Commentary: Housing costs — A tale of two daughters in the best of times and worst of times

By Jim Russell
Empire Press Correspondent

This is a tale of housing costs for my two daughters in April of 2016, one who panicked and one who celebrated. Their stories are being repeated in Seattle, Portland, Chico, Calif., and locally. And it’s causing success and problems.

One daughter received a letter increasing her rent over 50 percent by $1,000 on July 1. With her salary as a special education teacher in Seattle at a low-income school and as a single mother with three children, she would have to pay 50 percent of her income for housing. She told the landlord she couldn’t do it.

She and I shopped for a house to buy over the weekend.

Sellers in Seattle are getting multiple offers less than a week after listing. The hot job market bringing in high-tech employees is one reason. Another reason is builders and investors are teaming up to scoop up houses and evict renters. One owner made between $50,000-$100,000 last year in short term rentals. Our Realtor believes houses priced between $300,000-$400,000 could rise another $200,000.

Teachers like my daughter and low-wage caregivers are being crushed by these socially constructed economic forces. Caregivers, teachers and social workers end up in short supply so the quality of health and social services declines. Homelessness increases. And these investments are discounting serious risks.

We went to a Saturday open house being rented for $1,650 a month. The showing Realtor casually said, “Inspection reports are available. The buyer will review all offers on Tuesday at noon.”

Our Realtor noticed the bank on the front of the lot was slipping, but after the open house eight prospects had requested inspection reports, either ignoring the slippage or believing they could prevent it. Remember, Seattle expects to have devastating earthquakes.

Successful bids usually offered all cash, waived the inspection, set a closing date in a few weeks, offered free rent of the house back to the owners and bid $5,000 more than the highest competitor’s price up to a limit of $50,000-$75,000 higher than the asking price.

The other daughter in Portland accepted such an offer after her Saturday open house. Sunday night she and her husband chose an all-cash offer $50,000 higher than the asking price with a waiver on the inspection. Remember Portland and its economy would be devastated by “the big one,” the massive earthquake overdue and expected west of I-5.

The week they listed their home they faced the same multiple bid market in Chico, Calif. Chico’s current public water planning document declares that the city has no assurance it will have a reliable water supply after 2015.

They decided to rent.

A Chelan-Douglas mortgage broker told me Realtors are advising local sellers to pay for their own inspection to get cash offers and close more quickly. People are coming from Seattle with cash.

My neighbor placed her condo on the market in January. In April, she accepted an offer close to her asking price from a buyer in Alaska who viewed the home online but never visited it.

The local median sale price is above $250,000, which is the highest it’s been since the Chelan-Douglas Trends data became available in 2006.

Its housing affordability index has been declining since 2013 because median incomes are rising faster than housing prices.

But the Chelan-Douglas County Trends data has troubling signs for the low-income housing market. The number of first-time buyers has been declining since 2013. Rental vacancies are hovering around 2 to 3 percent.

From 2010-2015, between 45 and 46 percent of renters in Douglas County and East Wenatchee have paid 30 percent or more of their household income for rent. That is a frighteningly high percentage because those people find it harder to purchase other consumable goods and health services.

My Seattle daughter’s landlord said they don’t want to lose her and raised the rent $50 a month for the next year.

But the experience haunts her because she visualizes being dumped on the street. And worries that she’s losing money by not owning a house.