Northwest now is supported in part by viewers like you.

Thank you.

Neither the bond market nor the fed seems to be in any rush to lower interest rates.

And while home prices have slowed their meteoric rise, it doesn't mean getting into a home is getting any easier.

Tonight, it's our annual discussion with a panel of experts talking about what's likely one of the largest investments you'll ever make your home.

And our Steve Kitchens on the debate over rent control possibly coming to a state near you.

Real estate is the discussion next on northwest.

Now?

Music The typical home in Washington statewide is worth just about $600,000.

And again, that includes central and eastern Washington.

The northwest MLS reported prices were up 9.5% in the first quarter, implying a 44% increase by the end of the year.

Now, that's unlikely to happen, but I've been wrong before.

The Republican caucus recently put out a chart showing that Washington is number four nationwide for Unaffordability.

That's behind only Hawaii, California and New York.

Here in western Washington, condo prices surged almost 30% in January in both Seattle and the East side.

as buyers sought alternatives to steep home prices.

Inventory is going up, but there are still only about two months of supply on the market on average.

So it's still a seller's market, since the conventional wisdom is that a six month supply is balanced between buyers and sellers.

According to the latest MLS report, the median price in King County is $855,000, in Snohomish, 755,000.

And in Pearce and Kitsap counties, $555,000.

now.

Renting a home, possibly from a multinational hedge fund like Blackstone, is an alternative for would be buyers who can't make it into a house.

But renting brings risk if rents skyrocket.

As Steve Higgins tells us now, this is why the legislature is talking about rent control.

Rent control has been illegal in Washington state since the 1980s, but not anymore.

Governor Bob Ferguson signed House Bill 1217 into law in the first week of May.

The legislation caps rent increases to 7% plus inflation every year.

Advocates insist this legislation helps keep vulnerable families from being kicked on the streets.

But opponents insist this kind of legislation spooks developers, strangles housing supply and increases rent.

Rent is too high.

Dozens demonstrated on the steps of the Legislative Building in Olympia back in April, demanding lawmakers combat runaway housing costs in communities across Washington.

We clearly need more renter protections.

Single mom Andrea Bernhardt joined the rally.

And after watching neighbors, he double-digit rent increases year after year.

She worries she'll soon be priced out of Washington without protection.

Yeah, if I left Seattle, I would.

I would need and deserve, just like every other renter, basic protections for some sense of stability.

Organizations like the Washington Low Income Housing Alliance urged legislators to keep rent increases predictable.

Washington state right now has the highest evictions ever, ever in history.

And it's because people can't afford their rent increases.

So where do people go?

They go to the streets.

With utility costs rising and so much in the future being uncertain, including my state grants.

It's hard to feel secure.

I still have three years left to my degree, and I don't know if I'll be able to afford to stay through the end for weeks.

Lawmakers heard testimony from renters desperate for relief.

All their tenants have endured 50% rent increases, with many now paying over 70% of their low fixed Social Security income on housing.

They come to me in tears saying they fear homelessness.

This will drive investment into other states.

This will decrease our ability to build.

We also heard from developers and landlords warning rent control scares off development and does little to impact rent prices in the long term.

We cannot afford to rent if we can't turn a profit.

House Bill 1217 caps rent increases to 7% plus inflation up to 10% each year, whichever is lower.

Rent for manufactured homes caps at 5%.

The bill includes some limitations and caps on rent for apartments and homes.

Sunset in 15 years.

Democrats passed the bill without bipartisan support.

Republicans warn regulation ultimately hurts renters and pushes development elsewhere.

But the only real predictability that tenants in Washington State are going to have is assurance that their rent is going to go up 10% a year, year over year.

This is a great bill for Idaho.

This is a great bill for Montana.

And this is an amazing bill for Arizona.

How do we find the right balance?

University of Washington real estate associate Professor Greg Coburn coauthored homelessness is a Housing Problem.

During a presentation sponsored by the Seattle Public Library Foundation last fall, Coburn shared his research and touched on rent controls controversy.

I'd much rather have a whole bunch of housing built in some sort of cities.

That, to me, is an easier path to affordability than regulating the private market.

But those things cost money.

And so in the absence of resources to do that, then this is where we go.

We've got a crisis.

Our hands are in.

Washington state governor Bob Ferguson says House Bill 1217 ensures sudden and large rent increases don't destabilize families.

Together with another nine bills signed into law in early May.

Ferguson aims to make building affordable housing easier, even as opponents worry regulation deters investment.

What's your concern from developers who claim that this kind of legislation 1217 justice books about the state?

Yeah, I mean, look, I'm confident that this legislation is going to work for everybody in our state.

And but we need to have is a balanced approach, right?

We need more housing.

We need folks to construct that housing.

We need folks to rent that housing.

In Seattle Steve Keegan's with us now.

Joining us now are incoming Seattle King County Realtors President Garrett Nelson, the new Tacoma, Pierce County Association of Realtors President Jennifer Hawkins and banner bank mortgage officer at Puget Sound Mortgage Bankers Association Director Mark Meath.

Garrett, let's start with you in King County.

I was reading boy in the fall.

Things look like it was really the market was taking off.

Buyers and sellers are finding each other.

And then it rolled right over and boom, here we are again.

What's going on up in King County?

first of all, I think it's more than just the county itself.

Right?

We have to take it neighborhood by neighborhood, town by town.

I like to remind people that King County is larger than the state of Delaware, physically larger than the state of Delaware.

So with that in mind, you know, you can look at countywide data, but real really, it's down to the specific neighborhoods.

Some are still hot.

Where I live in North Seattle, you know, we're still getting a few multiple offers on listings.

Okay.

You go further out.

East King County.

It's it's slower.

I would say so.

I don't think you can just specifically take one, you know, the county as a whole.

You have to look down into the neighborhoods, really dig in on, the statistics that are happening where you're looking at buying a home.

I'm in the media.

I'm supposed to generalize.

I'm just kidding.

You kind of have to a little bit.

But I appreciate that.

You know, real estate will always be hyperlocal and, you know, obviously, location, location, location.

Jennifer, the news in Pierce County, workforce Central came out with a study recently saying we need something like 2300 new units every year to be built in Pierce County over the course of the next.

I think it was 20 years to catch up with demand, you know, do you see an environment where zoning and building codes and restrictions and rent hikes and market conditions are going to allow this to happen?

Will Pierce County be able to be the the price relief valve for King County?

It's traditionally been not so much anymore.

Yeah, that is a great question.

Also, I think as the association as a whole, what we would like to see is some permit streamlining, because the builders have been kind of taking it for a few years now.

And unfortunately, that gets pushed over to the consumer, which has caused us to catch up almost to King County and has not allowed us to be a relief button for housing.

Our shortages continue, our inventory continues to be low, and that, does continue to keep the prices high.

Even with the high interest rates, we didn't see any dips in our values here in Pierce County.

Yeah.

And, I think that if we could get some permit streamlining going on, we could hit that relief button for the builders.

That would then get pushed down to the consumers.

Are the buyers there in Pierce County, or have prices just stayed high?

There are buyers.

We're still seeing people come into our area.

We've seen a lot of, compound living.

Are were heavily and dated with, boomers and the boomers are not moving out.

Yeah.

Instead, they're moving kids close.

And so they want to help with childcare.

And, we're seeing a lot of that compound living people moving closer to family.

I think that's keeping, Pierce County numbers up.

Great segue to you, Mark.

How do originations look when we are having this lock in effect?

People on our age group, the boomers, are hanging on to that two and 275 mortgage or that 325 mortgage, whatever it was.

Do you see that changing at all, or is it change the dynamics of the market?

It's a compound question in that, or it's what I do best.

Yeah.

Yes.

I guess I should say another great question.

Yeah.

So, it's a compound question in that earlier in the year we were seeing interest rates improve.

And so we saw applications start to take off.

And we typically do this time of year just because I call it the W-2 effect.

People get their w-2s, they look at how much income they've made.

And even though interest rates may be slightly higher than what we've seen in the, you know, the past 3 or 4 years, they go, we should be able to afford a home.

And then they start doing their interview process and they start, you know, asking some of those important questions.

And then the other part two is many people are still finding out there's other ways of affording a down payment than what they may have in their savings account, or what they've been able to save through their tax refund.

So some new products out there, what are we talking about?

Actually, these products have been around for quite a while.

It's just lack of understanding of all of the down payment assistance money that's out there.

I did an actual deep dive before this event.

We found out at banner Bank that we had 13% of our applicants had down payment assistance money.

So it's it's not uncommon.

It helps get people into homes.

And then in terms of the inventory side of things, we are finding that many of our builders, unfortunately, are having to use some of their equity to help use for buy down type purposes.

They're helping people get into their new homes.

Correct?

Yeah, that is correct.

At least that's what I've seen on a couple of different transactions that I've seen.

I can't speak to all they've seen, but from what I've seen, a lot of our builders are having to do fairly sizable, closing costs, concessions to help with maybe A21 buy down or just a permanent buy down that helps make it more affordable.

Well, that's a little movement then in the seller's direction, if we could have more inventory that to back to Jen's point, where my national number is 1.3 1.4 million homes that we're short right now.

Yeah, yeah.

So what are you telling buyers and just we'll we'll start with you, Garrett, on this.

Are you how do you coach them up?

I guess to kind of look for that down payment assistant.

Is that is it all family do you negotiate with builders who are sitting site.

How do you how do you go about doing that and coaching up your buyers?

I mean, I think a lot of it the conversation has to start with the lender and, you know, make sure they're speaking to the lender about what options are available to them, understanding that there are opportunities to get concessions right now, not just in, you know, down payment assistance, but, you know, we might be able to get you a home inspection after after mutual acceptance right now, which I haven't seen for a few years, unfortunately.

Yeah.

He explained that people are buying homes just like we're not going to inspect it.

People are buying without inspections, or the sellers were doing, inspections and providing those to the buyers.

I've had some listings where we've done that, and right now there's opportunities to have, you know, a few more concessions, you know, inspections after after mutual.

I would say closing costs help, that sort of thing from the seller.

So it's not just about the down payment assistance.

There's a few other things that are we can throw into the mix.

And I think a lot of it is just having conversations with the buyer, understanding what they're trying to achieve, where they're trying to be at, knowing what the market's like in those areas and what, what the different possibilities are out there for them.

Jennifer, how do you how are you working with buyers?

I think, similarly to what he said in the beginning, what you said in the beginning about each neighborhood and location is so specific and so different.

Buyers are also so situational.

So, it always kills me when people say, oh, it's a buyer's market or seller's market.

Well, it's actually you need to get with your trusted advising team.

Talk to your lender early, talk to your real estate broker early, and make certain that you know what's going to be good for your specific situation.

Because there are so many different opportunities out there.

It's not just a blanketed situation when you buy a house because, as he mentioned, you know, Seattle proper might be just pop in, but if you go three miles outside, you might be able to be a first time home buyer.

And understanding the different situations and what you're actually needing as a buyer, I think is the most important thing.

What are you experiencing in Pierce with that lock in effect?

A lot of boomers and older folks, hanging on to their homes.

And how does that impact things?

Yeah.

So I think that's what's been the struggle for us as the advisor is that both the seller and the buyer think that it's their market right now.

And so we have a little bit of, of a, you know, standoff.

The prices have not gone down.

But there is a little bit more inventory and rates are up.

And so everyone thinks, oh, it's my turn, it's my turn, it's my turn.

And so, just having that conversation in the beginning to make sure that, you know, for a home that's been on the market for 90 days, you can get an inspection.

However, if the home's been on for two days and there's been 17 showings, you know, maybe we are going to have to waive or do a pre inspection.

So, every situation is different.

And just making sure that you're hearing, what, what your needs are and getting your, questions answered.

That's the most important part I realize.

Mark, I'm asking you to look into a crystal ball you don't have, and that's okay.

But that's part of the that's part of the game.

Do you think are you anticipating higher for longer interest rates, and do you ever think there will be a new product that comes out like a 40 year home mortgage?

What do you think?

Okay.

The 40 year home mortgage.

I haven't heard anything along those lines yet, but we will get creative somewhere at some point.

Something will be the new, you know, product of the month like item when, yeah, that crystal ball is really foggy.

In terms of interest rates, there's a lot of confusion in the market right now just because of the tariff situation.

So we had positive situation going on with interest rates, and then we had the different economic and political news that has shifted things back and forth a couple of different times within the last 30 days, probably 45 to 60 for sure, because ultimately you're looking at the ten year Treasury, correct?

Yeah.

The the word on the street through, Chairman Powell was simply probably in the second half of the year, we would see some additional rate relief of up to maybe a half percent, maybe a quarter, and then a quarter later in the second half of the year.

But he's always been a very measured individual in terms of the information that he gives.

And everyone just feeds off of every last sentence that that man speaks.

And so when he retreats or holds back information, people get a little bit nervous and dicey about what's going on, which is why we've seen interest rates improve interest rates, go away from interest rates, prove and then go away from us just because the economic news has been that way.

So until we actually let the water go under the bridge and see what really is going on with inflation and our economy, it's not going to be until third and fourth quarter, till we probably see any rate relief from from the fed.

Everybody went from arms into 30 year fixed after the great financial crisis.

Is there any role for a variable interest rate loan anymore or is that still just I think there will be in the future.

But the, the yield curve had been inverted, which essentially means your short term money was essentially the same price as your longer term money.

So we weren't getting.

Why bother?

Exactly.

Yeah, we are just starting to see a little bit of that margin where maybe it may make sense in the future.

But again, it may be the second half of this year, maybe 2026 before really that that differentiation takes place.

Yeah.

Garrett and Jennifer, I know from, from experience that when it comes to speaking with realtors and I say this with all the action now is always a good time to buy.

Oh, I get that.

I get that now is a good time to buy.

With that said, let's talk about policy a little bit.

You know, there's been some discussion in the legislature about uncapped property tax liabilities with no limit on on what could possibly happen to a homeowner.

We're talking and we're asking people to buy this this product that's very high priced for, for you know, I'll say it's not a super high interest rate, but higher than it has been in a while.

Interest rate.

And you're look, you think about maintenance costs and everything else.

You're kind of taking on this almost unlimited liability to some degree.

What is the argument today still for a young person or even a not so young person that, yeah, you want to own your home?

I mean, I still think it's it's the best way to build wealth and equity and get yourself on the property ladder.

I bought my first condo ten years ago, and, you know, it wasn't what I was dreaming to own for the rest of my life.

Eventually sold it, was able to buy the next home with that.

I think it's a great way to build, you know, a steady, solid base, to live from, you know, to control your costs.

I think it helps drastically, you know, the best rent controls, a 30 year fixed mortgage.

So.

Yeah.

Yeah.

And yeah, that's a that's a good.

Well, I think I'm going to steal that.

Jennifer to pay.

Yeah.

You're either going to pay someone else's mortgage.

You're going to pay your own mortgage.

Yeah.

What about the what about some of the points I bring up, though, when it comes to property taxes and what's going on in the state from a regulatory and policy perspective, is that give you any pause?

Is that ultimately going to help or hurt the housing market?

How do you feel?

Yeah, it's I'm not a big fan.

I know that we again as the association fought hard for the real estate excise tax.

And holding that back because that was a big issue that continued to hit the floor.

And I'm hopeful that we can continue that conversation on this end as well.

Property tax.

Yeah.

Go ahead.

Oh yeah.

Property tax I think any, any potentially large increase that negatively is going to affect, housing affordability.

It's not a good idea I know.

And in our office we had a, an agent whose client was able to qualify for the home by, like, I think like 20, $0.25 or whatever.

The margins were that tight, right?

And I worry about buyers like that.

If property taxes are going to drop quickly increase, they won't be able to be buyers and afford a home.

And I worry about people who are already own their home.

Are they going to be able to keep affording them?

If property taxes increase drastically?

Yeah.

And then you get into this death spiral where budgets don't make their numbers.

So property taxes have to increase and they it's it's a spiraling down.

And this this can happen in a market.

Is that a possibility here in western Washington.

That's so cool.

And everybody wants to live here.

I mean is that a concern?

Yes.

Talk about that's a big concern.

I think that, like you said, you've got to be able it's always a goal.

You know, you want to live the American dream and pay off your home and stay in your home and age in place.

Everyone wants to have, you know, a possibility to stay in your home.

And if the property taxes continue to go up, a lot of people will not be able to do that.

And that's not okay.

Mark, I know you measure everything by originations.

And ultimately you've got to feel like I would guess the same way about that.

Well, of course.

And another topic is the insurance side of things.

But then even on the insurance side of things, like with your condo driven type market, then you have your homeowner's association insurances.

So there's a lot of different costs that are involved that way.

Talk about insurance.

What's going on there?

Well, just with some of the, you know, issues that we've had in terms of global warming or whatever climate issues you want to call it, the fires that we've seen, the hurricanes in Florida, a that causes prices of materials to go up.

But then also the insurance companies have to account for that, and it's making it more drastic.

I know of some places, like in Arizona, where if you haven't replaced your roof in the last 30 years, you're getting canceled from your insurance company, and then you're having to go to a different policy and increase it, or go, you know, maybe bite the bullet to go put that new roof on.

They should have been on maybe 3 to 5 years ago.

But at the end of the day, costs are going up in terms of materials as well as what we understand with the tariff situation.

For some of those materials, then that means your homeowner's insurance companies have to be able to account for that in terms of what they have to cover.

So there's your insurance side, the tax side we've covered.

So all of that has to come into play of paying attention to how I'm qualifying somebody.

And then what am I using realistic numbers.

Because if I'm using numbers from 3 or 4 years ago, I'm giving people bad info and it's and it's not just making the monthly not on paid.

I it's like you said, the carrying costs.

Absolutely.

And I think a lot of people forget that a lot.

There's property tax, there is insurance, there is maintenance.

And those things you're nodding a lot Jennifer.

Yes, absolutely.

Yeah.

It's expensive to upkeep a home.

And people need to think about that and prepare for that.

You know, just like any budget for any business, you need to be doing that for your household as well.

Yeah.

Putting money aside for roof replacement, putting money aside for repainting the exterior and taking care of things like that.

You talked about the roof replacements in Arizona.

We're seeing that here as well.

Insurance companies are use drones to fly over, and if they see moths on your roof, they're canceling you or up in your hiking up your rates and, you know.

Yep.

Had a friend do that happen to?

Yep.

Could even be on an outbuilding.

Yeah, it could be on a on a shed, detached shed from the home.

And they'll still they'll still ding you for it.

So we've been talking about buyers want to talk about sellers for a minute and again my vast experience with realtors tells me that the answer is as long as they have it priced right.

Sellers are in good shape, so I understand that.

But talk a little bit about sellers.

If somebody is looking to sell a home, our expectations too high.

How do they how do you successfully sell a home in Western Washington based on current conditions?

I think it's going to depend on each client and on each agent to set those expectations, you know, understand what their goal is and what they're trying to achieve with selling their home, being realistic about what the market's like in their area and, you know, setting those expectations of what what they think they can be getting.

Again, it's it's all local.

You can read what is happening in King County, but that doesn't mean that's what it's going to be in your neighborhood.

Yeah.

I can't come up with somebody who's an Laurelhurst or something and decide that's what I'm going to.

Lauren, what's your feedback?

What do you how do you talk to sellers when they want to list a home?

What's your speech to them in the environment that we're currently in here in Pierce County, I think, it's a similar conversation.

So now a getting up to date on all of your maintenance is extremely important before listing.

We've all remember the times when you could just put the house on the market and inspections were waived and appraisal was waived, and people were paying cash, and all of those things were happening.

That's not so much anymore.

Okay?

Do you need to make sure that, you know, people don't typically go into their crawlspace, but check out your crawlspace, make sure that your insulation is, up to date.

Take a look at your roof.

Do all of those maintenance items before your listing, and that's going to help with your ROI.

I think the big takeaway that I'm just kind of just kind of gleaning from this discussion is it sounds like things aren't as crazy as they used to be.

We're in a little more of a balanced situation.

Is that fair?

I would say so.

Kurt, you're rolling your eyes.

I would say a bit more balanced.

To me, this feels like kind of like 2012, 2013, a little bit interesting.

That's what.

Yeah, I'm surprised that that time after the Great Recession and climbing back out like we when we've been through such a hot market that it you know, it feels like, you know, we're a little bit cooler market.

I think it's also important to bring up the fact that we're coming out of Q1.

Q1 is always the lowest we've got the holidays, we've got our weather.

So that's important to talk about as well.

We are going to be hitting the spring spring market and numbers are going to change.

Yeah.

Well, we talked with talked about buyers.

We talked about sellers.

We talked about the markets.

We talked about mortgages.

So again, I don't think we've solved any of the world's problems here necessarily.

But I'm hopefully, hoping we gave folks a good feel for what's going on out there.

Thanks all of you so much for coming to northwest now.

Thank you.

Thank you.

The only silver lining of a possible recession or repricing of assets as the global economy shifts, is that home prices might start to go down.

The bottom line while that's not great news for homeowners, of course, or for the state contemplating raising taxes on the notional value of an unrealized asset like a house, maybe it will let a little light leak in for younger, first time home buyers who for now have no place to go as boomers sit locked in their homes with low interest rates.

Only time will tell is the lamest ending in television.

But in this case, with so much uncertainty, it's the fact of the matter.

I hope this program got you thinking and talking.

You can find this program on the web at kbtc.org, streaming through the PBS app, or listen on Spotify and Apple Podcasts.

That's going to do it for this edition of northwest.

Now, until next time, I'm Tom Layson.

Thanks for watching.

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