Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'WA_Realtors'

State Considers Irresponsible Plan to Pre-Distribute $8,000 Tax Credit

By The Tim on April 17th, 2009 at 11:59 AM · 55 Comments

According to a post on Aubrey Cohen’s P-I blog Seattle Real Estate News, State may give buyer credit as temporary loan.

First-time home buyers would get their $8,000 tax credit as a state loan at closing, under a measure the state Senate Ways and Means Committee approved Wednesday night.

The federal government is offering the credit to first-time buyers who buy a home through November, but won’t pay the credit until after buyers file this year’s tax return. Under the new budget amendment, which State Treasurer James McIntire wrote, buyers would get the money as a loan at closing, meaning they could use the money for down payments, then pay it back when they got their tax refund.

As you could probably guess, this is being pushed for by the Washington Realtors and Lennox Scott.

As it is currently executed, the $8,000 first-time homebuyer tax credit is not able to influence the price of homes that are purchased, since it is not received until up to a year after the actual home purchase was made.

If the state starts handing out the $8,000 during the purchase, that money is immediately tied into the house. With homes continuing to depreciate (at an increasing rate), by the time the actual credit is received from the IRS and paid back to the state, the equity will likely be gone. $8,000 down the drain.

In contrast, if the homebuyer is forced to practice the lost art of delayed gratification, when they receive their $8,000 government handout in 2010, they will be able to invest it, maybe buy some furniture, or—here’s a crazy idea—save it.

Also, who knows what the homebuyer’s situation will be by the time they actually file their 2009 taxes next year? What if they end up owing some money, and they don’t get the full $8,000 from the IRS in an actual check? If they pre-used that money to buy a bigger/better house than they otherwise would have been able to, it is unlikely they will have saved much in the interim to be able to pay back the state. Or what if the homeowner loses their job? If they had not pre-spent the $8,000, it could have been used to tide them over for a few months on their shiny new mortgage.

All in all, this is a terrible idea. Shame on the Washington Realtors (the organization, not necessarily the individuals) and Lennox Scott for encouraging more of the same the type of irresponsibility that got us into this mess in the first place.

(Aubrey Cohen, Seattle Real Estate News, 2009.04.17)

→ 55 CommentsCategories: Administrative · News
Tags: , , ,

Gregoire: “The economy is strong. Buy your home.”

By The Tim on January 29th, 2008 at 9:37 AM · 22 Comments

Everybody’s pal Christine Gregoire gave a pep talk to the Washington Realtors last week in which she made some interesting comments.

Gov. Chris Gregoire told about 400 Washington Realtors on Thursday that she has been working to meet goals the group has for transportation, affordable housing, education and quality of life.

Gregoire, who spoke a day after Republican gubernatorial challenger Dino Rossi went before the group, cited a report in Fortune magazine and said the state is a good place to do business. She also offered encouragement for an industry slowed amid recession fears.
…
“The only thing we have to fear is fear itself,” Gregoire said, quoting former President Franklin Roosevelt and referring to national recession fears. “It is a very frustrating time, I know, for you, and it is for me. … I’m struggling to get the message out to Washingtonians. The economy is strong. Buy your home.”

From the Associated Press account of the same meeting:

Addressing the politically powerful Washington Realtors, the Democratic governor said she sometimes wishes people wouldn’t watch the evening news because of all the “doomsday” talk of a home mortgage meltdown and a pending recession.

Gregoire said that in actuality, the state economy has seldom been so strong, with record low unemployment, 222,000 new jobs created in the past three years, and national publications praising the business climate here.

She conceded that the national news is having a psychological effect on home buyers, even though there are relatively few mortgage failures here.

“This is a very frustrating time,” the governor said, adding “Our economy is strong — buy your home. … There is no good reason for a slowing of home purchasing in the state of Washington today.”

Now why do you suppose Mrs. Gregoire would promoting the idea that Washington State residents go out there and throw caution to the wind, ignore the warning signs of declining prices, and jump into that real estate market right now? Obviously one likely reason is the usual pandering of politicians telling people what they want to hear. In this case, the people in question are a room full of “professionals” whose income depends on suckers consumers continuing to buy homes all the way down the declining price slope.

I think there may be another reason though. I think Mrs. Gregoire may really be on the Realtors’ side here, not just talking the talk. Here’s a story that appeared in yesterday’s P-I… (emphasis mine)

Gov. Chris Gregoire and leading Democrats in the House and Senate have reached one early agreement in this year’s budget negotiations: It’s time for a reality check.

Anticipating a bleak revenue forecast, they’ve agreed to start looking for places to trim the $33 billion budget they passed last year. They say they want to have their priorities in order in case the slowing economy forces them to find efficiencies or even cut programs altogether.
…
Gone are the halcyon days of a skyrocketing real estate market and a ballooning economy that had led to back-to-back-to-back upward adjustments in the state’s revenue forecasts.

And gone is the free and easy feeling about spending, the unflinching commitment to “targeted investments” that Democrats have enjoyed for the past three years.
…
Gregoire already has called for frugality this election year and has asked lawmakers to adopt her budget that leaves $1.2 billion unspent.

But her budget also calls for $244 million worth of new spending.

Is it really any surprise that Mrs. Gregoire, who has overseen a 33 percent increase in state spending since taking office (source), would want people to ignore the “doomsday talk” and just buy, buy, buy? What do you suppose has enabled spending to increase by so much? Could it perhaps have been the high-flying home prices and red-hot pace of home sales in 2004-2006 (every one of which puts more money into the state coffers)?

And now Mrs. Gregoire wants us to ignore reality so she and her pals can fund their pet projects. Yeah, that sounds like a great reason to keep this bubble alive. Who’s with me?

(Brad Shannon, The Olympian, 01.25.2008)
(Associated Press, KGW.com, 01.25.2008)
(Chris McGann, Seattle P-I, 01.28.2008)

→ 22 CommentsCategories: News
Tags: , , , , , ,

Absolutely Hilarious!

By The Tim on November 16th, 2007 at 12:16 AM · 27 Comments

Except of course that some people will actually believe it. Not many, but certainly some.

From the Washington Realtors’ “Get The Facts Straight” ad campaign. I’m sure I will post more on these over the weekend, they’re just too hilarious to ignore. Thanks to Doug for pointing out the link to these.

→ 27 CommentsCategories: Features
Tags: , ,

Washington Realtors Spend Big in Olympia

By The Tim on July 3rd, 2007 at 10:08 AM · 17 Comments

Guess what group is the #3 lobbiest in Olympia so far this year (by dollars spent)? If you guessed “the real estate industry” (primarily the Washington Association of Realtors), you are correct. Since January, they have spent 1.85 million dollars to convince your legislature to do… well, I’m not sure what they want them to do.

Lobbyists have plied politicians with nearly $2 million of wining, dining and contributions so far this year. They also fattened their own wallets with $21.8 million in pay and expense money for their efforts to influence state policies and spending.

…

The top spending categories in Washington were much the same as they were in past years, with the real estate and development sector moving up to third-highest spender, compared with eighth-highest last year.

I guess they have a lot of money to burn. So what exactly are they trying to accomplish? Let’s ask a Realtor.

Sam Pace, a Realtor and legislative steering committee member for the Washington Association of Realtors, said that was no accident.

“Here’s the deal. We’ve got education, health care and the Puget Sound Initiative as top-of-mind, front-of-radar-screen issues of the Legislature,” he said. “We needed to get the housing affordability crisis higher on the legislators’ radar screen.”

Okay, so they racheted up their spending to go from 8th-biggest spender to 3rd so they could complain about a “crisis” that they helped create. Great, then what?

Pace said that because housing prices have skyrocketed, only about 2 percent of the homes on the market in King County are affordable to families who are making the median income or less.

“In January there were a total of nine city homes that were available in Seattle that were affordable to a family making the median wage or less,” Pace said.

I’m still missing the part where spending 1.85 million dollars was necessary. You would have to be pretty willfully ignorant not to know that homes have become ridiculously unaffordable in Seattle. What are they really trying to accomplish down there?

The association spent $1.3 million on an ad campaign to raise public awareness as well as its own profile in Olympia. [That is a reference to It's a Priority.]

Pace said it worked.

“We made real progress in helping to elevate the level of debate and the understanding that housing is an issue and there’s something we can do something about for working families,” he said.

I’m not really that much of a political junkie, so I’m having a hard time translating phrases like “elevate the debate” and “the understanding that housing is an issue” into anything meaningful. Seriously, what exactly are they working toward with all that money? Were any specific bills proposed? Have they suggested any alleged solutions to the “crisis”?

I want to hear what specific actions the Washington Realtors would like the legislature to take that they think will somehow magically make housing more affordable. In my experience, government “solutions” to problems like these usually involve pouring money into the demand side of the equation, with subsidies, grants, and loan programs. How they expect to help home buying to become affordable by increasing demand for it is beyond me.

The only government intervention that I can think of that wouldn’t make the problem worse would be to decrease demand by enforcing stricter lending standards. But I’ll bet that isn’t what the Washington Realtors have in mind as they “elevate the debate.” Anyone want to take me up on that wager?

(Chris McGann, Seattle P-I, 07.01.2007)

→ 17 CommentsCategories: Uncategorized
Tags: , ,

Bubble Link Roundup

By The Tim on April 10th, 2007 at 2:24 PM · 41 Comments

There have been a lot of real estate articles in the local dead tree outlets the last few days. It’s time for another link roundup before I get too far behind and forget to mention some of them.

First up, it’s Mark Trahant of the P-I with yet another thoughtful, well-reasoned take on Seattle’s housing market.

What if housing prices decline by 20 percent? That would solve Seattle’s affordability problem, right? Most folks would say this is impossible. The data from last week show that house prices keep increasing no matter what. Our boom continues, just slower and steadier. But both our region and our country have boom and bust cycles as predictable as weather. It’s as much of our history as innovation, military might or baseball. One minute we’re panning gold, the next we’re trying to recoup our investment in those nifty machines that pluck gold dust from stream beds.
…
Just think about what those higher credit standards will require: A significant down payment, good credit and, in Seattle, a high income.

More than likely, what it will really mean is that the supply of homes will grow — and prices, sooner or later, will fall.

On the opposite end of the spectrum, we have the Seattle Times encouraging first-time homebuyers to “learn the fine art of compromise.”

Rolf Johnson and Kerrie Cooley had different jobs, different priorities and different resources, but on their brave hunt for a $250,000 home in the Seattle area they both learned it came down to what they were willing to give up.

Cooley let go of any notion of buying a house or living in downtown Seattle to find the modern, two-bedroom condo she wanted.

Johnson spent more than a year, bumped up his budget and moved farther from work to find the house, property and studio space he craved.

Compromise is definitely the name of the house-hunting game in the Seattle area, especially for first-time buyers who often can’t come close to the $450,000 or so that it costs for a typical single-family house in Seattle and are looking more realistically at prices around $250,000.

Also worth noting is a pair of articles from the P-I and Times reporting on the recent blatherings of Senator Patty Murray. From the P-I:

The lack of affordable housing in Seattle and other places is a “silent epidemic,” U.S. Sen. Patty Murray, D-Wash., told representatives of housing agencies, developers, labor and environmental groups Friday.

“We all need to work together, whatever hats we wear, to start to address this crisis,” Murray, who chairs the Transportation and housing and urban development subcommittee of the Senate Appropriations Committee, said during a housing forum at Seattle’s Opportunity Place.

Some at Friday’s forum want more federal money, while others support incentives or requirements aimed at local developers. Cities and counties need to allow more homes through zoning, some said.

Here’s what the Times had to say about it:

U.S. Sen. Patty Murray, D-Wash., who was visiting Seattle on Friday during a congressional recess, convened the roundtable with representatives of housing agencies, business, Sound Transit, the Puget Sound Educational Service District and social-service agencies to see what she can do at the federal level to help people with low and moderate incomes find affordable housing.
…
Adrienne Quinn, director of Seattle’s Office of Housing, said a recent study by her office reveals that 51 percent of Seattle workers do not live in the city. Households earning between $60,000 and $100,000 a year are the least likely to live within the city limits, she said.

“People are able to buy someplace, but not in the city of Seattle,” Quinn said.

As we all know, you’re less of a person if you rent, so it makes sense that Ms. Murray et. al. would focus only on buying homes when stating that Seattle is in the midst of a “silent epidemic” when it comes to “affordable housing.”

Lastly, here’s the latest paid advertisement masquerading as an opinion piece from a “guest columnist.” Steve Francks just so happens to be the CEO of the Washington Realtors. His editorial is quite transparently nothing more than the latest volley in the Washington Realtors’ It’s A Priority campaign.

Transportation experts are tearing their hair out trying to figure out how to fix Puget Sound gridlock. But if they really want to improve transportation, they should focus on housing.

There are just too many people trying to drive between home and their jobs each day. There isn’t enough tax money in the world to pave our way out of this problem, especially with our population growing by a million each decade.

Instead of trying to deal with the symptoms, I suggest we address the cause: too few affordable home choices near where people work. That’s something that we can fix — with a little help from the Legislature.

Home prices throughout our state continue to rise month after month. Wages, however, do not. The result is a huge gap between typical home prices and what typical families can afford. The Center for Real Estate Research at Washington State University, which tracks the gap with its “Housing Affordability Index,” shows home affordability in Washington at a 15-year low. The gap is particularly wide for first-time home buyers, who, according to the index, could afford the local median-price standard only if they were living in Benton or Adams counties.

What’s a middle-wage family to do? Hit the highway and drive to find an acceptable home you can afford. Between 2000 and 2005, 67,000 people moved from King County to Pierce County. Another 14,720 Pierce residents moved south to Thurston County during the same period.

If I can make some time in the next week or so, I’d like to write essentially a counter-point editorial of my own in response to Mr. Francks’ drivel.

So what other recent local real estate articles have I missed?

(Mark Trahant, Seattle P-I, 04.06.2007)
(Heather Rae Darval, Seattle Times, 04.07.2007)
(Aubrey Cohen, Seattle P-I, 04.06.2007)
(Stuart Eskenazi, Seattle Times, 04.07.2007)
(Steve Francks, Seattle Times, 04.10.2007)

→ 41 CommentsCategories: Uncategorized
Tags: , , , , , , , , ,

What Is "It’s a Priority"?

By The Tim on December 5th, 2006 at 2:54 PM · 11 Comments

I heard an interesting ad on the radio yesterday. It started off with a generic John and Jane Q. Public talking about how bad traffic is, and how terrible it is that they have to live so far from work, etc… Then Mr. Announcer Guy came on and blabbed something about quality of life, the Washington Realtors® (WR), and It’s a Priority (dot com). Here’s the introduction to their website (emphasis theirs):

Welcome to the online headquarters of

It’s a Priority!There’s a housing crisis in Washington State.

The Washington REALTORS® are working to improve our quality of life and ensure there are a variety of home choices available for all Washington residents. That’s why quality of life issues like economic vitality, transportation, good schools, growth management planning and home affordability must be top priorities with Washington’s state and local lawmakers.

Lawmakers must address this crisis and work for solutions. It’s time we make this issue a priority!

Let me stop there for a moment before the rhetoric gets too thick. So, on the surface, this campaign appears to be some kind of good will initiative by the WR, who are gravely concerned about a declining quality of life in our state. I find that I agree with the assertion that the local economy, transportation, and housing affordability are important issues that people should be talking about, but I’m not so sure that running to Daddy Lawmaker is the right solution. Furthermore, I can’t help but wonder whether the WR might just have some kind of ulterior motive here.

Moving on…

Our population is growing but the supply of homes isn’t keeping up.

Whoops! Only three paragraphs in, and they’ve already started with the false assertions. As I pointed out here in October, population growth and shrinking household size was out pacing homebuilding, but since 2000, the pressure has eased considerably. I studied King County specifically, but one would assume that the situation would only be better in most other parts of the state.

Homebuyers have to drive too far to find an affordable home. That’s caused long commutes, traffic jams and sprawl.

Actually, no one is being forced to do anything. Homebuyers drive “too far” because that’s where they find homes that are big enough for their tastes that they can afford. Plus, nobody says you “have to” buy a home in the first place. If you want to trade off a short commute and affordable rent for crawling through traffic from your McMansion with a maxed-out mortgage, that’s your choice.

And home prices have increased by 160 percent in some parts of Washington.

And all the while Realtors® and their ilk were giddily cheering the “vibrant” housing market and the “strong price gains.”

Home ownership is the American Dream. Having a choice of quality, affordable homes is a big part of that Dream, but the ability to choose is slipping away.You know we’ve got a problem when even middle-income citizens, the backbone of our communities — the firefighters, teachers, police officers and nurses — can’t afford to live in the communities they serve. You shouldn’t have to be rich to buy a home.

Unfortunately, poor government planning has limited the supply of homes near where people work. Too many people are frustrated by the lack of home choices, sky-rocketing home costs, and traffic tie-ups.

So suddenly now the WR are concerned that home prices have gone up too much—that middle-income families can’t afford to buy a home? Forgive my cynicism, but I’m having a hard time buying the “we’re so altruistic” story. So what’s really going on here? What is the true motivation for a commercial group whose #1 priority is to sell houses to undertake this public campaign?

The Take Action page encourages readers to contact their friends, legislators, and local newspapers and demand that everyone “make our quality of life a priority.” How delightfully ambiguous! Of course, the real meat is buried in a bunch of boring “policy brief” pdfs that most people are unlikely to ever bother downloading. Well, I read through a few of the policy briefs to try to get a better idea of what the WR are after. Most of the documents are padded with a lot of the same fluff talk about “quality of life” and so forth, but there are some bits that appear to get to the heart of the matter. Here’s a telling quote from the Local Actions pdf:

The idea of performance zoning is to anticipate the actual outcomes of a project instead of just measuring units or lot sizes. For example, a parcel that is zoned for four single family homes, but is in an area that attracts single professionals, could be developed as a cluster of ten cottages. The impact of the cottage residents – primarily singles and couples – will be no more than the impact of the larger homes, which would likely have children.If builders are given tools to propose uses of property that differ from current zoning, they can maximize the value of land and provide more choices in the marketplace. Performance measures that can be employed to evaluate a proposed alternative use include floor-area-ratios, target markets or trip generation.

So at least one of their goals appears to be a loosening of zoning standards, to allow greater density of smaller (i.e., “more affordable”) housing units. I can see why the Realtors® would want that, because they are rapidly running out of suckers eager to buy overpriced McMansions and thirty-plus year-old flipped suburban ramblers.

The overarching theme of the policy briefs seems to be “we need more cheap housing, closer to city centers.” While I agree with that general sentiment, I don’t believe that the root cause of housing unaffordability is “not enough supply,” and I definitely don’t think that the solution is “build a bunch of tiny cheap houses all crammed together.” The whole effort comes across to me as a desperate attempt to keep a steady flow of suckers, er I mean, “buyers” jumping into the overpriced housing market.

But maybe that’s just me.

(Washington Realtors®, It’s A Priority, 2006)
(Washington Realtors®, Quality of Life Research Briefs, 03.2006)

→ 11 CommentsCategories: Uncategorized
Tags: ,