Tuesday, October 9, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Backyard Cottages

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How backyard cottages could open up Seattle’s housing market

Seattle City Council took a step closer toward legislation that would make “accessory dwelling units” easier to build, helping to offset mortgage costs for Seattle homeowners.
This comes hot on the heels of a study released by the City Council, evaluating “the potential environmental impacts of proposes changes to the City’s Land Use Code intended to remove barriers to the creation of accessory dwelling units (ADUs) in single-family zones.”
In layman’s terms, the city is looking to simplify and streamline the process for homeowners to build ADUs on their properties, known colloquially as backyard cottages or in-law units.
Homeowners would then be able to rent these units out, providing an additional source of income that could then be put toward anything from day-to-day living to mortgage payments. Alternatively, it also opens up more housing options for renters.
“We believe that backyard cottages will allow homeowners to increase the number and variety of housing choices in single-family zones,” said Councilmember Mike O’Brien in a press release announcing the release of the study.
Imagine buying a home with a mortgage outside of your price range, but being able to balance that out — or even completely cover the mortgage cost — by collecting rent from a backyard cottage. Opening up zoning requirements to make that easier is the goal for the City Council, touting it a small, creative fix to help offset Seattle’s ballooning housing market.
A planned bill would “remove some barriers to building ADUs, including changes to off-street parking rules, owner-occupancy requirements, and design standards.” The Seattle Times estimates that this would add approximately 2,500 ADUs in the next 10 years, and prevent 500 houses from being torn down to build “McMansions.”
Up until recently though, the City of Seattle has been charging an arm and a leg in zoning fees for anyone trying to build an ADU on their property.

A change that couldn’t have come soon enough for homeowners

“Most of the municipalities in the Pacific Northwest are in the fee-generating business,” noted KIRO Radio’s Ron Upshaw. “What this entire thing has been structured for up until this point is for them to collect fees.”
Hopefully, homeowners are about to see some relief once the City Council finally settles on new legislation.
Between this, and a promising report from Northwest Multiple Listing Service (MLS), it seems as though the local housing market could finally be softening for new buyers on a budget.
“In the South Sound the market has shifted into neutral and is idling at the moment,” Dick Beeson of RE/MAX Professionals said in the Northwest MLS report. He went on to point out how housing availability improved in Pierce and Thurston counties, “but nowhere near what King County has experienced.”
“Buyers are taking deep breaths as they survey this new territory,” said Beeson, claiming that potential buyers will soon see more homes available for sale for the first time in three years.

If homeowners are made able to both offset their own costs and provide additional housing to renters, that can only mean good things for anyone looking to buy in Seattle in the near future.

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Friday, September 21, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Renton's Sunset Area Plans

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City moves forward with Sunset area plans

Many Renton residents may have been wondering what is happening with the Greater Hi-Lands shopping center —the center that features a Dollar Tree, Tea Palace and vast parking spaces.
The area is part of the city of Renton’s Sunset Area Transformation Plan. In late July, after eight months of back-and-forth with developers, the city received a formal application for the Solera Project, an 11-acre development with more than 670 residential units, commercial space, a daycare and two new public streets.
“It was a long process before they even came in with this back-and-forth, making sure that this was something the city would support,” city of Renton planner Matt Herrera said. “This is a small part of a overall greater vision for the neighborhood, which the city has provided lots of capital investment for, so staff is very careful reviewing projects and making sure it fits the parameters of what the city has envisioned for the area.”
Although the building costs have yet to be determined, the site development costs are estimated at $8.5 million. The estimated fair market value of this project is $65 million, according to the project narrative from Quarant the city received in June.
Solera will provide a shopping area, along with town homes and market rate homes to integrate with affordable housing in the area. The residential area will have 152 town homes with their own back alleys for sale, and in front would feature two mixed-use buildings with senior housing, market rate housing, commercial space and daycare on the ground floor of each and underground parking.
This vision has been in action since 2008. The sunset area has been in significant need, Deputy Public Affairs Administrator Preeti Shridhar said.
More than 27 percent of the households are in poverty with residents lacking access to living-wage jobs and career advancement and low home ownership.
Shridhar said community amenities, business revitalization and creating a walkable integrated and engaging environment for the community is all part of the project.
Residents have mentioned gentrification of the area as a concern. Herrera said while gentrification is a concern around the region, this area has the benefit of being mixed housing, so there won’t be a line between affordable and market-rate housing. The affordable housing areas being rebuilt by Renton Housing Authority will always have a presence here, he said.
The Renton Housing Authority has created more affordable housing than it started with in the areas of rebuilding, Shridhar said. According to documents one project, Sunset Terrace public housing project with 100 units, is being rebuilt to now contain 172 units. Herrera says this affordable housing is integrated into the Sunset court area.
Shridhar worked for a similar project in Seattle High Point, that created a community with integrated mixed-use and affordable housing. She said its been wonderful to watch the thinking stage of Sunset revitalization transform to planning.
Another concern was school overcrowding and traffic in the area. Herrera said the private developers are responsible for school impact fees to the Renton School District for any increased needs to facilities, as well as transportation impact fees to the city and the impact of any of the new streets. Another overall focus is making sure the project can receive rapid transit from King County Metro as well.
The proposed area will also include pedestrian focused layout. With sidewalks on either side of the crossing streets, short crossing distances for pedestrians to limit vulnerability when crossing the street, and stoops and shared yards creating a “cottage-housing feel,” Herrera said.
The buildings with commercial leases will also have a buffer between them and the busy road Sunset Blvd. that mimics a similar project in Bothell. The streetscape features a strip of landscaping, parallel parking, a small road alongside Sunset and then 12 feet of sidewalk before the commercial stores, creating a separation from the noisy road and encouraging restaurant tenants on the ground floor.
The only store remaining from the Greater Hi-Lands shopping center will be the U.S. Bank, which will lose it’s drive thru and become walk-up, Herrera said.
The proposed Solera project will have a public hearing on Oct. 9 where the hearing examiner will be able to determine if the project is ready to go through. If it does, Quadrant intends to break ground next spring and have it completed in three years. Herrera said although this timeline is aggressive and fast, the private developer definitely has a stake in this project.
When the developer brought this project to a public neighborhood meeting earlier this year at Highland Library, it brought in one of the larger crowds the city has seen with around 30 people in attendance.
“Folks over last ten years have assumed this growth is coming, they’ve seen the city capital improvement projects, but now they’re seeing the private market come in,” Herrera said. “So I don’t think it’s surprising for anyone, there just might be some confusion on what’s being built.”
Phase 1, which would potentially begin spring 2019, would include the first mixed-use commercial building, the buffer, and the roads.

Note: This article has been corrected to show that the meeting held earlier this year at Highland Library was a public informational meeting and not a public hearing, which is a formal hearing where the public provides testimony for legislation.

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Wednesday, September 19, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - U.S. housing costs spurring multigenerational households

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Multigenerational living, defined as a household that includes two or more adult generations, has become more common in recent years. According to the most recent Pew Research Center analysis of census data, a record 64 million people (20 percent of the U.S. population) lived in multigenerational homes in 2016—up from 60.6 million Americans (19 percent of the U.S. population) in 2014 and 51.5 million Americans (17 percent of the U.S. population) in 2009.

Why multigenerational living is on the rise

Shifting economic circumstances, an increase in cultural diversity, and evolving lifestyles of older Americans are just a few reasons why families are embracing this type of living arrangement, but perhaps the biggest reason that’s causing this shift is the lack of affordable housing and housing availability in this country.

The housing market

As we all know, the housing market is a giant migraine right now. In March, home prices rose 8.9 percent over the same time a year ago while housing inventory dropped 13.6 percent over the past year. Throw in the lack of new-construction homes and you have a buyer-crowded market where supply just isn’t meeting demand. Multigenerational living is a solution to this problem, providing a more affordable option for those who can’t buy a home in this current real estate climate. 
Kevin Mejia has lived in a multigenerational home his entire life. “My mom is a single mom and living with extended kin was the best from a financial perspective,” says Mejia. Though Mejia doesn’t get much privacy, a common drawback of multigenerational homes, he avoids paying exorbitant rental costs. In New York City, where Mejia lives, and other places around the country, rent prices continue to rise faster than wages, making it extremely difficult to live comfortably on your own. In fact, Mejia says that many of his friends still live with parents and grandparents for this very reason.

Cultural trends

Growing racial and ethnic diversity among the US population also helps explain why multigenerational living is on the rise, according to the Pew Research Center. Though multigenerational living is growing among nearly all US racial groups, Asian and Hispanic populations are growing more rapidly than the white population, and those groups are more likely than whites to live in multigenerational family households. From 2009–2016, 26 percent–29 percent of Asian populations and 23 percent–27 percent of Hispanic populations in the States lived in multigenerational households. Only 13–16% of whites lived in a multigenerational home from 2009–2016.

Social implications of multigenerational housing

Previously, the primary demographic living in multigenerational households were adults aged 85 and older, but in recent years, young adults have more and more opted for this living arrangement: As of 2016, 15 percent of 25- to 35-year-old Millennials were living in their parents’ home. This figure is five percentage points higher than the share of Generation Xers who lived in their parents’ home in 2000 when they were the same age (10 percent). 
This shift could be caused by the dramatic drop in young Americans who are choosing to settle down romantically before the age of 35. Or we can factor in the Great Recession that led to weak employment opportunities, high unemployment rates, and college enrollment expansion (that led to massive student loan debt) that pushed young adults to live with their parents during this period. The numbers show that even if Millennials are able to get out of their parents’ homes, student loan debt, low housing inventory, and housing costs that continue to double year over year are a barrier to homeownership.

Elderly assistance

Another reason why some families opt for multigenerational living is because aging family members require more care, and nursing homes are becoming more difficult to afford. In 2017, the median cost of a private nursing home room in the United States was $97,455 a year, up 5.5 percent from 2016, according to Genworth’s 2017 Cost of Care survey. Considering the medians savings account balance of Americans over 65 is just $10,000, it’s not surprising that families step in to help. To counteract these costs, families are buying homes with multiple living areas or remodeling their current homes to make space for their parents. 
“I think as home prices continue to skyrocket alongside healthcare costs, we will see more pre-planning along these lines as middle-aged people think about their next housing move,” says Misty Weaver, realtor at the Dream Weaver Team. “Even my clients that initially want to downsize end up in a home that can somehow accommodate older family members.” 
There’s also the issue of single parents working or dual parents working, which can be problematic when caring for kids and getting them to and from different activities. “With a multigenerational household, this stress is relieved and everyone can thrive,” says Lisa Cini, ASID, IIDA, who has more than 25 years of experience developing interiors that improve the quality of life for seniors, and who lives in a multigenerational home herself.

Companionship and family bonding

Another reason some families choose to live intergenerationally is for the companionship. Cini reflects on how her multigenerational home fosters companionship between her parents and children. “My parents say they love it because the kids have so much energy and are so fun, that they actually have more energy being around them!” says Cini. She recalls how her own children love the wisdom imparted from their grandparents and great-grandmother and love hearing them tell stories about when they grew up. 
“The kids also love being able to be the ‘tech experts,’ teaching [my parents] all about their smart phones, Facebook, Instagram and Snapchat,” says Cini. And the learning goes both ways. “There’s something special about having your grandmother teach you her recipes or take care of you when you are ill.”

Restrictions on multigenerational housing

Some cities have introduced permits and zoning laws that make it harder for families to live in a multigenerational home. For example, some municipalities, like Raleigh, North Carolina, and Cherry Hill, New Jersey, have banned accessory dwelling units (ADUs), also known as granny flats, mother-in-law suites, and garage apartments, on properties. ADUs are small, self-contained residential structures that share a lot with an existing house and are often used as rental properties or private living spaces for family members.
But in Los Angeles, California, and Austin, Texas, ADUs have proven to be a popular means of expanding housing options, providing independent living quarters for aging family members, and granting property owners an additional source of income. 
California, home to some of the country’s most in-demand and expensive real estate markets, recently passed laws that would ease restrictions on building a second unit on a piece of land. According to the LA Times, “In Oakland, the planning department approved 266 so-called accessory dwelling units (ADUs) in 2017, up from 126 a year earlier. In Long Beach, 96 applications are pending and the city has approved 15 this year, compared with 21 approved in all of 2017 and none a year earlier. The largest growth is in Los Angeles, where 2,342 secondary units were permitted in 2017, up from 120 in 2016.” 
In Austin, Texas, the Alley Flat Initiative aims to increase the city’s affordable housing stock and make it easier for families to add new units to their property. The Initiative helps families plan, design, and build an additional flat on their properties to accommodate extended family members. Through this process, an adaptive and self-perpetuating delivery system is created that promotes efficient housing designs and innovative methods of financing and homeownership that benefit all neighborhoods in Austin.

How real estate is responding to multigenerational living

According to Jason Biddle, a Certified Aging in Place Specialist (CAPS), the growing trend of multigenerational living has changed the types of homes that single-family volume builders are developing. Not only are builders constructing homes with more square footage, they’re including a separate wing for extended family members. “Many national home builders have introduced new products marketed to multigenerational homebuyers with features like a first-floor master, larger square footage, and even a separate-but-connected apartment suite to help maintain privacy,” says Biddle. 
According to Weaver, most homes in Virginia are built with a basement and bath roughed in. “Builders understand that families are increasingly taking in older family members or expanding living space for themselves as they age and families grow. It’s almost unheard of in new developments to not have these features in the designs,” says Weaver. 

In an interview with the Wharton School at the University of Pennsylvania, James Timberlake, partner at award-winning architecture firm KieranTimberlake, says, “In urban situations, where space is more precious, decisions have to be made about the value of the lot, and what you can build, and how many units you can build in that particular area, and whether or not there’s a market for that kind of multigenerational experience. I think what you’re seeing is that developers see this niche, and it’s a niche that more and more people desire.”
Kealia Reynolds

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Tuesday, September 18, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - How Seniors are Affecting the Housing Market

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The baby boomers are entering their golden years and are poised to become the largest generation of retirees in the country’s history. Through their sheer numbers, boomers have impacted the nation’s economic trends. Now, as more of them enter their retirement years, this generation’s housing preferences will help determine the housing options available to younger people entering the market.
Not only are baby boomers the largest generation, but they also have different lifestyle preferences than previous generations. Baby boomers are working longer and delaying the home downsizing many have been expecting. While some observers think baby boomers are contributing to the inventory crunch by staying in place, others believe boomers are holding on to their homes to time the market and that a massive sell-off is on the horizon.
To better understand this demographic group, Trulia took a close look at the housing situation of seniors 65 and over now and a decade ago, as well as how senior households stack up in different metros. Of course, not all boomers are seniors yet—we define baby boomers as individuals born between 1945 and 1964, making them between 54 and 73 this year. However, we focus on changes in senior housing preferences over the last decade to offer insight into how boomers, who are starting to become seniors en masse, differ in their housing choices compared to previous generations.
We found that:
  • Senior households are delaying downsizing. They’re working longer and their kids are living with them more often compared with seniors a decade ago.
  • Senior households with no younger generations living with them—which include empty nesters— on average have two more bedrooms than people in their homes. Households under 65 on average only have one extra bedroom.
  • Places where housing inventory is most needed—the most unaffordable metros in the nation—aren’t the places where seniors are holding onto inventory. Like the rest of the population, seniors rent in these places at much higher rates and also have younger generations living with them more often. Unless they kick out the kids, they won’t be able to downsize.
  • Metros that have the most senior households that could potentially downsize—that is, those households that own their single family home and have no younger generations living with them—are among the most affordable in the nation. That may be evidence that boomers holding onto their homes is not driving up prices.

Delayed Gratification

Aging boomers are staying in place longer. As households move into their retirement years, some of them are downsizing—moving from owning to renting and from single family to multifamily homes. But, on average, boomers are staying in place longer than previous generations. Some observers worry they are taking up valuable home inventory in high-demand markets that would otherwise be snapped up by younger homebuyers. Of senior households, 83.4% live by themselves, with no younger generations. On average, this group has two more bedrooms than people living in the house—perhaps representing empty nesters whose kids have since moved out. That compares with just one extra bedroom for households under 65.
Baby boomers are staying in place longer because the life events that might cause them to downsize are being delayed. Seniors in recent years have adopted significantly different lifestyles than seniors even a decade ago. For one, they’re working longer. The proportion of household heads 65 and over who are still in the labor force rose to 19.3% in 2016 from 15.9% in 2005. What’s more, the kids are moving out later. Senior households living alone represented 83.4% in 2016, ticking down from 85.2% in 2005. In 2016, 16.1% of senior households had younger generations living with them, up from 14.4% in 2005. These factors mean senior households aren’t considering downsized housing options until later in life. In 2005, more senior households were moving into multifamily than single family housing by age 75. In 2016, this inflection point had shifted to age 80.

Senior Living by Metro

The areas where home supply is limited and affordability is low might appreciate an infusion of inventory from downsizing seniors. However, when looking at the nation’s top 100 metros, we don’t see evidence that boomers holding on to inventory is eroding affordability. Like the general population, seniors in expensive and unaffordable metros rent at much higher rates. Unaffordability also translates to higher levels of multigenerational living. The correlation between unaffordability and the percentage of senior households that could potentially downsize—those that live by themselves and own a single family home—is stark. The higher the income required to purchase the median home, the lower the proportion of senior households that could downsize (with a correlation coefficient of -0.73).
Note: We define senior households able to downsize as those who live alone and own a single family home. Affordability is based on 2018 Q2 inventory. 
The metros with the highest portion of senior households in a position to downsize are in more affordable metros, including Knoxville, Tenn., Colorado Springs, Colo., and Dayton, Ohio. However, even in these metros, inventory has fallen steadily for the past several years. In Knoxville, inventory decreased 12.4% year over year during the second quarter of 2018, rounding out 12 straight quarters of falling inventory. With this prolonged inventory drought across the nation, these metros may very well welcome an increase in boomers listing their homes.

Power in Numbers

Although seniors appear to be delaying downsizing until later in life, as a group, households 65 and over are still downsizing at roughly the same rate as in years past—which is to say not that often. In 2016, 5.5% of households 65 and over moved, pretty evenly split between moves to single family (2.7%) and multifamily (2.4%) homes. In 2005, these percentages were virtually the same, with 5.5% of senior households moving, including 2.5% into single family and 2.5% into multifamily homes.
Still, because the boomer generation is so much larger than previous generations, that 5.5% moving rate translates into very different raw numbers across the years. There were about 7 million more senior households in 2016 than 2005, meaning 386,000 more senior households moved in 2016.
Of course, the ability of senior households to downsize depends on the availability of homes to downsize into. The acute shortage in starter home inventory can make it difficult for retirees to move to smaller homes. Not only are seniors not responsible for making inventory-scarce metros unaffordable, they’re feeling the inventory pinch themselves. Gen X-ers and millennials, especially in expensive coastal metros, are going to need more than downsizing boomers to alleviate the inventory crunch they are facing.


We used 2005 and 2016 5-Year American Community Survey data for labor rates, household generation composition, moving rates, unit structure type, number of bedrooms, and tenure. Our analysis only looks at households that are not in “group quarters”, which would include retirement homes and nursing facilities. This means that our downsizing estimates are likely understated. Affordability is based on our inventory metrics from the second quarter of 2018, defined as the share of the median income needed to purchase the median priced home.


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Monday, September 17, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Old House Renovation

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Old House Renovation: Making Those Hard Repair-or-Replace Decisions

When you’re planning (or in the middle of) a whole house remodel there are always questions about what to keep and what to do away with. Sometimes those questions are about big things, such as hallways, bedrooms or walls. Other times they’re about more particular items, such as doorknobs, trimwork or old wooden windows.
No matter what type of item, the question is usually a challenging one because there often is no “right answer.” If this sounds like a question you might have to tackle in your future, maybe I can help you be more prepared.

Always Lean Toward Restoration

The first step in making the decision of “restore vs. replace” is one of mindset. I can’t tell you how many times I’ve been in a home with a contractor, tradesman or even homeowner who just thinks everything that’s not brand new needs to find its way to the dumpster! That’s the wrong mindset in my opinion. Replacing something just for the sake of replacing it is wasteful at best. In the case of something really special like the wavy glass in my kitchen windows it can be downright tragic.
So the first thing you want to do is to adopt a “restore over replace” attitude. Whenever an item is being considered, your first thought regarding restoration should be “how can we?” By looking at things with this mindset you’ll find yourself thinking creatively and seeing solutions that lead to restoration. In the long run, this kind of mindset is key to creating a beautiful project that has the unmatched depth of character that can only be achieved through restoration.

Pay Attention to Unique Details

In the restoration of an older home, there are those older elements that are unique and unlike brand new homes, and then there are those items that are essentially the same today as they were yesterday.
When it comes to decorative building elements, the saying, “They just don’t make them like they used to,” is often true.
Walls are a good example of something that isn’t “usually” that different in a brand new home as compared to a 300-year-old home. Sure, there are exceptions, but I’m talking about smooth interior painted walls. Restoration of an old plaster wall in a bedroom might cost five times as much as just replacing that same wall with drywall and the end result may look nearly identical.
A solid wood interior door, on the other hand, may be the opposite situation. The existing home might have solid doors made of a hardwood you just can’t buy anymore. If you look closely, those old doors might have a particular profile on the trim or the panels. Even if you can get a similarly designed door, the chances of replacing that detail are slim. When it comes to decorative building elements, the saying, “They just don’t make them like they used to,” is often true.

I Just Love It

I was talking with some fixer-upper owners one day in their home when the homeowners and I started talking about an archway between two rooms. I mentioned how unique and interesting that archway was and the wife said, “I just love that arch, but I know it has to come out.” When I inquired further, I found that two other contractors had told her the arch had to go to accomplish the other objectives of the project. I helped them find a solution that saved the arch.
Whenever there is any element of your home, no matter how tiny or how big, that inspires you to use the words “I just love that,” my advice is to work very hard toward restoring that item rather than replacing during your whole-house remodel. Even if it’s difficult or something else has to be sacrificed. Those “love it” items are what makes the house yourhome.

Cost is Always a Factor

The last factor, of course, is cost. Sometimes restoration of an item is less costly than replacement; other times it’s far less expensive to replace than to restore. When you’re attempting a major project like a whole-house remodel, sometimes it can just come down to money. What makes the most financial sense in the long run?

Options Are Good

The great thing about this question is that it reveals the fact that there are options. You’re not forced to go one way or another and you shouldn’t listen to people who try to take those options away.
Restore when you can, replace when you have to … and enjoy the process either way!

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Friday, September 14, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - How much money Americans have saved at every age

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Here’s how much money Americans have saved at every age 

A new study finds the median American household has $4,830 in a savings account. That's enough to cover minor emergencies and potentially even a few months of living expenses. Overall, between bank accounts and retirement savings, the median American household currently holds about $11,700, according to MagnifyMoney.
Almost 30 percent of households have less than $1,000 saved, MagnifyMoney finds, though the amount varies drastically by age. As of June 2018, millennials have less saved than baby boomers, because older Americans have had over three decades longer to save and larger salaries to work with.
Here's how Americans' median savings breaks down by age:
  • Millennials (born 1981-1998): $2,430
  • Gen X (born 1965-1980): $15,780
  • Baby Boomers and older (born before 1964): $24,280
MagnifyMoney estimates median household balances in various types of banking and retirement savings accounts by using data from the Federal Reserve and the Federal Deposit Insurance Corp. They calculate the median because it gives a more accurate estimate of what most Americans have saved; the average can be skewed by high-earners and older savers. Their results indicate that half of all U.S. households have more than $4,830 while half have less.
Among households that report having at least some money set aside, the median savings level is higher, just under $73,000.
Other surveys and studies have found similar results. Using data from the Federal Reserve's Survey of Consumer Finances, SmartAsset found earlier this year the median American household had about $5,200 in savings. And according to a 2017 GOBankingRates survey, about 12 percent of respondents had between $1,000 to $4,999 in a savings account, while more than half of Americans (57 percent) had less than $1,000.
Americans may still owe more in debt than they save. The Northwestern Mutual's 2018 Planning & Progress Study recently found Americans now have an average of $38,000 in personal debt, excluding home mortgages. That's up $1,000 from a year ago.
Meanwhile "fewer people said they carry 'no debt' this year compared to 2017 (23 percent vs. 27 percent)," according to the study.
"People's purse-strings are clearly caught in a tug of war between enjoying the present and saving for the future," says Emily Holbrook, director of planning for Northwestern Mutual.

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Tuesday, September 11, 2018

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Is Amazon responsible for Seattle’s housing cooldown?

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Is Amazon responsible for Seattle’s housing cooldown? Real estate experts weigh in
Seattle’s housing market has risen to record levels — for better or worse — fueled in part by Amazon’s historic success, but the tech giant’s hiring has slowed in recent months. At the same time, the region’s housing market has cooled, losing its nearly two-year title as the nation’s hottest.

Amazon is staffing up in these HQ2 finalist cities as second headquarters decision nears

But correlation does not necessarily mean causation, and real estate experts interviewed by GeekWire say they don’t see a connection between the slowdowns at Amazon and in the housing market. Instead, they say the real reason for the housing slowdown is that for the first time in years there are more than just a handful of houses for sale in any given area.
More homes hit the market in the Seattle area than at any time in the last three years in August, according to the latest statistics from the Northwest Multiple Listing Service, released Friday afternoon. That means more choices for buyers, smaller price growth and fewer of the multiple-offer horror stories that almost every buyer over the last couple years has experienced.
“It’s not so frantic, where if something comes on the market today, you’ve got to be there tomorrow morning or tonight with an offer in hand,” said Brian Golik, a managing broker for John L. Scott Real Estate. “There’s no rush to do that, and it’s getting back to more of a normal real estate situation where you can take a little time, you can do your inspection, you don’t have to waive everything.”

Amazon’s growth in Seattle is in the spotlight amid the company’s search for a second headquarters, and the recent fight over the city’s ill-fated head tax. In the first quarter, Amazon reported its first employee decline in nine years, and its CFO Brian Olsavsky told investors it is slowing hiring in favor of internal re-shuffling across the company.
But fellow tech giants and startups thirsty for talent will gladly step up to fill any potential Amazon void and bolster the pool of homebuyers.
“They are not the be all and end all,” Matthew Gardner, chief economist for Windermere Real Estate, said of Amazon “Other companies continue to grow and that will pick up any slack, or any perceived slack, given the slowdown in employment at Amazon.”
According to NWMLS, there were 5,803 homes for sale at the end of August in King County, a 74 percent increase over the 3,329 active listings a year ago and the most since September 2015. The median sale price in August was $669,000, up 2.9 percent from last year’s median of $650,000, but down from May’s sky-high median of $726,275.
Areas near downtown remain competitive and expensive. The growth of hometown startups as well as Bay Area tech giants means more new executives and highly paid employees, many of which could come from out of town. And a lot of those people want to live close to work.
“There’s a value to people’s time. People will pay to live closer to where they need to be,” Gardner said.

Region-wide, Gardner says the days of double digit price increases across the board are in the rear view mirror, for now at least, with a return to historical averages of about 6 percent annual rises going forward. Gardner said he is happy to see the trend, as he’s not a fan of over-eager markets.
Golik noted that brokers are having “tough conversations” with sellers pricing their houses based on sales that happened six months ago. And today we are in a different market, where some homes will have to be marked down about 5 to 10 percent to sell. Homes that would previously sell after just a few days are now spending a couple weeks on the market, or in some cases up to 50 days, according to NWMLS.
“I guess we should have schooled them a bit about a phasing-in process and not to bunch up at the listing house door,” said Dick Beeson, principal managing broker, RE/MAX Professionals in Tacoma, Wash. He added that “The real estate sky isn’t falling” for sellers.
Despite the flood of new inventory hitting the market in recent months, the Seattle area still remains under-supplied. There is just under two months worth of home inventory on the market right now, and Gardner wants to see that number creep up toward four to six months.
As the market cools, Gardner cautions against losing sight of the bigger picture of housing affordability. Even as price increases stagnate, the median home sale price remains unaffordable to most buyers.
That could also give companies pause about coming to Seattle, Gardner says. Right now, both companies and employees get a bigger bang for their buck compared to the Bay Area and its out-of-control housing costs. As costs continue to rise, Gardner posits, companies could look to lower-cost markets, where they wouldn’t have to pay as much for their employees to live comfortably.
The answer to this affordability crunch, according to Gardner, is zoning. In an argument echoed by Redfin CEO Glenn Kelman, Gardner says the city needs to, at minimum, change rules to allow more townhouses in areas that today only allow single-family houses. However, Gardner says, there is “zero political will to do that, and that’s a big, big problem.”
“I took a map and overlaid the city of Seattle and the city of Paris,” said Gardner. “And you can fit Paris into North Seattle. But here’s the kicker, Paris has got a population of 2.2 million people, we have a population of 730,000. We’re not close to being dense.”

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