HOUSINGNEWS REPORT
LEAD ARTICLE
are more active in applying for loans to buy homes in Snohomish County (north of Seattle) and Pierce County (south of Seattle) than in the central King County. Drive to Afford That drive-to-afford trend in the Seattle area is concerning to Matthew Gardner, chief economist at Seattle-based Windermere Real Estate. “Housing affordability does concern me quite a bit … it pushes people further out of the King County market,” said
Gardner. “You have to drive to buy. … (which) can actually push the prices of the suburban market up. The affordability crunch concerns Gardner because at some point it could cause companies that are considering expanding to Seattle – which is still priced at a substantial discount compared to the Bay Area – to go to other markets such as Spokane, Washington, or Boise Idaho, which would slow economic growth in Seattle.
But Gardner does not think the affordability crunch in and of itself indicates that the Seattle market is in a bubble. “Is it a bubble, no. Every data point I look at shows lending is robust,” said Gardner, who also chairs the board of trustees at the Washington Center for Real Estate Research at the University of Washington. “We’re giving mortgages to people who can actually afford to make those mortgages. Housing Risk #6. Tax Policies Mortgage interest is not deductible in such countries as Canada, France, or Great Britain. In the U.S. mortgage interest as well as property taxes are generally deductible from federal income taxes, something which the real estate industry has always seen as essential. Now things may be changing. Both President Trump’s tax reform plan and the proposal of House Speaker Paul Ryan, R-WI, keep the MID so neither can be accused of dumping a sacred write- off. However, both plans also devalue mortgage interest deductions and property tax write-offs to the point where millions of property owners are unlikely to claim them. The Bubble Danger: The real estate industry – correctly – argues that tax write- offs are a big financial advantage and effectively reduce the cost of ownership. They are also an important marketing tool, a reason to buy rather than lease. If tax write-offs are effectively removed after more than a century then the case for ownership becomes much tougher so demand – and home values – are likely to decline, and renting may be seen as increasingly attractive in comparison.
WHERE HOMEBUYERS ARE MOVING IN Q3 2017 Q2 2017 PRE-MOVER INDEX (100 IS NATIONAL AVG)
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Is it a bubble, no. Every data point I look at shows lending is robust. We’re giving mortgages to people who can actually afford to make those mortgages.” MATTHEW GARNER CHIEF ECONOMIST, WINDERMERE REAL ESTATE
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JULY 2017 | ATTOM DATA SOLUTIONS
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