House prices in Washington state are rising faster than in any other state in the country.
Rents are also rising, and it’s all because Seattle companies are hiring. It’s an unusual predicament for people looking for a foothold in this real estate market.
The high demand for homes means prospective buyers must lower their sights so they will have the flexibility to raise their offer and potentially win a house. Agents have learned to calm down the competition by opening all the offers at the same time. But many offers contain clauses that raise the offer – a sort of automatic bidding war.
It isn’t unusual to see homes sell for $35,000 or $100,000 or even more over the list price.
The high demand for places to rent means landlords are charging much more – forcing tenants to leave in search of another housing solution. Lower rents used to mean tenants had a chance at saving for a home. Higher rents make that harder.
Across the region, people at lower income levels are being squeezed.
“We actually have come to a critical point,” said Zillow economist Svenja Gudell. “We’re seeing the bottom third of people living in Seattle being shut out of the housing market completely.”
The consequences of the rising market is concerning cities, housing activists and now a major bank.
Wells Fargo has added King County to its list of regions that will be recipients of the bank’s charitable funds.
It is giving qualified low and moderate-income families up to $7,500 to beef up their down payments.
Belt said she intends to qualify for that money.
"The landlord’s going to raise the rent regardless," said Belt, a longtime renter. "He doesn’t care about how much money you make. I'm tired of renting.”
If you have lots of money, there are plenty of homes to pick, as builders have been building profitable high-end housing. But they haven’t been building homes on the low side of the King County median, which is around $485,000.
Wells Fargo said the lack of building for people of modest means is part of the reason for the rise in value of homes in formerly working-class Seattle neighborhoods.
“I wish the supply of especially affordable homes was available,” said Patrick Yalung, regional president of Wells Fargo. “Unfortunately it’s not.”
Belt said she will search in the southern end of the county, where prices tend to be lower.
But what about waiting out this housing price hike? Local economists say the run-up in house prices will end sometime.
“It needs a trigger,” state economist Steve Lerch said. “There has to be something that causes the income growth and the employment growth to go negative.” He said we would be due for a downturn around 2019 or later.
Or the unforeseen could happen, like a correction in the tech sector. Gudell of Zillow said she doubts a problem with a single employer would bring down prices.
“I don’t think there would be a tremendous impact on the housing market,” she said. “Home values would grow at a slower pace, but you wouldn’t see home values drop dramatically.”
Myrna Belt is not interested in waiting for prices to fall. She said she is ready right now.
“Today is godsend day for me, because it's allowing me to know that I'm on the right path. I'm doing what I'm supposed to do," she said.
Wells Fargo will collect applications from people who want to receive down-payment help at an event July 8 and 9 at the Westin Hotel in Seattle.
People who wish to apply should come with bank and tax statements and be prepared to prove their income. Wells Fargo says recipients do not have to have a Wells Fargo mortgage. You can find more information about the subsidy here.