Amazon: 15,000 new jobs coming to Bellevue

Amazon is continuing to expand its Bellevue reach.

On Thursday, Feb. 6, the company announced it was on track to create more than 15,000 new jobs in the city within the next few years. Currently, there are about 2,000 Amazon employees in Bellevue.

Amazon’s first Bellevue office opened in 2017. However, when CEO Jeff Bezos started the company some 25 years ago, it was in a home in West Bellevue.

Many of Amazon’s incoming employees will be working out of an in-the-works 43-story building, which is known as Bellevue 600. The building, which will be Bellevue’s tallest, takes up 1 million square feet of office space.

It is anticipated that the tower will be open within the next four years.

In a statement released on Feb. 6, Bellevue city officials shared their thoughts on the announcement.

“With the downtown area’s successful growth over the last several years, we’ve created a dynamic and thriving neighborhood, and one that’s attractive to businesses, workers and residents,” Mayor Lynne Robinson said. “Accelerated growth does come with impacts, and we hope to mitigate those by proactively working together as a community to address our resident needs. We appreciate Amazon’s eagerness to be a partner during this process and to take the role as an engaged Bellevue stakeholder.”

The city noted prior planning in the press release.

“While Bellevue, specifically Downtown, has seen major growth over the last decade, it’s taken a lot of work and planning to get to this point,” city manager Brad Miyake said. “It’s exciting to see that Amazon and other businesses want to invest in Bellevue, and we look forward to strengthening all our partnerships. Just as important, the city is committed to ensuring the high quality of life that residents, visitors and workers have come to expect.”

Amazon is hoping to start construction on the 43-story tower in 2021 and move in in 2024.

An additional tower at 600 108th Avenue Northeast will stand 33 stories and take the place of the Bellevue Corporate Plaza building, though the starting “phase” for the additional tower’s construction has not yet been determined.

Bellevue 600 also will come with a commons space, retail, possible daycare and meeting center during its first phase. An included below-grade, six-level parking garage is planned to have some 1,815 stalls.

“We look forward to continue growing our presence in Bellevue, bringing more jobs to the city, collaborating with its leaders and being an active member of this thriving community,” Amazon said on its website.

~Mercer Island Reporter

ZILLOW SEES ULTRA-COMPETITIVE SPRING SELLING SEASON

The latest housing market outlook from Zillow projects that the nearly two-year slowdown in the housing market may be coming to an end right as home shopping season kicks off.

U.S. home values grew 3.8% year-over-year to $245,193, less than one-hundredth of a percentage point slower than the previous month, according to the January Zillow Real Estate Market Report. Annual home value appreciation has slowed in each month since April 2018, but this is the smallest drop from one month to the next during that period.

Though the number of homes listed for sale increased from record lows a month earlier, inventory is down 8% annually — the biggest annual drop since March 2018, Zillow said. There were 1,500,262 homes on the market in January, up 4,295 from the previous month but down 130,310 year-over-year.

This persistently low inventory is a key reason why Zillow expects home value growth to speed up once again. The economy has remained strong, mortgage rates are low and buyers will be competing for a limited number of homes this home shopping season.

“As the economic storm clouds on the horizon in early 2019 cleared up, we saw buyers return in droves, taking advantage of ultra-low mortgage rates,” said Zillow economist Jeff Tucker. “Our first look at 2020 data suggests that we could see the most competitive home shopping season in years, as buyers are already competing over near-record-low numbers of homes for sale. That is likely to mean more multiple-offer situations, and that buyers will have a harder time finding the perfect fit for their families. The good news for buyers is that low mortgage rates are helping to make home ownership more affordable, and home builders are responding to the hot housing market by starting construction on more homes than at any time since 2007.”

Home values are growing faster than they were a month ago in about half of large markets (17 of the top 35). The hottest large markets are Phoenix (up 6.7%), Columbus (6.2%), Charlotte (5.4%) and Cincinnati (5%). Home values fell year-over-year in San Jose for the 12th consecutive month. But its Bay Area neighbor, San Francisco, saw home values grow 1% year-over-year, breaking a streak of declines that dated back to May 2019.

Inventory fell in all but three top-35 metros — San Antonio (+7.7%), Detroit (+6.4%) and Chicago (+0.3%). Inventory was hit the hardest in Seattle (-27.6%), Phoenix (-24.5%) and San Diego (-23.1%).

Rent growth remained stable. The typical rent is now $1,602, up 2.3% year over year and just $1 more than last month. Rents are growing faster than a year ago in 28 of the 35 largest U.S. metros, led by Phoenix (+7.9% annually) — also the fastest-growing for-sale market — Pittsburgh (+7%), Cincinnati (+5.7%) and Las Vegas (+5.7%).

Mortgage rates listed by third-party lenders on Zillow rose to a peak of 3.77% on January 31 after starting the month at 3.70%. Rates reached their monthly low on January 24 at 3.51%. Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site by third-party lenders and reflect recent changes in the market.

~Builder

Too Few Housing Units Built in Washington for Demand

Not enough housing has been built in Washington to meet in-migration and job growth, which has fueled home price and rent escalation, longer commutes as people drive farther for affordable housing, and lower quality of life, according to a January report that calls for more high-density housing walkable to transit corridors and other amenities. More high- and medium density housing and fewer single-family homes would improve lifestyles, the environment, Gross State Product (GSP) and tax revenues, it projected.

The report, Housing Underproduction in Washington State: Economic, Fiscal, and Environmental Impacts of Enabling Transit-Oriented Accessible Growth to Address Washington’s Housing Affordability Challenge, was authored by Up For Growth, a national nonprofit.

The housing problem is especially acute in King and Snohomish counties, where only 0.65 units of housing were built per new household between 2010 and 2017, according to data in the report. A functioning housing market needs to produce at least one new housing unit for each new household formed, the report says, noting the national ratio has been about 1.1 housing units per new household since 1960.

The report also notes that King County added 3.33 jobs for every new housing unit during from 2010-17, the highest imbalance between job growth and housing unit production in the state. Snohomish added 2.12 jobs per new housing unit.

“In counties with large imbalances, rents and home prices have rapidly increased and have even surpassed the previous housing bubble’s peak prices,” the report said. “If these ratios worsen in the short run, substantive policy interventions may be necessary to bring the ratio of jobs-to-units back into longer-term equilibrium.”

From 2000 to 2015, Washington underproduced housing by about 225,600 units, about 7.5 percent of the total 2015 housing stock, creating a supply and demand imbalance reflected in the housing and homelessness crisis in myriad communities, the report said.

The report also notes too little housing produced for low- and moderate-income households, those making 80 percent or less of area median incomes (AMI). Since 2000, Washington underproduced 181,000 rental units for this category, accounting for 80 percent of the total housing units underproduced from 2000 to 2015.

In King County, the underproduced units were equivalent to about 61 percent of all renter households earning less than 80 percent of AMI, and 42 percent in Snohomish County, which demonstrates the need for more rental units available to households earning less than 80 percent of AMI in the state’s most populous areas, the report said.

Currently, housing development is allocated roughly 4 percent to high density residential apartment towers; 29 percent to “missing middle” (accessory dwelling units, duplex, triplex, and quad homes, or courtyard-style apartments) and medium density (podium apartments); and 67 percent to low density single-family homes. This is what the report calls a “more of the same growth pattern.”

If an “accessible growth pattern” were used instead, those 225,600 units could be divided into 38 percent high density, 54 percent medium density, and 8 percent low density, the report said. That would use 12 percent of the land to produce the same number of units, and with developments closer to transit and employment centers, could reduce vehicle miles traveled by up to 36 percent. That kind of development pattern also could increase GSP by $25 billion over 20 years and generate an additional $660 million in state revenue (via sales, business and occupation taxes), the report said.

The accessible growth approach prioritizes building housing near transit and “job-rich but housing-poor areas,” Up For Growth said on its website in prefacing the report. “Such an approach could be achieved by increasing and expanding funding for affordable housing, zoning reforms, regional planning and accountability, and public-private partnerships.”

Up For Growth adds, “The report makes it clear that Washington is indeed experiencing a severe shortage of housing for people of all income levels. Solving it will require leadership and the state and local levels, as well as the private sector.”

~425 Business

Weekly mortgage applications soar 30% as homebuyer demand hits the highest level in 11 years

It was a seriously strong start to 2020 in the mortgage business for new home loans and refinances.

Total mortgage application volume surged 30.2% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinancing led the surge, thanks to a drop in mortgage rates. Those applications jumped 43% for the week and were 109% higher than a year ago. The refinance share of mortgage activity increased to 62.9% of total applications from 58.9% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to the lowest level since September, 3.87%, from 3.91%, with points decreasing to 0.32 from 0.34 (including the origination fee) for loans with a 20% down payment. The rate was 87 basis points higher the same week one year ago.

“Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act,” said Joel Kan, an MBA economist. “It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall.”

Homebuyers also rushed in, sending purchase application volume up 16% for the week and up 8% from one year ago. Purchase mortgage activity hit the highest level since October 2009.

“Homebuyers were active the first week of the year. Low rates and the solid job market continue to encourage prospective buyers to enter the market,” Kan said.

Unfortunately, buyer demand is bumping up against near record-low supply. Price gains have reaccelerated, and if supply doesn’t improve markedly, some of the tightest markets will overheat quickly, leaving less affluent buyers out in the cold.

~Diana Olick, CNBC

Puget Sound housing supply dwindles as prices continue to climb

Despite seeing a dip at the start of 2019, housing prices increased in the Puget Sound region in 2019, all while supply continued to dwindle.

“Inventory shortages persisted throughout 2019,” said the Northwest Multiple Listing Service in a newly-released report on 2019’s housing market.

The NWMLS reported the addition of 110,040 listings in 2019, a 5.3 percent decrease over the previous year. All while the median price of single-family homes sold by NWMLS brokers jumped from $410,000 to $435,000 between 2018 and 2019.

According to a recent report from Redfin, that trend persisted in Seattle city limits as well, punctuated by a 6 percent increase in the median price of a home year-over-year, while seeing a 39.7 percent decline in available homes for sale.

Median home prices in Tacoma climbed 9.3 percent, paired with a massive 44.3 percent decline in inventory.

“Prices heated up in West Coast metros like Seattle and Los Angeles, which indicates the slowdown of 2019 has officially ended in these markets,” said Redfin chief economist Daryl Fairweather.

That trend started in late 2019, when inventory began to dip dramatically across King, Pierce, and Snohomish Counties.

“The most recent data certainly appears to bolster the idea of a ‘new normal,’ as we see the same trends continuing,” Coldwell Banker Bain President and COO Mike Grady predicted in November.

~Nick Bowman, My Northwest

2019 Mortgage Rates Were Lowest in Nearly 50 Years

The interest rate for the 30-year fixed-rate mortgage averaged 3.9% for 2019, the fourth lowest annual average since 1971, according to Freddie Mac. For 2020, Freddie’s outlook mirrors that of the real estate industry’s top economists, who discussed their predictions at the National Association of REALTORS®’ first-ever Real Estate Forecast Summit earlier this month: Low mortgage rates and an improving economy will help drive steady home sales, construction, and increases in home prices.

“While the outlook for the housing market is bright, worsening housing affordability is no longer a coastal phenomenon and is spreading to many interior markets, and it is a threat to the continued recovery in housing and the economy,” says Freddie Mac Chief Economist Sam Khater. NAR Chief Economist Lawrence Yun, too, has long called for greater homebuilding in entry-level price points to satisfy affordability and housing demand for first-time buyers.

Freddie Mac reports the following national averages with mortgage rates for the week ending Dec. 26:

30-year fixed-rate mortgages: averaged 3.74%, with an average 0.7 point, mostly unchanged from last week. Last year at this time, 30-year rates averaged 4.55%.

15-year fixed-rate mortgages: averaged 3.19%, with an average 0.7 point, unchanged from last week. A year ago, 15-year rates averaged 4.01%.

5-year hybrid adjustable-rate mortgages: averaged 3.45%, with an average 0.3 point, rising from last week’s 3.37% average. A year ago, 5-year ARMs averaged 4%.

~Realtor Magazine

First American says low mortgage rates are driving home price growth

In September, home prices rose 0.9%, declining 7.6% year over year, First American said in its Real House Price Index. According to the company, unadjusted house prices sit 8.1% above the housing boom peak.

Consumer buying power, which measures the influence of income and interest rate changes on house-hold spending, increased by 0.2% between August and September, rising 15.8% year over year.

When consumer house-buying power is factored in, home prices are actually 42.2% below their 2006 peak and 18.8% below prices from January 2000.

Although housing affordability improved during the month, Mark Fleming, First American’s chief economist said the growth just wasn’t enough.

“Two of the three key drivers of the Real House Price Index, household income and mortgage rates, modestly swung in favor of increased affordability in September, yet affordability declined month over month,” Fleming said.

This is because September’s home price growth outpaced improvements in overall affordability, according to Fleming.

“The 30-year, fixed-rate mortgage fell by 0.01 percentage points and household income increased 0.03 % compared with August 2019,” Fleming said. “When household income rises, consumer house-buying power increases. Declining mortgage rates have a similar impact on consumer house-buying power.”

“However, nominal house price appreciation jumped 1.1% in September, outpacing the benefits of rising house-buying power on affordability,” Fleming said. “Accordingly, the RHPI increased 0.9% month over month.”

Increases in the RHPI indicate a decline in affordability, and September ‘s was the largest month-over-month affordability decline since November 2018, Fleming said.

While declining mortgage rates have increased house-buying power throughout the year, Fleming said it has also led to a greater demand of supply, which has put pressure on the nation’s home prices.

“When demand increases for a scarce (limited or low supply) good, prices will rise faster,” Fleming said. “While year-over-year, the RHPI shows an improvement in affordability, the increase in house-buying power in September was not enough to offset nominal house price gains compared with August.”

~Alcynna Lloyd, Housing Wire

Your home may not be a mansion. But you might still have to pay a ‘mansion tax’

Beginning in January, homeowners in Washington state will soon pay a real estate tax that increases based on the sale price of their home.

Under the new provision, the tax rate on properties that sell above $1.5 million will more than double, rising from 1.28% to 2.75%. Homes that sell for more than $3 million will be taxed at 3%.

And Washington isn’t the only state changing the way it taxes real estate. New York also recently expanded its “mansion tax” — an additional tax that targets higher-end home sales.

Most real estate deals in the US trigger what is known as a transfer tax. But certain states — including Connecticut, Hawaii, New Jersey, Vermont and New York — also levy a mansion tax on homes that sell above a certain price.

What is a mansion tax?

The aim of a mansion tax is to make the state and local tax systems fairer and to raise money, says Samantha Waxman, a policy analyst at the Center for Budget and Policy Priorities. The additional taxes can be used to fund things like schools or roads, or can be specifically targeted toward things like affordable housing projects.

“Mansion taxes are one way for states to provide for their long-term future,” she said.

But how expensive does a home have to be to trigger a mansion tax?

Washington state made its transfer tax progressive in 2019, according to CBPP, with graduated rates that increase for homes sold that are worth over $500,000, $1.5 million, and $3 million. These new rates will apply as of January 1, 2020. The state cut the rate for homes worth less than $500,000.

Who pays a mansion tax?

Using transfer taxes to raise public funds is nothing new, says Kim S. Rueben, director of the State and Local Finance Initiative at the Urban-Brookings Tax Policy Center. But more recently, some states and cities are adopting tax rates that go up as the value of the property increases, similar to income tax rates that go up as your income increases, rather than a flat tax.

In deciding who should pay these taxes, lawmakers are considering two things, said Rueben.

First: How badly does the state need the money?

“If you need the money for basic services, like Vermont, you need a lower threshold to get more people to pay,” Rueben said.

The second factor is income inequality and how housing prices in the area are widening the gap.

In Washington state, the real estate excise tax is typically paid by the seller of the property, although the buyer is liable for the tax if it is not paid, according to the state Department of Revenue.

~Q13 Fox News

Rapid growth in jobs and office rents puts Seattle among leaders in top 30 tech markets

Another new report is shining a light on Seattle’s rapid growth among leading tech hubs.

CBRE’s annual Tech-30 report, which measures the tech industry’s impact on North American office real estate markets, shows Seattle is the sixth fastest growing tech market in overall office rent growth. Rents jumped 12.4 percent between Q2 2017 and Q2 2019, up from 11.7 percent in the previous two-year period, CBRE reported.

Seattle is also fourth in tech employment growth, with a rate of 23.7 percent during 2017 and 2018. The 34,000 new jobs added in the market were the highest number among any of the Tech-30 cities.

Vancouver, B.C., San Francisco and Toronto were the top three markets ahead of Seattle in the overall ranking of the 30 markets.

“Seattle’s tech industry is among the largest in North America and is growing at a rapid pace,” said CBRE’s John Miller, senior managing director of the firm’s Seattle office. “This growth, combined with the second strongest tech labor pool in North America, means we’re going to continue to attract tech firms looking to take advantage of our intellectual capital, which will continue to strengthen office fundamentals.”

Major technology companies have leased nearly 2.8 million square feet of office space in the past year, accounting for 45 percent of all leasing activity in the Puget Sound market, CBRE reported. Much of this space is for expansion purposes, which will add even more jobs to the tech industry in the near-term. And perhaps they will be filled by area tech grads, whose number grew by more than 60 percent.

The report also looked at rent gains, rent premiums and net absorption in submarkets that are hot tech spots in the larger overall markets. South Lake Union, home to Amazon and major tech outposts for Facebook, Google and Apple, showed a 6.4 percent rent growth in the past two years and commands a 13.4 percent premium over the overall market average, CBRE reported.

CBRE’s report comes on the heels of last week’s Q3 2019 PayScale Index, which tracks quarterly and annual trends in compensation, and found that wages increased 4 percent year over year in Seattle. The city outpaced the national average of 2.6 percent and only trailed San Francisco, at 4.3 percent.

~Kurt Schlosser, GeekWire

U.S. Real Estate Predictions for 2020 Suggest More of the Same, Mostly

According to Freddie Mac’s latest set of predictions, issued on October 31, the U.S. real estate market will “continue to firm” as home sales increase. In fact, they believe housing is currently one of the brighter spots in the U.S. economy.

Their chief economist, Sam Khater, said that despite a global economic slowdown the U.S. real estate market “remains on solid ground with housing starts, building permits, existing home sales, and new home sales all outperforming the broader economy.”

Home Sales Expected to Increase Slightly

The first and most notable prediction has to do with home sales in 2019 and 2020. The group issued a mostly positive outlook for residential real estate sales activity in 2020. Home sales nationwide are expected to reach 6 million by the end of this year, and then rise to 6.1 million during 2020.

This contradicts some of the previous predictions for the U.S. real estate market, which suggested that the market could actually cool down next year.

A growing chorus of voices are now predicting that real estate sales activity could actually ramp up next year, partly due to low mortgage rates (see below).

Inventory Challenges Will Carry Over to Next Year

Home sales nationwide would likely be higher right now (and in 2020) if there was more inventory available. But most real estate markets across the country are still experiencing a shortage of homes for sale relative to the demand from buyers. This has constrained the housing market.

Robert Dietz, chief economist for the National Association of Home Builders, called it a “perfect storm of supply side challenges.” He told CNBC that the residential construction industry has been grappling with a prolonged labor shortage, along with a scarcity of buildable land.

Supply is especially tight at the lower end of the pricing spectrum, where many first-time home buyers tend to shop. As a result, buyers seeking an entry-level or “starter home” in 2020 should start early and pack their patience. (See: Biggest challenges for first-time buyers.)

Mortgage Rates Could Be Slightly Higher in 2020

Real estate predictions for 2020 suggest we could see more of the same next year, in terms of home sales and price growth. A similar “status quo” forecast has been issued for mortgage rates.

In their latest round of economic and housing predictions, Freddie Mac said they don’t expect to see a major increase in rates between now and next year.

In October 2019, the company’s research team predicted that 30-year fixed-rate mortgages would end up averaging 3.7% for 2019, and then “tick up slightly” to 3.8% in 2020.

Granted, this is just a prediction. It’s the equivalent of an educated guess. But if it’s even close to being accurate, it’s a pretty big deal from a home buyer’s perspective. It removes the sense of urgency that’s usually associated with a period of very low mortgage rates.

If rates continue to hover within their current sub-4% range through the end of 2019 and into 2020, home buyers would be able to benefit for the foreseeable future.

Home Prices Expected to Keep Rising, in Most Markets

Freddie Mac’s latest real estate predictions suggest that home prices across the U.S. could rise more slowly in 2020 than they did in 2019.

And that’s not surprising. House values in most U.S. cities have been rising at an above-average pace for the past few years. That has created affordability problems for buyers in many cities. So a slowdown is to be expected at this point.

According to their October 2019 forecast:

“The house price forecast is expected to appreciate 3.3 percent in 2019 and 2.8 percent in 2020.”

This closely resembles a similar prediction issued by the real estate information company Zillow. In October of this year, Zillow’s economists wrote: “United States home values have gone up 4.8% over the past year and Zillow predicts they will rise 2.8% within the next year.”

So here we have two separate research teams making an identical prediction for U.S. home prices in 2020. Both groups expect the median home price to rise by around 2.8% next year.

But real estate predictions for the nation as a whole don’t always tell the full story. Both companies predicted that the nation’s median home value will continue to climb in 2020, albeit at a slower pace than previous years.

But that’s the median (or midpoint) for all home values nationwide. This means they expect prices in most cities to continue rising in 2020, as they did in 2019.

When you drill down to the city level, however, it’s more of a mixed bag. Some local housing markets are actually seeing a steady drop in home prices right now. And that could continue in 2020 as well.

(This is something we’ve written about in the past. In July, we published a report on local housing markets that might be a bad investment due to ongoing price declines. And in September, we published a “crash alert” for nearly two-dozen California cities where home values were dropping.)

A Lot of Homeowners Will Refinance in 2020

Home prices in the U.S. have risen steadily over the past few years. And mortgage rates are currently hovering below 4%. As a result of those two trends, refinancing activity picked up during the fall of 2019.

During the last week of October 2019, the Mortgage Bankers Association reported that their “Refinance Index” had increased by 134% over the same week in 2018. Low rates and rising home values have a lot to do with that.

This ties into one of Freddie Mac’s real estate market predictions for 2020. They expect to see a continuation of the current “surge” in refinancing activity, as homeowners take advantage of low rates and increased equity.

To quote their forecast: “The surge in [mortgage] refinance activity will carry over into next year, with a projected $789 billion and $785 billion in single-family refinance mortgage originations in 2019 and 2020, respectively.”

The bottom line to all of this is that 2020 could look a lot like 2019.

~Brandon Cornett, HBI