Local Housing Oversupply Finally Shrinks Slightly in 2012

It’s been two years since we last took a look at the local housing oversupply. This week the Washington State Office of Financial Management released their 2012 population and housing supply estimates, so let’s update those charts.

Here’s an updated chart of housing supply (total housing units) and demand (total households) for the 3-county Puget Sound region, indexed to 2000:

Puget Sound County Housing Supply & Demand

2011 to 2012 was the first year since 2006 that more households were added to the three-county region than new housing units. King County saw 2,104 more new households than housing units, Snohomish had 65 more, and Pierce had 504 more, for a total of 2,673 more households added to the area than new housing units.

Here’s a look at the total number of households and housing units added in each county since 2000:

Puget Sound County Housing Supply & Demand

Across King, Snohomish, and Pierce counties, a total of 186,949 new households have been added since 2000. During the same time, 226,211 new housing units have been built, amounting to an oversupply of 39,262 housing units. This is down from a peak oversupply of 41,935 last year.

Here’s a look at the raw number of housing units and households added to the region each year:

Puget Sound County Housing Supply & Demand

2006 slightly beat out 2012, eating into the oversupply to the tune of 2,708 more households than housing units.

Here’s another look at the numbers, in terms of housing occupancy.

Puget Sound County Housing Occupancy

All three counties have seen occupancy rates increase off their bottoms in 2012, but are still quite a bit below where they were in 2000.

Of course, all counties are not created equal. Hit the jump for the individual supply and demand breakdowns for King, Snohomish, and Pierce Counties.

Here’s the year-by-year breakdown for King:

King County Housing Supply & Demand

King County has added 98,941 households and 119,726 housing units over the past tweleve years, for a total oversupply of 20,785 housing units. The peak last year was an oversupply of 22,889 housing units.

Here’s the year-by-year for Snohomish:

Snohomish County Housing Supply & Demand

Snohomish has added 43,079 households and 54,387 housing units since 2000, adding up to an excess of 11,308. The peak in Snohomish last year was slightly higher at 11,373.

And here’s Pierce:

Pierce County Housing Supply & Demand

Meanwhile, down in Pierce County, 39,881 households and 48,315 housing units have been added since 2000, bringing the oversupply there to 8,434. The peak in Pierce actually came in 2010 at 8,434.

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

15 comments:

  1. 1
    Justin Vander Pol says:

    Tim, a question. Is there an occupancy rate that is considered to be “full occupancy” by economists and experts? Much like 4% unemployment is considered to be full employment. This would help us understand the long term trends a bit better.

  2. 2
    ess says:

    “Of course, all counties are not created equal”

    And I would assume that not all areas in each county are not created equally either. For example, I would naturally assume that these figures are different in each county depending on how close the housing is to population and job centers.

    But all in all, good news – another indication that there will be upward pressure on prices on both purchased and rental housing in the near future. Now if we can just get un and underemployment down – things will really take off

  3. 3
    David Losh says:

    Over Supply?

    What about the Slim Inventory?

    Yes, I read the Excel print outs, yes I get it, but of course I have an opinion about this.

  4. 4
    whatsmyname says:

    My friends at Altos Research can’t understand how the oversupply can be shrinking while the inventory is going up!

  5. 5

    By ess @ 2:

    Now if we can just get un and underemployment down – things will really take off

    Help is on the way. The Supreme Court just ruled that you can be taxed for not doing things. So we’ll just tax people for not being employed. That will motivate them! ;-)

  6. 6
    ess says:

    RE: Kary L. Krismer @ 5

    It is those penumbras we read about in Griswold v.Conn

  7. 7
    David Losh says:

    In 2009, 2010 apartment permits were granted for thousands of units all to come on the market at roughly the same time, which is this Summer, and Fall.

    What you are missing is that we are now seeing that influx of new hires for Amazon.

    We have jobs here that other parts of the country lack.

    I’d like to know how many people are being hired as contractors rather than employees. I’d also like to know what the benefits packages are, and if they include relocation.

    What I think is that more people are coming here on what is a temporary basis, and apartments are making a lot more sense.

    Another thing is the land use codes that allow for density that have been largely ignored until this last bubble. When we tear down a duplex we can build four town houses. With apartments we can take neighborhood commercial and turn it into a hundred units.

    It looks to me like we are just getting started with the over supply.

    As far as single family construction there are plenty of spot lots right now that have tear downs sitting on them. With new green building codes we can throw up a house in about six months, in some cases three.

    We should be talking about permits pulled, and occupancy.

  8. 8
    Rumpole says:

    RE: Kary L. Krismer @ 5

    My wife and I pay a higher tax rate because we don’t have children, but that hasn’t motivated us to have any.

  9. 9

    RE: Rumpole @ 8 – First, it was a joke. Second, tax benefits will motivate some but not others. Often those who are motivated do so when it really doesn’t make much sense. The old saying is some people would flush $100 down the toilet to save $30 on their taxes. Having a child to get an extra deduction would clearly fall into that type of thinking.

    But as to the topic of the decision, I was initially relieved because the court didn’t expand the powers under the Commerce Clause. The problem with doing that would be there’s no real way to limit such a holding that makes any sense, and the federal government would have been given power to regulate almost anything.

    I’m not so sure though that we didn’t accomplish the same thing through the back door. How are these two things really different:

    1. “You cannot force people to do this using the Commerce Clause, but if they don’t you can tax them.”
    2. “You can force people to do this using the Commerce Clause, and if they don’t you can penalize them.”

    I suspect Congress will start taking advantage of that power in more and more ways, and that the issue will again come before the Court and be reconsidered.

    On the other hand, Congress could have just created a new tax to pay for the Medicare portion of the bill, and then given everyone a deduction for buying health insurance, including somehow insurance paid for by the employer. That would have lead to the same result without the same constitutional concerns.

    BTW, I still haven’t read anything other than the main opinion, so I don’t know what position the dissent took on the tax issue.

  10. 10

    More SWE Tanks on the Street?

    Or just the pragmatic news for our near future and Seattle incomes reduced with more taxesand federal aid mitigations, that home price decline bottom callers mask over incorrectly?

    “….Now that Congress has extended the president’s requested Payroll Tax Holiday, America may want to spend it while they got it. Without significant tax code changes, in 2013, America is scheduled to get hit with what would be the largest tax increase in our history….”

    http://www.policymic.com/articles/4451/when-the-payroll-tax-holiday-ends-in-2013-taxes-will-go-through-the-roof

    More printing debt money to keep us afloat? Perhaps not:

    “…Boehner, a Republican, said last week that he will insist that spending cuts exceed any increase to the debt ceiling when the federal government approaches its borrowing limit — likely at the end of this year…”

    http://www.boston.com/politicalintelligence/2012/05/20/house-speaker-john-boehner-stands-hard-line-debt-ceiling-democrats-call-his-ultimatum-irresponsible/koN18JHGoSPmti4HE5YvAP/story.html

    How about health insurance costs going up since Obamacare took root? Even those of you that have employee health insurance:

    “… Employers will pass on cost increases primarily through higher employee premium contributions…”

    http://abcnews.go.com/Business/employee-health-insurance-cost-rising/story?id=14706031

    But not to worry, when/if more people are insured by 2014….that should stop the cost hike spikes biting our pay checks? Time will tell, but don’t assume anything in this witches brew.

  11. 11

    By softwarengineer @ 10:

    But not to worry, when/if more people are insured by 2014….that should stop the cost hike spikes biting our pay checks? Time will tell, but don’t assume anything in this witches brew.

    Not sure if there’s sarcasm there, and if so, where it is, but insurance is inflationary. 2014 will not be good for those who have to pay for health insurance (employers and self-employed).

  12. 12
    Lo Ball Jones says:

    While visiting Fort Collins, I noted several developments where they had constructed complete “towns” made up of wooden frame, and closely packed houses, similar to Seattle’s neighborhoods of Craftsman homes.

    http://goo.gl/maps/XokR

    This is exactly what I have always thought the general market has needed…something in between vertically dense “cities” and spread out disassociated communities.

    It’s like living in a Seattle neighborhood…but with 90 weather and abundant sunshine!

  13. 13
    redmondjp says:

    By Lo Ball Jones @ 12:

    While visiting Fort Collins, I noted several developments where they had constructed complete “towns” made up of wooden frame, and closely packed houses, similar to Seattle’s neighborhoods of Craftsman homes.

    http://goo.gl/maps/XokR

    This is exactly what I have always thought the general market has needed…something in between vertically dense “cities” and spread out disassociated communities.

    It’s like living in a Seattle neighborhood…but with 90 weather and abundant sunshine!

    And on occasions, it’s even hotter than that – you could say smokin’ hot:

    http://www.denverpost.com/wildfires/ci_20972336/colorado-wildfire-high-park-fire-outside-fort-collins

    Now if those closely-packed houses had asbestos shingle siding (fairly common where I grew up, ugly but incredibly long-lasting and of course fireproof) and tile roofs, then I could go along with that.

    Wildfires have been happening for thousands of years. Putting structures with combustible exteriors and roofs in areas prone to wildfires is akin to building in a flood plain IMO . . .

  14. 14
    graygoat says:

    By Kary L. Krismer @ 9:

    RE: Rumpole @ 8
    […snip…]

    But as to the topic of the decision, I was initially relieved because the court didn’t expand the powers under the Commerce Clause. The problem with doing that would be there’s no real way to limit such a holding that makes any sense, and the federal government would have been given power to regulate almost anything.

    I’m not so sure though that we didn’t accomplish the same thing through the back door. How are these two things really different:

    1. “You cannot force people to do this using the Commerce Clause, but if they don’t you can tax them.”
    2. “You can force people to do this using the Commerce Clause, and if they don’t you can penalize them.”

    I suspect Congress will start taking advantage of that power in more and more ways, and that the issue will again come before the Court and be reconsidered.

    […snip…]

    That was my big relief as well, as the Commerce Clause has already been expanded much wider than I think is reasonable.

    To your second point: As I understood the brief, when they were considering whether or not the “penalty” could be seen as a tax one of the criteria they evaluated was the _size_ of the penalty. At ~2% it is apparently considered small enough to be a tax. Presumably, a higher value would be consider a penalty and be unconstitutional, though the actual value that would change from penalty to tax was (purposefully) unclear. One of the cases sited (Drexel Furniture) had a tax of something like 10% and was considered unconstitutional (though there were other circumstances, as well).

    You have to love the Court’s logic:
    1. There are a bunch of restictions on how and when the Court can consider questions about taxes (basically only after you have paid them),
    2. The court rules that the “penalty” is _not_ a tax, so they can consider it, and then
    3. The court rules that the “penalty” _is_ a tax, and thus constitutional.

  15. 15

    […] its population and housing counts, as it did this past week.  A local blog has compiled some helpful charts to illustrate trends in the housing surplus (which has finally begun to diminish after widening for […]

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