Tag: rental market

Seattle Rep. Macri Has a Plan to Ease Eviction Fears

This post originally appeared on Seattle magazine’s website.

Image result for nicole macriSeattle state representative Nicole Macri (D-43) is drafting legislation that could address some of the issues raised in last month’s report on evictions by the Seattle Women’s Commission and the Housing Justice Project. That report revealed that many renters who get evicted owe very small amounts of money, and that the vast majority of people who get evicted in Seattle end up homeless.

In Washington state, landlords have no obligation to accept rent that is more than three days late. And aside from Seattle—where landlords are barred from terminating a lease without cause—landlords can terminate a renter’s tenancy with just 20 days’ notice, giving the renter almost no time to find a new place to live and to come up with the money to pay for first and last month’s rent, and deposit.

Macri says her office is meeting with stakeholders to figure out the exact parameters of the bill (or bills) that she will propose in the upcoming state legislative session. The options include things like extending the current three-day limit to somewhere between 14 and 30 days—meaning that tenants who fall behind on their rent would get a bit more breathing room to come up with the rent, instead of immediately getting an eviction notice on their door.

“What we’re hearing is that folks are being put out of their homes for relatively minor infractions, including small underpayments of rent,” Macri says. “Say you underpay your rent by $20. The [state] statute allows a three-day notice to go up on your door at the moment the late day comes up on your lease. You can be in court the very next week after the three days expire, and within a week and a half or two weeks a sheriff could come to remove your possessions.”

Another problem the eviction report found is that judges in Washington have no discretion to order landlords to accept late rent or work out payment plans; if a landlord wants to evict a tenant for late payment, for example, a judge can’t order the landlord to accept partial payment or set up a payment plan. In jurisdictions with judicial discretion, like New York City, the eviction rate is much lower than in Washington.

Another proposal Macri is drafting would create a just cause eviction ordinance—similar to what Seattle already has in place—for the whole state. Like Seattle’s, it would specify the circumstances under which a tenant could be evicted, and bar evictions for reasons that fall outside the ordinance. The current situation, Macri says, “creates fear [among tenants] about bringing up any concerns with their unit. People are afraid to say, like, ‘I need a new refrigerator, because it isn’t working,’ because they’re worried that they’ll get a 20-day notice.”

Macri says she hopes to have legislation ready to pre-file by next month, in time for next year’s legislative session, which begins in January.

As Rents Increase, Homeownership Even More Elusive

Back-to-back presentations in council chambers Monday morning painted a stark picture of a Seattle divided between the homeowning haves and the renting have-nots, and also showed once again with data (not the ever-popular anecdotes) that the tighter the supply of any form of housing, rented or owner-occupied, the more expensive that housing is.

First, the good news: For renters, a development boom over the last few years is already starting to relieve pressure on prices, meaning that rents are likely to go down or at least stabilize as vacancies go up. Mike Scott of Dupre+Scott, a longtime Seattle apartment market analyst, likened the development pipeline as “a snake eating a small animal—it’s going to digest it, but it’s going to take some time.”

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The relationship between supply and demand—or, put another way, vacancies and rents—is starkly illustrated in the following graph, which shows that as supply tightens (that is, as development slows down), rents go up; as more housing gets built, rents decline.

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That’s true, Scott pointed out, even though new apartments are usually more expensive to rent than existing stock. (The Housing Affordability and Livability Agenda, which proposes to build 50,000 new units over the next decade, including 20,000 affordable units, would make a dent in the need but would not by itself accommodate the 120,000 people expected to move to Seattle by 2035).

The exception to that rule was microhousing, small efficiency units that are expensive per square foot but affordable in practice; according to Scott’s presentation, the average microunit rented for $871 in 2015, compared to an average studio rent of $1,433. Unfortunately, city regulations have effectively banned the development of new microhousing, and that housing type has been replaced by so-called small efficiency dwelling units, or SEDUs (which Scott insisted on pronouncing, “Said-Yous”). Those are still cheaper than studios, but significantly more expensive than micros, at an average of $1,151 a month.

Screen Shot 2016-03-15 at 7.13.05 PMNone of those rents are particularly affordable to struggling working-class or middle-class renters, of course, and the solutions seem obvious: More housing, and more opportunities for homeownership. Unfortunately, city rules that reserve nearly two-thirds of the land in Seattle for single-family homeowners make it extremely difficult to build the massive quantity of new housing stock the city would need to significantly push rents down, and first-time homeownership, as a presentation by Zillow’s chief economist Svenja Gudell illuminated, is elusive to all but the wealthiest and becoming more so. In January, single-family home values were up 11.8 percent over last year, and condos were up 14.2 percent. “That’s very, very strong—much stronger than you would see in a normal year,” Gudell said. The average home in Seattle was valued at $533,000, making this the definition of a seller’s market as long as you don’t want to buy another home in Seattle.

As for first-time buyers, they’re being buffeted by a near-perfect storm: High rents that make it difficult to save money for a down payment; a high-demand market where lenders can afford to be selective about who they loan to; lending standards that have tightened in general since a recession caused largely by banks loaning money to people with bad credit; and the simple fact that there just aren’t many houses, condos, and townhomes on the market to begin with.

“Rents are extremely high, so it’s still hard to save for that downpayment, and if you’ve qualified, it’s quite difficult to find anything at all, because affordable housing at all price points is in very tight supply right now,” Gudell said.

How tight? Here’s an unsettling stat to ponder as you write your next rent check: Right now, there are only 906 homes of any kind for sale in Seattle—a 21 percent drop from last year. So while buying a home is currently much more affordable than renting one (as the graph from Zillow, below, illustrates), it’s out of reach to all but a few. One reason for that is the fact that there are still a significant number of homeowners (about 7 percent) whose homes are underwater, meaning they owe more than the value of their condo or house. Those people, according to Gudell, tend to be lower-income owners of lower-price houses, and they aren’t selling, which means that what would be entry-level homes are simply off the market.

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Actually, pretty much all homes are off the market. Another reason for that: People who want to stay in Seattle don’t really benefit from elevated home prices, because they have to turn around and buy another house in the same overinflated market. “Seattle is a distinct seller’s market right now—as a seller you definitely have the upper hand and have more power in that negotiation compared to the buyer—but most sellers turn around and become buyers and they can’t find house they want to buy.”

The moral, for both renters and buyers? Hang tight and hope* Organize and demand that the city allow more density, which will reduce rents, and wait for the next downturn to roll around.

*Mike in the comments makes an excellent argument for this edit.