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April 2015

News In Brief

April 2015

  • According to the Puget Sound Business Journal, a study by Dice.com shows that Seattle is number 2 in the United States for tech salaries. At an average of $99,423, tech salaries in Seattle are close to rival Silicon Valley's. Local tech salaries are up by more than 20 percent from 2008-2014, and since 2013, they have increased by 4.6 percent.

  • The Seattle City Council approved legislation that caps rent at about $600 a month for some tiny new apartments covered by a voluntary tax-break program. The bill adjusts the city's Multifamily Property Tax Exemption Program, which gives 12 years of tax breaks to developers who volunteer to reserve a percentage of units in a new building for lower-income households.

  • Annual effective rent growth in the Seattle-Bellevue-Everett area was 6.74 percent in 2014, according to apartment research company Axiometrics. A year previous to this, it was at 5.17 percent. Also, apartment occupancy rates rose over the same period of time.

  • Migration into Washington by new residents is currently the strongest on record, according to Department of Licensing data. The March summary report published by the state "Economic and Revenue Update" shows the number of licenses from other states or countries surrendered to the Department of Licensing by people applying for Washington licenses. It is a good indicator of migration into Washington from other states or countries. A record 180,700 licenses were surrendered in the 12 months ending in February 2015, up 16.9 percent from the previous year. The previous high point was in the year ending in May 1991. Other highlights of the new Update are a strong growth in new jobs created - 1,600 jobs over the past three months - for a very strong 4.1 percent annual rate of growth. In contrast, employment grew at an average rate of 2.9 percent during the previous 12 months. The construction sector added 7,700 employees in November, December, and January, due to unusually mild weather accounted for some of the strong growth in construction employment. Manufacturing employment rose 3,600 in spite of the loss of 400 aerospace jobs. Private services-providing employment grew 18,800 in the three-month period and the public sector added 1,400 jobs.

  • Appraisers placed a higher value on Seattle-area homes than the homeowners, according to the February Home Price Perception Index (HPPI) produced by Quicken Loans and reported by Tom Kelly in mynorthwest.com. HPPI represents the difference between appraisers' and homeowners' opinions of home values. The index compares the estimate that the homeowner supplies on the mortgage application to the appraisal that is performed later in the mortgage process. For example, a Puget Sound home guessed to be worth $352,000 by the homeowner was valued at $363,102 by an appraiser. That 2.87 percent difference held true for homes throughout the Seattle area, according to the Quicken study. Nationally, appraisers valued homes 0.13 percent lower than homeowners estimated in February. This is the first time appraiser opinions fell below homeowner estimates since August 2013.

  • Rental housing and apartment rates in Seattle have leaped nearly one-third since 2009, widening the gap between rental costs and household income to an unsustainable level, according to a new study released by the National Association of REALTORS®. NAR evaluated income growth, housing costs, and changes in share of renter and owner-occupied households over the past five years in metropolitan statistical areas across the U.S. Over the past five years, a typical Seattle rent rose 32.38 percent compared to the national average of 15 percent. The income of renters grew by only 11 percent, according to NAR research. "The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay," said Lawrence Yun, NAR's chief economist. Seattle, New York and San Jose are among the cities where combined rent growth far exceeds wages, according to the survey. "Current renters seeking relief and looking to buy are facing the same dilemma: Home prices are rising much faster than their incomes," said Yun. "With rents taking up a larger chunk of household incomes, it's difficult for first-time buyers - especially in high-cost areas - to save for an adequate down payment." Meanwhile, those who were able to buy a home in recent years have been insulated from the rising housing costs since they were able to lock-in a low 30-year fixed-rate mortgage with a set monthly payment, according to NAR's study.

    The markets that have seen rents rise by the highest amounts since 2009 are:
    • New York: 50.7 percent
    • Seattle: 32.38 percent
    • San Jose: 25.6 percent
    • Denver: 24.14 percent
    • St. Louis: 22.26 percent

"Many of the metro areas that have experienced the highest rent increases are popular to millennials because of their employment opportunities," said Yun. The key to relieve housing costs: Builders need to ramp up the supply of new-home construction, according to Yun. He estimates that housing starts need to rise to 1.5 million. Over the past seven years, housing starts have fallen far short from that historical average - averaging about 766,000 per year.