the middle tier rose 0.4 percent, and the high tier was up 0.5 percent.

Here’s a chart of the year-over-year change in the index from January 2003 through August 2016.

Case-Shiller HPI - YOY Change in Seattle Tiers

Year-over-year price growth in August was slightly larger than it was in July for the middle and high tiers, and flat for the low tier. Prices in all three tiers are still double-digits above last year’s levels. Here’s where the tiers sit YOY as of August – Low: +12.4 percent, Med: +11.9 percent, Hi: +10.9 percent.

Lastly, here’s a decline-from-peak graph like the one posted yesterday for the various Case-Shiller markets, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers

Current standing is 2.3 percent below peak for the low tier, 4.4 percent above the 2007 peak for the middle tier, and 9.7 percent above the 2007 peak for the high tier.

(Home Price Indices, Standard & Poor’s, 2016-10-25)


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.

79 comments:

  1. 1

    Eventually, the Top 10% Progressive Elite’s Money Runs Dry Without Employment and/or Savvy Investments

    That’s when sanctuary cities catering to this rich elite see a sales decline without most Millennials buying in without a very high salary job way above the average income.

    That’s when the bubble pops.

    The parents’ basement dwellers [Bernie Supporters] will eat cake then too.

  2. 2
    ess says:

    By softwarengineer @ 1:

    Eventually, the Top 10% Progressive Elite’s Money Runs Dry Without Employment and/or Savvy Investments

    That’s when sanctuary cities catering to this rich elite see a sales decline without most Millennials buying in without a very high salary job way above the average income.

    That’s when the bubble pops.

    The parents’ basement dwellers [Bernie Supporters] will eat cake then too.

    Ah, but research indicates that Millennials REALLY want to buy single family houses -with yards! All that is missing is a trip to the altar.

    http://time.com/money/3551773/millennials-home-buying-marriage/

  3. 3

    Here’s a list of the best and worst RE markets. http://www.cbsnews.com/media/5-best-and-5-worst-u-s-real-estate-markets/2/

    Of course there criteria is suspect, as well as how they define best and worst. But the reason for bringing it up is I’m amazed as some of the low median prices in the “worst” markets. I know Texas has high RE taxes, and that holds down prices. Does anyone know what’s going on in the other three “worst” cities? Is it high taxes or something else?

  4. 4
    Doug says:

    RE: Kary L. Krismer @ 3 – All the worst markets are on the east coast. Might be as simple as that alone.

  5. 5
    ess says:

    By Kary L. Krismer @ 3:

    Here’s a list of the best and worst RE markets. http://www.cbsnews.com/media/5-best-and-5-worst-u-s-real-estate-markets/2/

    Of course there criteria is suspect, as well as how they define best and worst. But the reason for bringing it up is I’m amazed as some of the low median prices in the “worst” markets. I know Texas has high RE taxes, and that holds down prices. Does anyone know what’s going on in the other three “worst” cities? Is it high taxes or something else?

    Perhaps a combination of too many retired folks, younger folks moving away, and a stagnating economy that contributes to a “worst” market list?

    On the other hand, for retirees with an independent income, the price of housing in a place such as Daytona Beach sure is enticing. If housing is indeed 30-50% of one’s expenses, it can be moderated in places such as Daytona Beach.

    Seattle apparently doesn’t have to worry about a stagnating economy or too many retired folks as the latest article of “where in the world will Amazon rent or buy next” appeared in the paper today. Another office building in the area. Note that when Amazon is done expanding – it will have the equivalent of 8 Columbia centers. That is a whole lot of office space, growth and jobs, and demand for housing in the area.

    http://www.seattletimes.com/business/real-estate/amazon-leases-former-tommy-bahama-hq-in-seattle/

  6. 6
    redmondjp says:

    RE: ess @ 5 – Amazon can’t keep on growing forever . . . people said the same thing about Microsoft not so long ago as well. And opening 2000 grocery stores?

    I’d be no more surprised than if Safeway decided to get into the cloud computing business.

  7. 7
    Justme says:

    RE: ess @ 5

    Jesus Murphy, enough with the mindless Amazon cheerleading. Amazon reported earnings today. Not good. Did you see what happened to the stock after hours today? it ended down 5.6% and at one time was down 9%. I’m not sure the usual bullshit initiative announcements and analyst upgrades can save Amazon this time.

    But you can be certain that the bullshitters will be out in force in the next few days.

  8. 8
    ess says:

    By redmondjp @ 6:

    RE: ess @ 5 – Amazon can’t keep on growing forever . . . people said the same thing about Microsoft not so long ago as well. And opening 2000 grocery stores?

    I’d be no more surprised than if Safeway decided to get into the cloud computing business.

    Agreed, but based upon the amount of office space Amazon is marshaling, that company alone will have space for double or more of its current number of employers. Not to mention the spin off jobs each Amazon job produces, as well as related industries that locate in the area because of Amazon and its influence. And it isn’t the infinite growth that determines the health of a city or area, it is the ability of those companies to maintain a strong presence over time, with corresponding employment.

    Microsoft may not be growing its numerical employee base as it once did, but its’ continued healthy operation with well paying jobs insures that the Redmond and area housing market remains strong.

    The criteria for a “worst” real estate market often is where industry and jobs have abandoned the area in question, such as the steel and auto industry. I believe the correlation between “worst” markets and a declining economic base is strong.

    Having experienced Seattle when it was a one horse (airplane) town, and having been impacted by the effects of that one industry suffering significant declines, I believe the best economic scenario is a region that has a diversity of unrelated industries that are all not impacted by the same economic situation. Same theory as maintaining a diversified investment portfolio. I think the Puget Sound area is moving in that direction, which is a good thing.

  9. 9

    By Doug @ 4:

    RE: Kary L. Krismer @ 3 – All the worst markets are on the east coast. Might be as simple as that alone.

    But I thought some of them (but not Buffalo) were thought of as fairly nice cities.

  10. 10

    Those of you opposed to ST3 will be glad to know that the Seattle Times is running a news article making the false claim that the ST3 taxes will be passed on to tenants. That might be true in part of the taxation area, maybe, but it’s very unlikely anywhere within the city limits of Seattle. But the story will get some renters to vote against ST3.

    Does anyone think it’s mere coincidence that the Time’s editorial board today also came out against ST3? It’s too bad news sources let their editorial positions affect their news stories, but they do and this is hardly the only example of that.

  11. 11
    ess says:

    By Kary L. Krismer @ 10:

    Those of you opposed to ST3 will be glad to know that the Seattle Times is running a news article making the false claim that the ST3 taxes will be passed on to tenants. That might be true in part of the taxation area, maybe, but it’s very unlikely anywhere within the city limits of Seattle. But the story will get some renters to vote against ST3.

    Does anyone think it’s mere coincidence that the Time’s editorial board today also came out against ST3? It’s too bad news sources let their editorial positions affect their news stories, but they do and this is hardly the only example of that.

    While landlords don’t pass on tax increases directly to their tenants, the tenants indirectly pay for the taxes through their rent, while the landlords get the tax write off. The same theory that successful corporations don’t pay taxes – their customers do.

    While admitting that the timing of the story may not be impeccable, at least someone somewhere is finally indicating that there are no free lunches ( or to relate to Seattlelites – no free lattes). At least it is a news item that explores the co-relation between tax initiatives and the fact that someone somewhere has to pay the underlying costs when these initiatives pass. Snohomish County is getting into that act – their tax assessments break down the taxes passed by the government and passed by initiatives.

  12. 12

    By ess @ 11:

    By Kary L. Krismer @ 10:

    Those of you opposed to ST3 will be glad to know that the Seattle Times is running a news article making the false claim that the ST3 taxes will be passed on to tenants. That might be true in part of the taxation area, maybe, but it’s very unlikely anywhere within the city limits of Seattle. But the story will get some renters to vote against ST3.

    Does anyone think it’s mere coincidence that the Time’s editorial board today also came out against ST3? It’s too bad news sources let their editorial positions affect their news stories, but they do and this is hardly the only example of that.

    While landlords don’t pass on tax increases directly to their tenants, the tenants indirectly pay for the taxes through their rent, while the landlords get the tax write off.

    That’s like arguing that the buyer of a house indirectly pays the seller’s real estate agent commissions. Technically true, but it doesn’t really get you anywhere. Also, the write off would only save a percentage of the income taxes paid by the landlord.

    Right now in Seattle rents are not driven by cost. They are driven by shortages relative to demand. They will not go up due to changes in taxes, at least not over the short-medium run. Over the long run the taxes might impact the number of new apartment units built, but that is going to be a rather small change. And that long term small change might be countered in Seattle by renters living further out once this project is built.

    BTW, I’ve not researched this project enough to have a position on it one way or the other. I’m just pointing out that the Times article is misleading and the connection of the misleading article to the editorial.

  13. 13
    greg says:

    RE: Kary L. Krismer @ 12

    when you consider the money poured into the YES campaign and the pittance the NO group has managed to scrap up, it has hardly been a fair fight.

    I say thank goodness the Times is putting some weight into it.

  14. 14
    Eastsider says:

    By Kary L. Krismer @ 12:

    That’s like arguing that the buyer of a house indirectly pays the seller’s real estate agent commissions. Technically true, but it doesn’t really get you anywhere. Also, the write off would only save a percentage of the income taxes paid by the landlord.

    Right now in Seattle rents are not driven by cost. They are driven by shortages relative to demand. They will not go up due to changes in taxes, at least not over the short-medium run. Over the long run the taxes might impact the number of new apartment units built, but that is going to be a rather small change. And that long term small change might be countered in Seattle by renters living further out once this project is built.

    Commissions – BOTH buyer and seller of a house pay the real estate agent commissions. I don’t think we need to argue about it. (Did I mention that you have vested interest in commissions? LOL)

    Rent – If I am a landlord, I will pass any tax increase to the tenant. To say that rents are not driven by costs is a big lie. So many tax proposals have been levied against ‘wealthy’ property owners. Now people are complaining of sky high rent. There is a big disconnect here. Such lies are toxic to democracy. Just pick any high tax area where you have no supply-demand issue and compare the rent to a low tax jurisdiction. Econ 101 says rent correlates to taxes.

  15. 15

    By Eastsider @ 14:

    Rent – If I am a landlord, I will pass any tax increase to the tenant. To say that rents are not driven by costs is a big lie. So many tax proposals have been levied against ‘wealthy’ property owners. Now people are complaining of sky high rent. There is a big disconnect here. Such lies are toxic to democracy.

    If you could pass a $100 cost increase along now, why wouldn’t you just increase the rent $100 now regardless of whether the proposal passes? In this rental market in Seattle landlords will charge what the market will bear. They’ve been increasing rents without corresponding increases in costs.

    This is exactly the same as gas tax holidays which didn’t largely work because they were mainly proposed during periods of times when there were shortages. It just allowed the oil companies to make more money and reduced the states’ tax income. If there were any price decreases they were very short lived because the lower prices would quickly result in reduced inventories of gas, and it was the reduced inventories leading to the high prices.

  16. 16

    By Eastsider @ 14:

    Commissions – BOTH buyer and seller of a house pay the real estate agent commissions. I don’t think we need to argue about it. (Did I mention that you have vested interest in commissions? LOL)

    But that wouldn’t have been parallel to the point I was responding to, which was a claim that the tenant pays the tax because they pay the rent.

    The fact that you can make an alternative argument as to who pays the commission just proves my other response to that argument. It doesn’t get you anywhere. You can just as easily argue the buyer pays it, the seller pays it, or they both pay it.

  17. 17
    pfft says:

    By ess @ 11:

    By Kary L. Krismer @ 10:

    Those of you opposed to ST3 will be glad to know that the Seattle Times is running a news article making the false claim that the ST3 taxes will be passed on to tenants. That might be true in part of the taxation area, maybe, but it’s very unlikely anywhere within the city limits of Seattle. But the story will get some renters to vote against ST3.

    Does anyone think it’s mere coincidence that the Time’s editorial board today also came out against ST3? It’s too bad news sources let their editorial positions affect their news stories, but they do and this is hardly the only example of that.

    While landlords don’t pass on tax increases directly to their tenants, the tenants indirectly pay for the taxes through their rent, while the landlords get the tax write off. The same theory that successful corporations don’t pay taxes – their customers do.

    except that rents and prices for goods are a market. just because costs increase that doesn’t mean that you can pass those costs on. remember that great story from Florida about how home prices couldn’t fall because because the price of drywall was going up? spoiler alert, home prices tanked.

  18. 18
    pfft says:

    By Eastsider @ 14:

    By Kary L. Krismer @ 12:

    That’s like arguing that the buyer of a house indirectly pays the seller’s real estate agent commissions. Technically true, but it doesn’t really get you anywhere. Also, the write off would only save a percentage of the income taxes paid by the landlord.

    Right now in Seattle rents are not driven by cost. They are driven by shortages relative to demand. They will not go up due to changes in taxes, at least not over the short-medium run. Over the long run the taxes might impact the number of new apartment units built, but that is going to be a rather small change. And that long term small change might be countered in Seattle by renters living further out once this project is built.

    Commissions – BOTH buyer and seller of a house pay the real estate agent commissions. I don’t think we need to argue about it. (Did I mention that you have vested interest in commissions? LOL)

    Rent – If I am a landlord, I will pass any tax increase to the tenant. To say that rents are not driven by costs is a big lie. So many tax proposals have been levied against ‘wealthy’ property owners. Now people are complaining of sky high rent. There is a big disconnect here. Such lies are toxic to democracy. Just pick any high tax area where you have no supply-demand issue and compare the rent to a low tax jurisdiction. Econ 101 says rent correlates to taxes.

    have you ever heard of margin compression?

  19. 19

    Here’s an article on gas tax holidays–the opposite movement of taxes.

    http://taxfoundation.org/article/temporary-gasoline-tax-holidays-relief-motorists-or-poor-tax-policy

    In general, a 1-cent temporary gas tax holiday will not lead to a 1-cent decrease in retail gas prices unless accompanied by price controls that artificially force down prices. Instead, the actual relief to consumers will often be smaller, making holidays an ineffective way to reduce retail gas prices.

    This is so simple that during the 2008 elections 2 of the 3 major Presidential candidates (Obama, Hillary and McCain) actually understood the issue and were opposed to tax holidays even though that was not a politically popular position.

  20. 20
    ess says:

    By pfft @ 17:

    By ess @ 11:

    By Kary L. Krismer @ 10:

    Those of you opposed to ST3 will be glad to know that the Seattle Times is running a news article making the false claim that the ST3 taxes will be passed on to tenants. That might be true in part of the taxation area, maybe, but it’s very unlikely anywhere within the city limits of Seattle. But the story will get some renters to vote against ST3.

    Does anyone think it’s mere coincidence that the Time’s editorial board today also came out against ST3? It’s too bad news sources let their editorial positions affect their news stories, but they do and this is hardly the only example of that.

    While landlords don’t pass on tax increases directly to their tenants, the tenants indirectly pay for the taxes through their rent, while the landlords get the tax write off. The same theory that successful corporations don’t pay taxes – their customers do.

    except that rents and prices for goods are a market. just because costs increase that doesn’t mean that you can pass those costs on. remember that great story from Florida about how home prices couldn’t fall because because the price of drywall was going up? spoiler alert, home prices tanked.

    Update on Florida market from this week:

    http://realtybiznews.com/home-prices-in-florida-jump-11-3/98735704/

    Singular events, such as drywall tend to take care of themselves in the overall scheme of things.

    If people believe that real estate is a poor investment, or that it is not time to buy, then they should rent. Some folks believe that it is better to purchase a place to live and not have to deal with the uncertainty of increasing rents or possible displacement due to the sale of the underlying property, while understanding that there will be ongoing maintenance issues in the future. And some of those maintenance issues are expensive – it is no fun getting estimates for a new roof, for example.

    Others believe that renting relieves them of the both financial responsibilities of maintaining a house, and the possible decrease of the real estate investment itself. Others will be moving out of the area in a few years, and probably should rent and not buy. Others simply can’t afford to buy, or have other priorities.

    There are no right or wrong answers – everyone has a different situation. All I know is that real estate financed two professional degrees, and it allowed me to walk away from a career that was less than satisfying (and that is that putting it mildly).

    For others – especially those who lost money in real estate investments – they have a different perspective.

    What I do object to is long term employed renters who COULD HAVE afforded to purchase a residence, chose not to, but then demonize others when faced with dramatic increase in rents or displacement. For those folks – they made their choice and they were incorrect. Rather than blaming others – they should accept that they gambled (as most decisions in life are gambles) and they lost, and move on.

  21. 21

    RE: ess @ 20 – The drywall argument reminds me of people blaming real estate agents before 2008 for rising prices, ignoring the fact that half the agents represented buyers and it was the sellers that set price. Those arguments went away when prices started declining. Real estate agents’ control over real estate prices suddenly evaporated!

  22. 22
    ess says:

    By Kary L. Krismer @ 21:

    RE: ess @ 20 – The drywall argument reminds me of people blaming real estate agents before 2008 for rising prices, ignoring the fact that half the agents represented buyers and it was the sellers that set price. Those arguments went away when prices started declining. Real estate agents’ control over real estate prices suddenly evaporated!

    Just a larger trend in society where everything is someone else’s fault, coupled with a tort/legal/ legislative system that in some cases has gotten out of control.

  23. 23
    Eastsider says:

    By Kary L. Krismer @ 15:

    By Eastsider @ 14:

    Rent – If I am a landlord, I will pass any tax increase to the tenant. To say that rents are not driven by costs is a big lie. So many tax proposals have been levied against ‘wealthy’ property owners. Now people are complaining of sky high rent. There is a big disconnect here. Such lies are toxic to democracy.

    If you could pass a $100 cost increase along now, why wouldn’t you just increase the rent $100 now regardless of whether the proposal passes? In this rental market in Seattle landlords will charge what the market will bear. They’ve been increasing rents without corresponding increases in costs.

    This is exactly the same as gas tax holidays which didn’t largely work because they were mainly proposed during periods of times when there were shortages. It just allowed the oil companies to make more money and reduced the states’ tax income. If there were any price decreases they were very short lived because the lower prices would quickly result in reduced inventories of gas, and it was the reduced inventories leading to the high prices.

    I am not going to argue with you in the comment section. I know where it is going… nowhere.

  24. 24

    By ess @ 22:

    Just a larger trend in society where everything is someone else’s fault, coupled with a tort/legal/ legislative system that in some cases has gotten out of control.

    Good transition. I just received an email on this right after I read your post.

    https://www.youtube.com/watch?v=lzr_pc17JvQ&feature=youtu.be&_cldee=a2FyeUBraG91c2VhZ2VudC5jb20%3D&recipientid=contact-a6d36679d15c480c931b053fb3232503-bf550d7ccb554f3f82aec416398bf3df&utm_source=ClickDimensions&utm_medium=email&utm_campaign=Friday%20Video%202016

    I’ve never had great respect for the Attorney General’s office, going back decades, but if anything it’s getting worse.

  25. 25

    RE: Eastsider @ 23 – Apparently setting rents isn’t the only thing you don’t know how to do. If you don’t want to argue a position, no response is required.

  26. 26
    pfft says:

    By ess @ 20:

    By pfft @ 17:

    By ess @ 11:

    By Kary L. Krismer @ 10:

    Those of you opposed to ST3 will be glad to know that the Seattle Times is running a news article making the false claim that the ST3 taxes will be passed on to tenants. That might be true in part of the taxation area, maybe, but it’s very unlikely anywhere within the city limits of Seattle. But the story will get some renters to vote against ST3.

    Does anyone think it’s mere coincidence that the Time’s editorial board today also came out against ST3? It’s too bad news sources let their editorial positions affect their news stories, but they do and this is hardly the only example of that.

    While landlords don’t pass on tax increases directly to their tenants, the tenants indirectly pay for the taxes through their rent, while the landlords get the tax write off. The same theory that successful corporations don’t pay taxes – their customers do.

    except that rents and prices for goods are a market. just because costs increase that doesn’t mean that you can pass those costs on. remember that great story from Florida about how home prices couldn’t fall because because the price of drywall was going up? spoiler alert, home prices tanked.

    Update on Florida market from this week:

    http://realtybiznews.com/home-prices-in-florida-jump-11-3/98735704/

    Singular events, such as drywall tend to take care of themselves in the overall scheme of things.

    If people believe that real estate is a poor investment, or that it is not time to buy, then they should rent. Some folks believe that it is better to purchase a place to live and not have to deal with the uncertainty of increasing rents or possible displacement due to the sale of the underlying property, while understanding that there will be ongoing maintenance issues in the future. And some of those maintenance issues are expensive – it is no fun getting estimates for a new roof, for example.

    Others believe that renting relieves them of the both financial responsibilities of maintaining a house, and the possible decrease of the real estate investment itself. Others will be moving out of the area in a few years, and probably should rent and not buy. Others simply can’t afford to buy, or have other priorities.

    There are no right or wrong answers – everyone has a different situation. All I know is that real estate financed two professional degrees, and it allowed me to walk away from a career that was less than satisfying (and that is that putting it mildly).

    For others – especially those who lost money in real estate investments – they have a different perspective.

    What I do object to is long term employed renters who COULD HAVE afforded to purchase a residence, chose not to, but then demonize others when faced with dramatic increase in rents or displacement. For those folks – they made their choice and they were incorrect. Rather than blaming others – they should accept that they gambled (as most decisions in life are gambles) and they lost, and move on.

    housing policy in SEattle(everywhere really) is heavily weighted against renters.

    heck, mortgage interest deduction heavily subsidizes buyers over renters.

    http://www.cbpp.org/high-income-households-get-four-times-more-housing-benefits-than-low-income-housing

    think about what we did in the post-war period. we paved highways so people could move to the suburbs to their single-family owner occupied homes. then what happened after all that assistance? they passed and still pass laws to make it illegal to build apartments. it’s been happening for so long that many people don’t even flinch when people in the suburbs say they don’t want apartment buildings built because it will detract from the character of the neighborhood.

  27. 27
    pfft says:

    By ess @ 22:

    By Kary L. Krismer @ 21:

    RE: ess @ 20 – The drywall argument reminds me of people blaming real estate agents before 2008 for rising prices, ignoring the fact that half the agents represented buyers and it was the sellers that set price. Those arguments went away when prices started declining. Real estate agents’ control over real estate prices suddenly evaporated!

    Just a larger trend in society where everything is someone else’s fault, coupled with a tort/legal/ legislative system that in some cases has gotten out of control.

    the NAR and many realtors were active participants in promoting home ownership during the bubble. remember david lereah? many were active bubble deniers.

  28. 28

    RE: pfft @ 26 – As were many/most politicians, banks, businesses, etc.

  29. 29
    sleepless says:

    By Kary L. Krismer @ 24:

    By ess @ 22:

    Just a larger trend in society where everything is someone else’s fault, coupled with a tort/legal/ legislative system that in some cases has gotten out of control.

    Good transition. I just received an email on this right after I read your post.

    https://www.youtube.com/watch?v=lzr_pc17JvQ&feature=youtu.be&_cldee=a2FyeUBraG91c2VhZ2VudC5jb20%3D&recipientid=contact-a6d36679d15c480c931b053fb3232503-bf550d7ccb554f3f82aec416398bf3df&utm_source=ClickDimensions&utm_medium=email&utm_campaign=Friday%20Video%202016

    I’ve never had great respect for the Attorney General’s office, going back decades, but if anything it’s getting worse.

    So, if former criminals are good enuf to be renters, why aren’t they good enuf to own guns or pursue employment at the government agencies?

  30. 30
    Blurtman says:

    60 per cent of China’s richest people plan to invest abroad and emigrate in next three years, says survey
    Three American cities – Los Angeles, San Francisco and Seattle – top list of destinations as wealthy look to diversify assets over fears of yuan’s depreciation
    —–
    Many of the nation’s wealthiest residents were looking to invest their money in foreign properties and live abroad in response to the fall in the value of the Chinese yuan and an overheated domestic property market.
    —–
    Los Angles was chosen by 17.8 per cent of the respondents, almost unchanged from last year, followed by 13.2 per cent for San Francisco, 12.8 per cent for Seattle and 11.6 per cent for New York.

    http://www.scmp.com/news/china/money-wealth/article/2041025/60-cent-chinas-richest-people-plan-invest-abroad-and?ref=patrick.net#comments

  31. 31

    RE: Blurtman @ 29 – That will be balanced out by 60% of America’s richest people leaving if Trump is elected. The net loser will be China since very few of those Americans will go to China.

  32. 32

    By sleepless @ 28:

    So, if former criminals are good enuf to be renters, why aren’t they good enuf to own guns or pursue employment at the government agencies?

    First, let me say this isn’t my area of the law at all, but my problem with it isn’t necessary the result it’s the method. If the state wants to have a rule that says landlords have to rent to felons, that should be done by statute, not by the AG picking a property management company and suing it. That just creates a lot of uncertainty, at least until there’s an appellate court decision.

    Beyond that though, this appears to be a situation where the AG is way out on a limb. If you look at the landlord tenant statutes, they clearly contemplate a landlord looking at a prospective tenant’s criminal history.

    (3) “Comprehensive reusable tenant screening report” means a tenant screening report prepared by a consumer reporting agency at the direction of and paid for by the prospective tenant and made available directly to a prospective landlord at no charge, which contains all of the following: (a) A consumer credit report prepared by a consumer reporting agency within the past thirty days; (b) the prospective tenant’s criminal history; (c) the prospective tenant’s eviction history; (d) an employment verification; and (e) the prospective tenant’s address and rental history.
    (4) “Criminal history” means a report containing or summarizing (a) the prospective tenant’s criminal convictions and pending cases, the final disposition of which antedates the report by no more than seven years, and (b) the results of a sex offender registry and United States department of the treasury’s office of foreign assets control search, all based on at least seven years of address history and alias information provided by the prospective tenant or available in the consumer credit report.

    http://app.leg.wa.gov/RCW/default.aspx?cite=59.18&full=true#59.18.030

    If would be rather odd that the legislature would think that a landlord could routinely obtain that information, but not be able to act on it. And more to the point, if they agreed with the AG on this issue they would prohibit a landlord from routinely receiving such information.

    I haven’t seen any local political ads this year. Is the opponent making this an issue?

  33. 33
    boater says:

    RE: Kary L. Krismer @ 31

    I seem to recall hearing a year ago or so that at a federal level HUD determined there was housing discrimination even using what would normally be considered reasonable screening criteria due to the same reasons listed by the AG. THe law is applied unevenly and primarily to the detriment of minorities. It was going to start pushing states to end segregation even where there was no obvious discrimination.

    Anyone else recall that?

  34. 34

    RE: boater @ 32 – I think this is what you remember.

    http://www.sfchronicle.com/business/networth/article/New-HUD-guidance-on-criminal-records-puts-7237897.php

    I would agree with the arrested part. But when you start looking at the types of convictions, that’s more likely to cause issues.

    (BTW, I don’t think Washington landlords have the liability to other tenants for actions of another tenant mentioned in the article, but I’m not certain of that. I only spent a short time trying to find a case.)

  35. 35
    pfft says:

    nobody posted GDP the other day. people used to…
    GDP was up 2.9%

    U.S. ‘finally showing its strength’ in GDP, analysts say
    http://www.marketwatch.com/story/us-finally-showing-its-strength-in-gdp-analysts-say-2016-10-28

    I am sure the excuses will follow…

    remember when obama came into office.

    Carnage continues: 524,000 jobs lost in December
    http://www.marketwatch.com/story/carnage-continues-with-524000-jobs-lost-in-december

  36. 36
    boater says:

    RE: Kary L. Krismer @ 33
    What I recall wasn’t specifically dealing with criminal records but the more general case where you look at a city with full complying anti discrimination laws and active enforcement and yet still shows statistical discrimination. I think it had to do with withholding federal dollars if the states dont do more to combat this. I feel like that’s what might be driving the AG

  37. 37
    Ryan says:

    If ST3 passes, the renter class will greatly benefit, because the map will open up for them as stations come online. So even if the cost was passed through to renters, it’s in their long-term interest to pay it.

    That said, I’m in agreement with Kary on this that cost increases are less tied to rent than “market rate. ” Landlords charge the most they think the market can bear, for the most part. That means I’m maximizing my profit and, yes, increased costs will come alone (either one-time or recurring), but those chip away at my profit, they don’t drive my rental price. No landlord tracks the cost of every expense and adjusts the rent exactly to the YoY change. I mean, some crazy anal type may, but not your typical landlord.

    You’re always capped by the market. Sure, you can play that game of, “moving sucks, I can turn up the rental heat on this tenant, ” but that’s ultimately a losing battle. They’ll bail on you eventually. Tenant changeover is costly and risky. If I have a good tenant who pays on time, that’s worth more than passing along a minor bump in rent.

    Source: I was a landlord for three years and some of my friends are 8+ year landlords.

  38. 38
    Eastsider says:

    By Kary L. Krismer @ 25:

    RE: Eastsider @ 23 – Apparently setting rents isn’t the only thing you don’t know how to do. If you don’t want to argue a position, no response is required.

    I simply don’t have the time to debate with you and pfft. You alone account for over 35% of the comments above.

    Here is an answer from Gene Balk, the FYI Guy, from the Seattle Times today – “Will your rent go up if voters OK Sound Transit 3?”

    http://www.seattletimes.com/seattle-news/data/if-st3-passes-how-much-would-your-rent-go-up/

    I do know what I am talking about…

  39. 39

    RE: Eastsider @ 37 – That’s the article I was referring to. I just didn’t link it or the Times’ editorial I also mentioned. You realize that one of the two entities he sourced was a landlord group, which naturally would want to say things that would lead people to vote against ST3? Not a balanced report at all.

    And no you don’t have a clue what you’re talking about. I would suggest that if you are a landlord you get professional management because you don’t know what you’re doing. You’ll probably make more money even though you give them some of your proceeds. And you’ll likely greatly reduce your legal exposure of being a landlord and also likely gain some liability insurance.

  40. 40

    By boater @ 35:

    I think it had to do with withholding federal dollars if the states dont do more to combat this. I feel like that’s what might be driving the AG

    Well if that’s the case they could have gone the route of proposing legislation or regulations. Actually that’s what they should have done even if that wasn’t the reason. It would have provided some guidance as to what they expect.

    Looking at the AG’s site, they didn’t do a thing to try to educate landlords or management companies on this issue. They just started sending out fake tenants and then serving consent decrees. And that means no one really knows what they want, which is evident in the WR video. The Department of Licensing will actually reach out to various entities when they see an issue, and give advice. And then those entities disburse the information. That works fairly well, and at least at that point I don’t feel bad for the entities that get targeted for later violating policy even when I don’t agree with the policy.

  41. 41

    RE: Eastsider @ 37 – BTW, the largest calculation that the FYI came up with for a monthly cost was under $10 a month.

    Even ignoring a failure to have even a basic understanding of economics, I seriously don’t know how anyone could read that article and conclude that ST3 would cause rents to go up. I wonder how many years it’s been since anyone in Seattle got a rent increase of $10 a month? Even accepting the nonsense in the article, the answer would be no, because it’s a nominal amount of money! And that’s even more true after you factor in that $10 being more like $7 after accounting for the landlord’s taxes, which you would presumably do if you have the misconception that costs drive price.

  42. 42
    Eastsider says:

    RE: Kary L. Krismer @ 38

    Wow, now you account for almost half of the comments (17/40) here.

    I am going to give a simple example to illustrate the tax impact. A simple google on gax tax gives us the following story from USA today –

    http://www.usatoday.com/story/money/2016/02/06/24-7-wallst-state-gas-tax-oil/79834368/

    WA has 2nd highest gas tax (44.5 cents). Gas price: $2.18 (5th highest)
    NJ has 2nd lowest gas tax (14.5 cents). Gas price: $1.70 (18th lowest)

    There is a general correlation between gas tax and gas price. That’s one reason we haven’t seen $.99/gallon gas even when oil prices hit decades low.

    The same thing can be said of corner gas stations vs Costco gas station. The corner gas stations have higher costs and their gas prices will always be higher than Costco’s, even if they are on the same block!

    You are naïve if you think the trolls on this site are smart.

    Here is my public service message – Vote No on ST-3 if you can’t afford higher rent.

  43. 43
    David B. says:

    RE: Eastsider @ 37 – So you think people’s rent will stay the same or go *down* if they vote against ST3? When was the last time rents on average went down in Seattle? What was the local economy doing then?

    Also look up: post hoc, ergo propter hoc.

  44. 44

    RE: Eastsider @ 41 – You’re in over your head arguing economic issues without even a basic understanding of economics. Newsflash. Gas prices are higher in Bellevue than Renton, and they have the same gas tax. And you’re talking about long term pricing, not the ability to pass along a price increase. But nice try. /sarc

    But if you want to talk about changes in tax and gasoline , read this: “In general, a 1-cent temporary gas tax holiday will not lead to a 1-cent decrease in retail gas prices unless accompanied by price controls that artificially force down prices.”

    http://taxfoundation.org/article/temporary-gasoline-tax-holidays-relief-motorists-or-poor-tax-policy

    Now admittedly that’s because gas tax holidays are usually tried during periods of shortage, where the higher price is needed to keep the pumps from running dry. Reduce the gas tax and the same price is needed to keep people from buying too much gas. But that market isn’t all that different than the current rental market. Note I’m not saying landlords can never pass along price increases, but just that it’s not going to happen in the Seattle rental market right now.

    As an aside in 2008, two of the three main Presidential candidates took a position against gas tax holidays (McCain, Obama and Hillary). Not a politically popular position to take, but they took it because they understood the issue. I don’t remember for certain, but I think it was Hillary that favored gas tax holidays. I know it wasn’t Obama.

    Finally, I’m not sure why you’re so obsessed with how much I post. When people respond to my post I usually respond, and they account for all but three of my posts. Also, this is a real estate issue discussing pricing, and at least it’s not some nonsense based on what the graph looked like for the past 3 years. Also, others here have expressed an interest in ST3, although that’s not my motivation to address the issue.

  45. 45

    Make that 4 posts–this article addresses the lack of residential construction downtown. A bit focused on the condo market, but also covers rental.

    http://www.marketwatch.com/story/residential-building-cant-keep-pace-with-seattles-surging-job-market-2016-10-31

  46. 46
    Blurtman says:

    Affirmative action for whitey!

    “A plentiful supply of high-tech jobs, good schools, and overall livability is making Bellevue the magnet for a growing Asian and minority population, according to statistics from the recent census.

    “That growth continues an older trend,” said Richard Morrill, University of Washington professor emeritus of geography. “It consists both of newcomers [high immigration] related to Microsoft especially, and families relocating from Seattle. Believe it or not, parts of Bellevue are lower in real housing costs.”

    Overall, the increase in the number of minorities on the Eastside, especially Bellevue, has been significant, according to demographers. Data from the 2010 census shows a 28 percent increase in minorities in the past decade. Approximately 40 percent of Bellevue’s population is now minority.”

    http://crosscut.com/2011/04/census-shows-bellevues-growing-asian-minority-popu/

  47. 47
    Blurtman says:

    Nearly half of the homes purchased in major cities in Florida are all cash buyers. Cleveland is also seeing nearly half of all home purchases being made with all cash.

    Many cities in Florida have close to half of all home purchases being made by all cash buyers. Cleveland is also seeing a similar trend as well. Investors are aggressively targeting lower priced housing markets to load up on properties. Investors in large numbers pulled away from expensive cities in California over a year ago. Value is being seen in other areas where all cash buying is dominating.

    http://www.doctorhousingbubble.com/all-cash-buying-florida-cleveland-cash-buying-investors-real-estate/

  48. 48
    Eastsider says:

    By David B. @ 42:

    RE: Eastsider @ 37 – So you think people’s rent will stay the same or go *down* if they vote against ST3? When was the last time rents on average went down in Seattle? What was the local economy doing then?

    Also look up: post hoc, ergo propter hoc.

    Everything being equal, no ST-3 means no rent increase. Sure, supply and demand always have an impact on prices. But that does not mean prices have nothing to do with costs. They do!

    A REIT owning multiple apartment buildings in Seattle is not going to absorb the higher property taxes. They will pass on the tax increase to tenants. The same thing happens when gas tax is increased – gas prices go up by exactly the same amount, if not more, immediately.

    A few (purposefully) ignorant people (or more likely ST-3 proponents) are using the supply and demand argument to claim that costs do not matter. This is a big LIE.

  49. 49

    By Eastsider @ 47:

    A REIT owning multiple apartment buildings in Seattle is not going to absorb the higher property taxes. They will pass on the tax increase to tenants. The same thing happens when gas tax is increased – gas prices go up by exactly the same amount, if not more, immediately.

    You have things so backwards it’s incredible. This is the one type of entity that is already likely to be charging the highest rates the markets can allow. They know what they are doing.

    Ignoring the fact that this difference is nominal, as to landlords who change their rates in reaction to ST3 there are two types:

    1. Landlords who were undercharging before, not realizing they were undercharging. They will be able to pass the increase along.
    2. Landlords who were not undercharging before. They will have to roll back the increase because the renters don’t care that the landlord has to pay a tax.

    You remind me of the seller of a house who wants to price it based on the fact that the “need to net $_________ to buy my next house.” Buyers don’t care! Renters don’t either!

    A few (purposefully) ignorant people (or more likely ST-3 proponents) are using the supply and demand argument to claim that costs do not matter. This is a big LIE.

    There are two types of landlords claiming that ST3 will raise rates. The first knows it’s not true and is simply trying to sway votes. The second doesn’t know squat about economics or how to price their rentals.

  50. 50

    Yet another wrongful foreclosure decision not in favor of the debtor/owner.

    http://www.courts.wa.gov/opinions/pdf/738275.pdf

  51. 51
    pfft says:

    By Eastsider @ 41:

    RE: Kary L. Krismer @ 38

    Wow, now you account for almost half of the comments (17/40) here.

    I am going to give a simple example to illustrate the tax impact. A simple google on gax tax gives us the following story from USA today –

    http://www.usatoday.com/story/money/2016/02/06/24-7-wallst-state-gas-tax-oil/79834368/

    WA has 2nd highest gas tax (44.5 cents). Gas price: $2.18 (5th highest)
    NJ has 2nd lowest gas tax (14.5 cents). Gas price: $1.70 (18th lowest)

    There is a general correlation between gas tax and gas price.

    oh really? how do you know that? let’s see, how could we get you to prove that? let’s see…POST YOUR SOURCE!

    LOL!

    The thing is WA my use it to fund their roads. NJ might not and might get revenue for roads elsewhere. they also may pay for lower gas taxes in the form of higher pollution. NJ transit is such a mess I believe they just raised their gas tax. they just had a bad train accident.

  52. 52
    kenmorem says:

    dear kary,

    where does $54,000,000,000 come from?

    will there be additional burden placed on property owners?

    i have several properties and can tell you that rents will be going up.

  53. 53
    jon says:

    Kary’s logic reminds me of the people who believe that inflation does not affect interest rates, because one is faster than the other. I forget which way it is supposed to be, but just try to convince one of those people otherwise.

    An individual landlord cannot raise rent just because their costs changes, but when the costs change for all landlords, the supply curve shifts, the equilibrium point moves, and thus the price changes. There is an elasticity figure that is affected by other factors such as the degree of preference for space, but the price will move.

  54. 54

    By kenmorem @ 51:

    where does $54,000,000,000 come from?

    will there be additional burden placed on property owners?

    It will come from the taxpayers, and in this case those who own real property. I think I’ve already said that when I said this will hurt landlords.

    i have several properties and can tell you that rents will be going up.

    Then why are you waiting? Do you think something needs to happen before you can raise rents? Or do you just not like money that much–you want to limit the amount that’s in your bank account?

    Seriously, I can somewhat understand why some people have the mistaken believe that rising costs will result in rising prices when something is being produced and then sold. Even that’s not true, but I can see why some people think that. But why does anyone think that if a landlord could pass along a cost that they would wait for that cost to go up before raising rents on a property that they already own and are renting? Absent a lease delaying their ability, or maybe they already did a recent rent increase, it makes no sense.

    Do they maybe think tenants will be more understanding if their landlord’s costs go up? They’ll say: “Gee, I know you’ve raised my rent over 10% for each of the past three years even though your costs have not gone up, but hey, your expenses have now gone up, so I’m going to be happy to pay you even more!”

    About the only theory that makes any sense would be that rents would go up because every landlord would try to raise their rents to cover the added cost. They would be effectively reducing the supply at a given price. But that would assume most the landlords are amateurs and don’t know how to set their rents. And again it would also assume they were already pricing too low.

    But anyway, so far we have two people who purport to be landlords who say they will be raising their rents, but can’t say why they haven’t already done it or why they think they need to wait for their costs to go up before they do. They just think costs get passed along to consumers, but cannot explain why. If that were true, no company would ever go bankrupt! They would just pass their increased costs along to the consumer.

  55. 55

    By jon @ 52:

    An individual landlord cannot raise rent just because their costs changes, but when the costs change for all landlords, the supply curve shifts, the equilibrium point moves, and thus the price changes. There is an elasticity figure that is affected by other factors such as the degree of preference for space, but the price will move.

    Why does the supply change? Does ST3 destroy some properties that are being rented? The nominal supply is the same (or possibly slightly lower over the very long term). The only thing that would change is the landlord’s desire to rent for a certain price.

    I covered a possible change in supply due to landlord desires in the second to last paragraph above. It makes no sense. Landlords always desire more money. They don’t need costs to go up to want to maximize their revenues.

    I really want to know why we have two landlords here who don’t already want to maximize their revenues. They apparently use some other factor in setting rent. The only situation I can see that occurring is those who price low for tenant retention. And I’ve already said that those pricing low can pass along a cost.

  56. 56
    Eastsider says:

    Tim,

    It’s time to re-institute the 3-comment policy! Kary is hijacking your blog for his political agenda!

    LMAO

  57. 57
    jon says:

    We can assume that on average landlords are doing the best they can to maximize profit (not revenue) when setting rent. If they had a monopoly then the optimal rent would be much higher than it is. Instead, the landlords need to figure out where on the desirability/price curve they are, and set their prices accordingly. So what determines the collective desirability/price curve? That is a difficult question in a market with a large sunk capital cost, but prices are going to on average be set with a long time horizon because the asset is long lived. At low prices, some units would be uneconomic at the current cost and would be allowed to decay, with the owner taking a loss. At high prices, new units will come in to compete. ST3 coming along will drive away the competition and allow prices to rise without drawing in competition.

  58. 58
    pfft says:

    By jon @ 52:

    Kary’s logic reminds me of the people who believe that inflation does not affect interest rates, because one is faster than the other. I forget which way it is supposed to be, but just try to convince one of those people otherwise.

    An individual landlord cannot raise rent just because their costs changes, but when the costs change for all landlords, the supply curve shifts, the equilibrium point moves, and thus the price changes. There is an elasticity figure that is affected by other factors such as the degree of preference for space, but the price will move.

    dude you just don’t understand margin compression. google it.

  59. 59
    Hugh Dominic says:

    RE: Kary L. Krismer @ 49
    I just read that entire ruling and I don’t know why.

  60. 60
    Hugh Dominic says:

    By Kary L. Krismer @ 54:

    By jon @ 52:Why does the supply change? Does ST3 destroy some properties that are being rented? The nominal supply is the same (or possibly slightly lower over the very long term).

    This was a fascinating discourse and I feel that I must contribute.

    First, let’s dispel the notion that by adding $10 in annual taxes to all properties, that landlords all across the area will right away commensurately raise their rents by $10. That is silly and unrealistic. This sort of thing does increase rents though, and does destroy rental supply, but it does so by working on the margin.

    Across the spectrum of landlords, most are happy with their situation and will absorb the $10. However, a very few are right on the balance between finding another tenant vs. using the property differently; perhaps selling it instead. For some, they will find renting justifiable but only at a higher price. For those unable to secure that, or for those that choose to sell out anyway, their house is taken out of the rental supply. Thus one more renter competes for the remaining supply, pushing each renter to the next-more expensive alternative.

    It may be only a tiny fraction of houses, and the time lag could be several years. But that is the principle of working at the margin. A tiny change causes a tiny impact that ripples across the ecosystem until the costs are absorbed into a new equilibrium.

  61. 61

    By Eastsider @ 55:

    Tim,

    It’s time to re-institute the 3-comment policy! Kary is hijacking your blog for his political agenda!

    LMAO

    The only agenda I have here is pointing out that the press doesn’t understand economic issues and pointing out the connection to the ST article and their editorial. As I mentioned I don’t have a position on ST3.

    You’re the one who hijacked the thread by repeatedly posting claiming my understanding of economics is wrong without ever stating a valid reason why other than a claim that you’re going to capture your $3 a month. Not very convincing, to put it mildly.

    But let me take one more try. Let’s assume you have a problem to solve. You’re either a student or perhaps a property manager. You’re told the solution is to find the best price to ask for a rental coming on the market. Here are the facts:

    Landlord has invested $50,000 of cash into the property and owes $200,000 on which he pays $800 a month in interest. He also pays $250 a month in taxes and $30 a month for maintenance. How much rent should the landlord charge?

    What’s your answer? You’re the one who thinks that landlord costs are what determine rental rates. What does the landlord charge on those facts?

    When you realize you can’t answer that question maybe you’ll also realize that you’ve been repeatedly told by the press so many times that costs get passed onto consumers that you believe it without question. While there are situations where increased costs can be passed on, they are so few they are practically the exception rather than the rule.

  62. 62
    [troll] says:

    Tm snt m mssg tht rds s fllws:

    “Sm, lk vryn hr, m trd f sng Kry pst hr bcs h s s wrng, s vry wrng. ls ld nd bldng. Bt hs mny dctrs clld m p nd tld m tht Kry hs dmnt, rctl dysfnctn, nd gnrl ld mn brth.

    Th nblty t thnk chrntly nd pls hs wf s rlly strtng t tk tll n hs ld wthrd, vry dcrpt bdy.

    Pls lt hm pst hs rmblngs n yr blg, t s th thrpy h nds. knw tht t my rn yr blg t hv sch trbld mn pst, bt w wll rmbrs y $500 pr cmmnt tht Kry mks.

    W tld hm t t lst rmv hs vtr s n n hs t s hs gly fc bt h rfss. Bcs f ths w wll wrd y $23,000/yr.

    N n shld hv t s tht n rl lf, r nln.

    Bst Wshs,

    Dctrs Mgndff, Krystll, Smth”

    Sd.

    ~Sm Hntr

  63. 63

    We have a pretty good chance of the real NWMLS active listing number going under 3,000 for the beginning of the month. Lots of pendings in the last 7 days relative to new listings.

  64. 64
    greg says:

    RE: Kary L. Krismer @ 58

    Kary you are a stubborn man child.

    increased costs are ALWAYS reflected one way or another.

    sometimes the margin just gets compressed, sometimes the asset loses value , sometimes the cost is directly passed on to the consumer. But mostly increases are reflected in a mix of all of those and more.

    In the case of King county rentals you may in fact see costs passed on to the consumer due to the lack of supply and the high profile nature of this particular cost. If nothing else we will see a large number of landlords review what they are charging and making a more vigorous examination of the market as a whole. Some may even see it as a time to consider exiting the market (big tax hikes often suggest “peaks”).

    New supply might well mitigate it, but not in the short term. the improved access to transit will not be realized during many of our lifetimes and is thus moot. In short someone will have to actually pay the monies, and the most likely candidate in a hot market is the end user not the asset holder.

    We all get the basic premise that prices are decided by the ‘market” and not the landlord, but right now the landlords have all the advantages and are likely willing to push rates given this “justification”. Sure the market may one day decide rental rates in King county are far too high, but based on the information you , me and everyone else has today, that day is a today, nor tomorrow.

    The idea that landlords will simply absorb their share of the 54 billion is as absurd as your never ending need to prove yourself on a internet forum.

  65. 65

    RE: greg @ 64 – Not a single explanation there of how the cost gets passed along if the landlords are already pricing to maximize revenue (which presumably most are), or a single response to any of my arguments, with this one exception: ” If nothing else we will see a large number of landlords review what they are charging and making a more vigorous examination of the market as a whole.” So yes, if the new tax causes a landlord look at what they are charging and realizes they are charging too little they will raise rents. The amount they raise the rents would probably have zero correlation to the new taxes, unless by coincidence.

  66. 66
    David B. says:

    Increased costs are most definitely *not* always passed on to the customer! Anyone who asserts so has no understanding how price elasticity of demand works.

    https://en.wikipedia.org/wiki/Price_elasticity_of_demand

    In brief, unless a good or service is completely inelastic, attempting to pass on *all* the cost will result in demand going down enough that the decrease in the number of transactions will result in more lost profits to the seller than the decrease in profit per transaction would have should the seller decided to eat at least part of the cost.

    The profit motive *itself* will therefore motivate sellers to choose to eat some of the cost. All of it will *not* just be passed on to the customer.

  67. 67
    jon says:

    Just for fun, there is actually way for more than $10/mo to be passed on to renters because of a $10/mo tax.

    An individual landlord cannot just raise prices on their own, because renters will go to the competition. However, if all landlords costs are going up by the same amount, then they all can raise rents because renters have nowhere else to go, subject to the elasticity of demand (e.g. getting a roommate). But elasticity can be negative. In this case, rents going up could be enough to drive out the riff-raff (they can ride the train after all). The perceived value of the apartments with the riff-raff gone could be sufficiently higher such that people who were staying safe in the suburbs decide move into the city, and drive demand up.

  68. 68
    uwp says:

    By Kary L. Krismer @ 63:

    We have a pretty good chance of the real NWMLS active listing number going under 3,000 for the beginning of the month. Lots of pendings in the last 7 days relative to new listings.

    This looks like it is going to be worse inventory-wise than last year, yes?

    Re: rental pricing… Who would have thought the idea that rental rates are set by the market is a controversial theory?

  69. 69
    Blurtman says:

    What will a possible Trump presidency do to RE? Will there be a perception that rates are going to go up? Will Chinese buyers evaporate? Will emigration drive up foreign RE prices? Canada? Mexico? Paraguay?

    It looks like Hillary may be in real trouble. The recent leaked Podesta e-mails seem to illustrate intent to hinder an investigation.

  70. 70
    Sleepless says:

    Katy’s logic is flawed because he assumes that taxes will affect individual landlords. If it was the case, then yes, I agree, individual landlords would not raise rents. But when tax affects everyone, it is a completely different story. Think of a min wage. It is like claiming that min wage increase does not translate into prices increase when it has been proven it always does.

  71. 71
    boater says:

    RE: Kary L. Krismer @ 55
    They are possibly maximize something other that revenue. I know my house rents for under market but i have a tenant who does repairs, calls professionals I’ve selected and generally makes renting for me as simple as collecting a check from the mailbox. Could i make more for a little more work? Definitely. Do i like not having to worry, not needing to look for a new tenant every year or so, not worrying about damage? Yes.

    I’ve semi optimized for max dollar per unit work on my part. But I’m not 100% sure I’m maximized i just don’t care enough to put it to the test.

  72. 72
    ess says:

    By kenmorem @ 52:

    dear kary,

    where does $54,000,000,000 come from?

    will there be additional burden placed on property owners?

    i have several properties and can tell you that rents will be going up.

    Ken

    Another interesting matter is that most renters have no idea of what is happening within their own communities. They have no concept of who their local city or county council members are, what their taxing policies are, what the proposed increases in taxes are, and what local initiates are on the ballot. Unfortunately, renters don’t care, which really impacts their expenses in a number of ways.

    Anyone look at the taxes for water, sewer and other utilities? While everyone is bemoaning less than progressive taxes for the poor, the cost of those local taxes, especially to those of modest income is really expensive. Everyone uses approximately the same amount of water and sewage. Local jurisdictions view them as cash cows to fund all sorts of local governmental activities. Need more money for this or that – just sock it to the rate payers.

    Local city or county initiatives are the same. Someone has to pay for those initiatives, and the tenant is not immune from those expenses. Tenants often relocate on a regular basis, and when they move, even those under rented properties that they leave are then re-rented at market rates, as well as the new residence the tenant moves to. Some of those market rates are driven by larger market forces, including but limited to shortages and taxes. Sooner or later the good tenant is going to pay for the taxes via rent when she or he decides to relocate.

    ST3 is such a big deal that it didn’t disappear under the radar as so many of these initiatives and tax increases have over the years. Most of these increases are never really publicized.

    As to the ongoing debate here about raising rents when taxes go up, I would suggest that the aggravation/ care factor of the rental in question goes into the equation of any increase in rent in a housing shortage environment. The good tenant that pays on time, takes care of the place may not face the same increases in rent as the less than desirable tenant. Why lose a good tenant because taxes have increased, when the costs may be much greater with the next less than stellar tenant that occupies the premises? There are often non financial matters that are part of the rental equation, and it isn’t just a financial decision alone.

  73. 73
    greg says:

    RE: Kary L. Krismer @ 65

    Kary, you are a foolish pedant. No amount of shifting ground and hiding in verbiage can make your bogus nonsense any better. In short your BS remains BS.

  74. 74
    formerSeattlite says:

    RE: Sam Hunter @ 62 – Dude, that’s just uncalled for. You can respectfully disagree with someone, as many have shown here.

    Unless you’re a liberal. If you disagree with a liberal, you’re an intolerant, homophobic, deplorable, bigot.

  75. 75

    By Sleepless @ 70:

    Katy’s logic is flawed because he assumes that taxes will affect individual landlords. If it was the case, then yes, I agree, individual landlords would not raise rents. But when tax affects everyone, it is a completely different story. Think of a min wage. It is like claiming that min wage increase does not translate into prices increase when it has been proven it always does.

    At least that is an interesting theory. And I might agree with it if this tax were maybe 100X higher, such that it would have some real effect, getting some to sell their rentals which would then maybe be bought by resident owners.

    But the other difference is minimum wage is usually applied to positions where the employee is making or selling something. So it effectively becomes a part of the cost of producing or selling and thus affects the supply in a negative manner. But with rentals we are dealing with an asset that is not replaced each month or even each lease, so there is effectively no decision of whether to sell or make more or less, particularly where in this market 95% of the landlords are renting well above cost. So the impact on the supply is about as close to zero as you could possibly get in any market. And that means there’s no real effect on price.

  76. 76

    By boater @ 71:

    RE: Kary L. Krismer @ 55
    They are possibly maximize something other that revenue. I know my house rents for under market but i have a tenant who does repairs, calls professionals I’ve selected and generally makes renting for me as simple as collecting a check from the mailbox. Could i make more for a little more work? Definitely. Do i like not having to worry, not needing to look for a new tenant every year or so, not worrying about damage? Yes.

    I’ve semi optimized for max dollar per unit work on my part. But I’m not 100% sure I’m maximized i just don’t care enough to put it to the test.

    I think I already covered that type of situation with landlords who want to retain tenants in post 55. This seems similar, although perhaps with more detail in the rational for not charging the most you can get. But yes, those not already trying to maximize their rents can charge more for ST3, or just because they decide they want to start going to Starbucks every day.

  77. 77

    By uwp @ 68:

    Re: rental pricing… Who would have thought the idea that rental rates are set by the market is a controversial theory?

    Particularly on a site where the issue is largely the price of real property! At least now we know why there are so many opinions on price that make no sense.

    The people posting on this rent issue remind me of sellers who think that what they spent on an improvement is the determining factor in what they should list their property for.

  78. 78
    Blake says:

    RE: Sleepless @ 70
    Re: “It is like claiming that min wage increase does not translate into prices increase when it has been proven it always does.”

    Oh brother… “always?” …. “proven?”
    Them’s strong words… please cite at least one or two sources for this idiotic statement.
    Consider an industry where many of the companies are very efficient and pay all their workers above minimum wage (like the factories my father used to manage) and some competitors still have minimum wage workers. So if the minimum wage increases, that second group could raise their prices… and lose market share and maybe go out of business! But they often cannot… because of MARKETS and competition!
    You think Costco would be upset with increasing minimum wages vs. WalMart?

    Kary’s comment above is spot on:
    “The people posting on this rent issue remind me of sellers who think that what they spent on an improvement is the determining factor in what they should list their property for.”

  79. 79
    Hugh Dominic says:

    By formerSeattlite @ 74:

    Unless you’re a liberal. If you disagree with a liberal, you’re an intolerant, homophobic, deplorable, bigot.

    What kind of racist comment is this? I deplore your intolerance.

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