Seattle's Homeowners Will Not Save the Poor

Comments

1
This is one of the very best series The Stranger has ever done. And is in fact the one of the few bright spots (like Eli's excellent pieces) in a the last four or five years of Stranger petty outrage articles and pop culture dreck. Please more like this.
2
Pretty damn good assessment but I see two things to dispute:
1) Treating the hells of Vancouver BC and San Francisco as the only two options is a false dichotomy. Mandating affordable housing in exchange for the ability to build taller buildings is already in place, and adding residency requirements would further keep housing in the hands of people that actually live in Seattle
2) Arguing there is little actual good in home ownership for Americans is ridiculous. At the end of the day, so long as you are able to sell the property for as much as you paid and as much as you spent on upkeep and maintenance (adjusted for inflation), you will come out ahead of where you would be if you rented.
3
Someone is very very young if they think housing has suddenly become an "investment vehicle" or as the trendies say, "commodified"
4
" they have become dependant on the inflation of property values to make ends meet"

Wait, what? I don't follow. (There's also a typo.)

Ownership turns your monthly living cost into a consistent, non-increasing-over-time expense; the only variables are maintenance and, per year, property taxes. Should you pay off your house, you won't have a fixed monthly expense at all.

The concern over property values comes from people who are using it as an investment, are obsessed with their net worth, or are looking for equity loans.
5
Charles,

As I've asked in response to several of your recent pieces, if speculative investment is such a driving force in Seattle's housing market, why isn't this reflected in property sales records? I've been skimming excise tax reports since your series started a few weeks ago, and virtually every real estate transaction I've seen involved a purchase by an existing Seattle resident, rather than some mysterious foreign investor or hedge fund. Shouldn't I be seeing some evidence of your theory?
6
In real estate terms, Seattle is really Greater Seattle
7
Agreed with others, this is a really fascinating piece (and I don't live in Seattle, though housing issues mostly correspond nationwide).

@2, on your second point, even if you sell your property for a loss you can still come ahead of renters if your overall house sale, minus what you bought it for and what you put into it, still exceeds what you would have paid over the years in rent.
Though there's also cost in terms of time spent... home owners often (though not always) spend a great deal of their time fixing/improving their property. Renters don't and thus have that time as extra.

@4, Totally agree! Although even people who have no intention of selling their property STILL tend to carry a sort of NIMBY attitude, peer pressure maybe? That, or they have HOAs that in essence force everyone in it to fixate on property values.
8
Charles should really address @5.
9
You mostly had me up until this part:

And for those fortunate to own home, they have become dependant on the inflation of property values to make ends meet.


This doesn't make sense. Home owners may be dependent on rising property values for their nest egg, but not to make ends meet in the short term, for the simple fact that they can't sell shares of their home. That is, as a homeowner you can't both profit from rising property value and stay in your home, since you have to sell it to realize the gains (and unless you plan on moving, you still have to secure an alternative living arrangements in an area of rising property values).

If anything, current homeowners (who are not cashing out) are hurt in the short term by rising property values, as the appraised values will usually rise (albeit slower), increasing the property tax burden (even while keeping tax rates unchanged).
10
Just looked over my original purchase agreement for my home and damned if I couldn't find a thing about having to help the poor. I did let a friend use my guest house rent free until they were back on their feet. So there's that I guess. Charles, don't you own a home?
11
Chuckles has his finger poised over the "delete comment" button, I see.
12
@9: Homeowners can, and often do, cash in on the rising value of their homes by taking out a home loan, which is essentially borrowing against that rising value (at least, that's the hope of the homeowner).
13
@12: But only once, if you're talking about a home equity loan.
14
Also, drawing a loan against house value is not exactly cashing in. In general, if you're taking on debt to make ends meet, you're not making ends meet.
15
Charles should really address the question raised in @5.
16
Unfortunately, thanks to the Washington State Legislature, which has banned rent control in our state, homeownership is the only way people can get out from under greedy landlords and control their housing costs.
17
@14: It isn't "cashing in", is it? Well many would beg to differ. Many see it as a major line of credit they basically get for nothing. Just like a credit card, it is cash in hand that can be used now.
18
Curious, it seems such a popular question. What is it Charles needs to address in @5? This person claims they have done original research into property sales records, and he has also verified that each person in these records is actually a resident of Seattle (and clearly a resident of Seattle that isn't buying property as an investment).

Does @5 have something to show for his/her research? Otherwise, I can't see what Charles really should be addressing here. There is no hint at what this person actually looked at, such as how many of these records over what span of time, or how it was determined these sales were not investment-related.

To be truthful it sounds more like a spurious claim made in an anonymous online comment, not proof positive that speculative investment is not a major driver of housing prices.
19
@8 im ignoring @ 5 because this was exactly the game played by real estate
Interests in vancouver untill it was too late (2016 tax reform on speculation). I mean to the letter. Researchers had to use innovative tactics to get a better picture of things because gov records wete useless and did not correspond with reality.
20
@19 Charles, your whole premise here is based on an assumption (speculative investment is driving the rapid increase in Seattle-area residential real estate prices), and that assumption may be faulty. But rather than examine this assumption, you add in yet another layer of assumption: why do you now assume that King County's records of real estate transactions are not reliable?

@18 I reviewed land records available through the King County Recorder's Office. Specifically, what I did (and what Charles could easily do if he hadn't elected to bury his head in the sand instead) is review real estate excise tax affidavits from transactions involving a warranty deed and a sales price in excess of $500,000. I then looked at the buyer's name and address on the affidavit. The majority of the affidavits I reviewed suggegsted that the buyer was an individual or couple (i.e., not a corporate entity) with Western surnames (i.e,, not a name that I subjectively believed was likely to belong to a Chinese individual). In addition, the majority of the affidavits showed that the buyer's address was a residential location in the greater Seattle area. This is as far as I took it--I'm not sure what gave you the impression that I claimed to "also verified that each person in these records is actually a resident of Seattle." Instead, I assumed that the affidavit--which is signed under penalty of perjury--was accurate. I'm not sure what Charles is thinking, but he seems to believe that we should all assume that these affidavits were falsely completed as part of some sort of widely recognized (but still secret?) attempt to disguise foreign and corporate investment, presumably in an effort to avoid the development of regulations that could curb speculative investment in residential real estate.

There are, of course records that could indicate foreign investment. Here's a good example: http://146.129.54.93:8193/imgcache/OPR27… . I'll leave it to you to contact this couple to determine what their motivations are. Of course, you can always just ignore this, and assume that this couple is buying this property as an investment vehicle, and that's the direct cause of Seattle's current homeless crisis:that's what Charles would do.

21
Well, did some further searching and did manage to find one residential real estate transaction involving what appears to be speculative investment by a hedge fund:

http://146.129.54.93:8193/imgcache/OPR27…

This was purchased by a Blackstone subsidiary and currently appears to be a rental. This is, however, the only one I was able to find.

Charles, what I did here was type "Blackstone" into the party name field in a King County excise tax record search. Above you suggested that "innovative tactics" were required to research real estate transactions to find speculative investors. Seems to me like just about any idiot could track this stuff down--I mean, it's all right there, all you have to do is look.

Are you afraid if you look into the data that you'll find out your assumptions were incorrect?