Affordable And Unaffordable Housing

(WA state required disclosure: I’m a broker at Dalton Realty, Inc. http://whidbeyrealtor.com/).

My house’s tax assessment came in today. Yesterday I was part of a group meeting about affordable housing in one of your local tourist towns: Langley. A month ago I gave a presentation about real estate and affordability on Whidbey Island. Just prior to the pandemic I was also part of the discussion about housing on the less-touristy part of the island that is dominated by the Navy base. Throw in a few years of writing about affordable housing in the Seattle area (Seattle.Curbed.com) and eventually I might take the hint that I have some experience with the topic.

1) Affordable housing is a term that’s easy to mis-interpret. The current median sales price on the south end of Whidbey Island is $675,000. That sounds unaffordable to some, but the multi-million dollar homes sell to people who can probably afford them. We could use a different phrase.

2) Ten years ago the median sales price for the same area was $292,500. It was considered somewhat unaffordable then. ~130% increase in a decade? That’s a reasonable rate of return, if you’re the one with the house. If your income hasn’t risen by more than 130% in that time, then buying a house is less affordable.

My house’s tax assessment went up 22% in one year. 

Pessimist’s view: My property taxes just went up. My clients who want to buy might not be able to afford the house they want.

Optimist’s view: If I have to sell, I should get more than before. If I don’t sell, there’s that much more equity to borrow against in case I need a loan.

Pessimist’s/Optimist’s view: If I sell, I might not be able to buy – unless I move to zones that are under threat of wildfires or tsunamis. Fire or water; take my pick. (Remote Living – my 1,100 mile long road trip through Washington State’s more remote regions.)

The Langley Housing Plan, as well as the “Issues That Matter – Housing, Where will we all live?“, as well as the all-island meeting “Affordable Living On Whidbey” suggest that someone is paying attention. The continuing need also suggests that the issue hasn’t been resolved.

It isn’t only happening on Whidbey. Housing expenses are rising faster than wages, seemingly everywhere. Rising house prices prove that lots of people can afford to buy, frequently more than one, two, or more houses. Wage growth is nice to see, but it doesn’t seem to be enough. It might be one reason for the #GreatResignation.

Eventually something will change. Change is a constant. But will the change be evolutionary or revolutionary? #NotRhetorical

The move to remote locations has been enabled high-speed internet, decentralized electricity, and mobile phone coverage. Rural areas are the front line. Ironically, rural character can be espoused as something that defines an area; but that new rural character is far from the small, frugal, pragmatic, independent lifestyle of pioneer times. 

One of the more popular requests I get as a real estate broker is for a tiny house on a lot large enough for a productive garden. ‘Tiny’ can mean many things. To someone in a 3,000 square foot house it can seem radical to consider anything less than 1,500 square feet. To someone who has no home, 300 square feet can look luxurious. The irony is listening to people complain that tiny houses will impinge of the rural character of the neighborhood. 

Look at the houses that were built by true pioneers. Houses were as big as necessary, though not as big as they wanted. They couldn’t spare the time or money to build bigger. They needed those resources for wells, roads, clearing, and planting. Eventually septic systems and electricity were upgrades.

And then inflation and interest rates hit. I’m not grabbing for tangential news items. These are topics, current events. Housing becomes less affordable, again. (Housing Affordability Falls as Mortgage Rates Climb in April)

So, lots of talk while the situation worsens. Unaffordable housing is unsustainable. Eventually, something will change.

Considering years, decades of conversations it is possible that the old solutions won’t solve the new problems. Apartment buildings and dense developments are attractive to the housing industry because they use conventional models that create conventional jobs. They’re understandable. 

  • Tiny houses are happening, regardless of regulations – until a regulator notices.
  • RVs are not just for vacations, any more. Van life is trending, both by choice and necessity.
  • Living on a boat gets around the issue of having to find land.
  • Off-grid houses benefit from less oversight, simply because sometimes they are out of sight. Just hope nothing breaks at a bad time.
  • And don’t forget ‘other’ because innovation and necessity are familiar with each other.

And then there are the changes in the real estate industry, just in case enough wasn’t in flux. (Searching For A New Normal In Real Estate And Affordability)

How does that adage go? First they ignore you. Then they laugh at you. Then they fight you. Then you win. Inspirational, but not always what happens. 

These are dynamic times in real estate and housing. #MassiveUnderstatement I’m watching it happen from the inside and can’t see where it’s going and how it’s going to get there, and that includes on a personal level. Will I have to sell? Will stay by taking out another loan? Will my income or assets climb sufficiently for the issue to be more academic instead of dramatic? Dynamic times? Yes. Weird times? Definitely. Good luck predicting any of it.

PS I look forward to your personal perspective in the Comments

About Tom Trimbath

real estate broker / consultant / entrepreneur / writer / photographer / speaker / aerospace engineer / semi-semi-retired More info at: https://trimbathcreative.net/about/ and at my amazon author page: http://www.amazon.com/-/e/B0035XVXAA
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