Monthly Archives: January 2019

New Pavilion a Community Benefit for Those with Two Feet…or Four

Go to any warm weather locale and dog parks are all the rage. Owners and their furry friends convene to meet friends, allow their pets to socialize and to take in the wonderful weather.

Well, dog parks aren’t only something those in warmer climates can enjoy.

“People love their dogs up here!” said Kelly Martin, Chief Executive Officer of the Kenai Peninsula Association of REALTORS® (KPAR) in Southcentral Alaska.

And when it comes to pets, well, quality of life for homeowners extends all the way down to the four-legged members of the family.

Last October, KPAR secured a grant from the National Association of REALTORS® (NAR) and partnered with the city of Soldonta Parks and Recreation Department and the local Rotary Club to help build a large pavilion in the year-old community dog park that was built in 2017 on an unsafe vacant lot.

A city-owned property, the 3 Friends Dog Park was funded by the estates of three friends in the Soldonta community and is maintained by the Parks and Recreation Department in a public-private partnership.

And while in the first year of its existence, many hard-working volunteers helped build a walking trail, a water station, a pet memorial wall, off-leash zones for big and small dogs, a bulletin board and supplied doggie toys. The one thing that was missing was a covered area where dog owners could go if the elements were not ideal, or as a rest area or meeting spot for activities and events.

That’s where the NAR grant came in, and KPAR provided $2,500 for construction supplies and then several of the 68 members of the Association volunteered time to actually construct the pavilion.

The outer structure was built over the course of three days, and a few weeks later benches were added underneath the structure.

It’s little things like this that help foster a feeling of togetherness in a community and improves the quality of life for all homeowners and their families – and the work in Soldonta is not done.

Thanks to the funding provided, an additional plan to construct a canine agility course in 2019 can move forward to enhance the park even further.

“The response has been amazing,” Martin said. “There’ve been lots of great posts on Facebook, and an article in the local paper, and we’ve even heard a local DJ talking the project up on the radio. Best of all, for me, is that I drive by the dog park just about every day and see first-hand how well appreciated it is.”

Constitutional Changes in Arizona Protect Homeowners

When Arizona voters passed Proposition 126 last November, it was the latest in a history of amendments to the state constitution that either helped or protected Arizona homeowners.

Proposition 126 created the Arizona Taxpayers Act, which amends the Arizona constitution and stops state and local governments from imposing any new sales taxes or taxes on services.

Even though the Arizona legislature had not acted on its right to do that prior to November, trends from around the country indicated that it could be something lawmakers would consider soon.

Which meant it was important to act now to stop new sales taxes and taxes on services from ever happening.

It was reminiscent of what took place in Arizona a decade earlier.

Proposition 100

In 2008, Proposition 100 was put on the ballot – again with the intention to protect homeowners.

At the time, 76.8 percent of Arizona voters passed the Protect Our Homes Act, which shot down the real estate transfer tax.

Voters identified this tax as double-dipping into their pocket books, which meant a loss of equity and cost increases when Arizonans sold their homes. It also negatively impacted lower income individuals.

But did you know that protecting homeowners with constitutional amendments goes all the way back to the 1960s?

In November 1961, the Arizona State Supreme Court ruled that buyers and sellers of properties were required to hire lawyers to do the work licensed real estate agents do elsewhere.

So, deed preparation, mortgages, leases, etc. were to be authored by an attorney instead of an agent, which resulted in increased costs.

Furthermore, the court ruled that the legislature could not authorize real estate licensees to perform these tasks, because it would be deemed as practicing law – which is controlled by the court.

Proposition 103

A year later, Proposition 103 was added to the ballot and 78.6 percent of voters approved it, amending the constitution to allow for limited practice of law for real estate licensees to reduce costs for homebuyers and sellers.

Homeownership is a dream that is deeply ingrained in the American spirit.

Sometimes that dream can be inadvertently derailed by local and state governments, as they search for ways to fund projects and programs.

Sometimes Americans need to pass amendments to their state constitutions to protect homeowners and those pursuing that dream of homeownership.

In Arizona, there have been three key amendments in the last six decades. It’s probable Arizona voters will continue to defend homeownership when similar hurdles arise in the future.

Action on Salem River Crossing delayed again, sparking frustration

Time is Running Out on a New Bridge in Salem—Act Now!

Despite an overwhelming majority of city residents supporting the building of a third bridge over the Willamette River, Salem City Council has continued to punt on the Salem River Crossing Proposal.

A third meeting on the issue is slated for January 30. At the City Council meeting last November, supporters of the bridge urged Council to respond to concerns by Oregon’s Land Use Board of Appeals (LUBA).

A motion was introduced by Council Member Jim Lewis at the November Council meeting asking that Council take the required actions to respond to the LUBA remand and support the completion of the Final Environmental Impact Statement for the Salem River Crossing.

A majority of Council instead voted in favor of a substitute motion made by Council Member Tom Andersen and decided not to approve the motion and holding a work session on Jan. 30 instead.

It’s a curious decision by the Council considering 77 percent of Salem residents support the idea of building a new bridge, according to a survey conducted in 2017 by the Nelson Report, a public opinion research firm.

77% of residents support building a new bridge

And Council’s inaction is not sitting well with neighboring municipalities.

Support from next door

Keizer Mayor Cathy Clark attended the November work session and called on Salem to do what is necessary to complete the Environmental Impact Statement and to have city staff begin working on the appeals and the response to LUBA, something that could be accomplished in the next six months.

She argued that this would allow all communities in the region to identify the best ways to connect Polk and Marion Counties across the Willamette River.

Supporters reminded the Council that the motion was not to build a bridge, but to move forward with the information gathering required to make a fair and balanced decision for the community.

Quite simply, Salem continues to grow. With growth, comes additional infrastructure needs. In this community, the chief infrastructure need has been to build a third bridge over the Willamette River.

The growing traffic headache

Mid-Valley residents need a new bridge to reduce traffic congestion and to help ease their commutes for work, school and entertainment, not to mention, help save their cars from guzzling gas or wearing down faster from constant stops and starts.

Currently there is only one access point connecting East Salem, West Salem, the coast and the surrounding communities. The traffic has become onerous. The latest traffic volume numbers over the two Salem bridges are the highest ever and they continue to rise. In 2017, 72% of all weekday traffic counts exceeded 100,000 vehicles per day.

Accidents or events at the bridge (such as the overturned hay truck last October) happen frequently and negatively impacts the traffic flow of goods and services as well as the previously mentioned mobility needs of Mid-Valley residents.

There may not be any long-term answers to seismic threats that the current bridges can address. By the Fall of 2019 a better understanding of the feasibility of a seismic upgrade for the Center Street Bridge and approaches will be known. However, due to its design and age, the Marion Street Bridge is not being considered for any seismic upgrades. Mitigation for seismic hazards using modern standards would be part of the structural design of the new bridge.

A history of delay

Efforts to get a third bridge built goes back decades. The Oregon Department of Transportation (ODOT), the city of Salem and the Salem-Keizer Area Transportation Study (SKATS) have had a funding agreement since 2006 to examine this possibility. Since that time, more than $8 million has been spent on the Salem River Crossing Study and the Environmental Impact Study (EIS). The Federal Highway Administration (FHWA) has extended the deadline on a decision for this potential new bridge to Sept. 30, 2019 at which time ODOT and SKATS may be asked to pay back a portion or all of the federal money expended on this project.

Completion of the Final EIS and a Record of Decision is only a first step in the process. It gives SKATS permission from FHWA to take the next steps. Construction of a new bridge and other parts of the plan will take many years and would potentially be done in several phases. Funding and actual construction phasing won’t happen until a later date.

However, the LUBA concern is a fair one. It found the city used the wrong population forecast in 2016 as well as other zoning and compliance issues within Salem’s land-use plan.

To address this, Salem would have to work with the Mid-Valley Council of Governments to get the proper population figures and conduct transportation analyses.

Additionally, the area would need to be re-zoned to allow for only urban transportation use. Because some of the land is outside of the city limits, the Polk County Board of Commissioners would have to get involved, potentially creating an annexation of land scenario.

The ball is in Council’s court

There is a lot that needs to be done, but City Council continues to sit on its hands regarding the matter, and the longer it does, the more the community will be impacted.

Supporters will be able to once again show up at City Hall for the Jan. 30 work session, and to call on Council to finally take needed action when a motion to respond to LUBA comes before the Council again, most likely on February 11.

But will it take that action?

Abandoning the process now, which could be the end goal for Council, could set back the Mid-Valley region for decades.

30-YEAR MORTGAGE USE SPIKES IN FINAL QUARTER OF 2018

The use of the 30-year mortgage saw a substantial spike in the fourth quarter of 2018, according to the Welcome Home survey recently conducted for the Pennsylvania Association of Realtors®. The share of new Pennsylvania homebuyers using a 30-year mortgage climbed from 38 percent in the third quarter to 50 percent in the fourth quarter.

“Thirty-year mortgages are the most common financing for home purchases and that has remained constant over the last several years,” said PAR President William McFalls Jr. “What is especially interesting is that we saw a similar jump in the fourth quarter in 2017 as well.”

The number of homebuyers using an online site to find a home grew to more than 60 percent in the fourth quarter. The biggest drive in this trend is the boost in buyers over the age of 50 who are using websites like realtor.com® and Zillow to find a home.

“In the past, older homebuyers were less likely to use online sites to help in the homebuying process,” McFalls said. “More than 50 percent of buyers between the ages of 50 and 64 reported using a website to aid in their home search. In previous surveys, far fewer buyers over the age of 50 would recall using a website to aid in their home search.”

Fewer homebuyers found their home in less than three months, down from surveys earlier in the year. Forty-three percent reported taking less than three months to from starting their search to closing on a home, compared to nearly 50 percent throughout 2018.

“We’ll continue to watch this trend to see if the sense of urgency has calmed for the homebuying market,” McFalls added.

For more information on the Welcome Home survey, visit PARealtor.org.

How homeowners and buyers are unexpectedly impacted by the shutdown

The U.S. government has been partially shutdown since just before Christmas and while that has adversely impacted federal programs, services and government employees, it’s also having a negative impact on the real estate market. While President Donald Trump and Congress continue to battle over the best way to fund the federal government, 1-in-4 (25%) real estate transactions have been impacted by the shutdown, according to a survey of REALTORS®.

1-in-4 real estate transactions have been impacted by the shutdown

Survey respondents indicated multiple reasons for how transactions have been impacted:

  • 17 percent were because of delays related to a USDA loan.
  • 13 percent were from delays related to IRS income verification – although the IRS announced on Jan. 8 that it would resume this practice, even during the shutdown.
  • Nine percent were from delays related to FHA loans.
  • Six percent were because of delays related to a VA loan.
  • Six percent due to economic uncertainty.
  • Three percent had a client who was unable to secure a loan because they were a furloughed.

REALTORS® also reported about five percent of the contracts terminated since the beginning of the shutdown were related to federal loans.

“The housing industry was already facing market challenges before any government closure. The shutdown has made matters worse.”

“The housing industry was already facing market challenges before any government closure,” National Association of REALTORS® (NAR) Chief Economist Lawrence Yun told Housing Wire. “The shutdown has made matters worse.” Yun also stated, “A home purchase is a major expenditure that simultaneously involves a high level of excitement and anxiety, and the current government shutdown adds another layer of unnecessary complication to the home buying process. The shutdown is causing tangible harm to potential buyers, the real estate market and economic growth.”


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Researchers also published information about the following real estate-related agencies and the impact the shutdown is having on each:

  • Environmental Protection Agency – With the EPA employees furloughed, issues related to lead-based paint in homes and how to disclose, renovate and repair those issues will be unavailable, creating delays.
  • Federal Housing Administration – During the shutdown the Department of Housing and Urban Development (HUD) will not make any new commitments in the Multifamily Housing Development program. Loans in the Single-Family Mortgage Loan Program are still being endorsed by HUD.
  • Rural Housing Programs – The U.S. Department of Agriculture is not issuing new rural housing direct loans or guaranteed loans during the shutdown. Scheduled closings of direct loans will not occur. Scheduled closings of guaranteed loans without the guarantee previously issued will be closed at the lender’s own risk.

Laguna Beach Seniors “Age in Place”

As homeowners get older, reach retirement age and progress into their golden years, many want to make the conscious decision to stay in their own home, as long as they can maintain the comforts and quality of life that is important to them.

In those later years, this could also include adding supplementary services to maintain those comforts.

This concept is known as “aging in place.”

An advocacy group known as Laguna Beach Seniors supports a service, called Lifelong Laguna, that provides an ambitious vision of services to help residents age gracefully in their homes.

The goal of this group is to create a supportive network of trusted and trained volunteers who assist seniors to age in place by providing help with everyday tasks, social support, and a trusted connection for Lagunans to call on when life happens.

One of their primary partners is the Laguna Board of REALTORS®, which over the past two years secured Housing Opportunity Grants to help address the challenges of aging in place.

Securing the first grant in 2017 was part of our ongoing mission to lend a helping hand and be part of the solution to assist seniors with staying in their homes.”

“Securing the first grant in 2017 was part of our ongoing mission to lend a helping hand and be part of the solution to assist seniors with staying in their homes,” said Bobbie Jordan, association executive for the Laguna Board of REALTORS®.

A second grant followed in 2018. The combined funding has enabled Lifelong Laguna to conduct focus groups with numerous partners throughout the community and to engage in outreach about the Lifelong Laguna Home Modification Assessment.

More recently, it has supported workshops on accessory dwelling units, which, once a revision of municipal ordinances is complete, could benefit seniors wanting to age-in-place.

The Home Modification Assessment allows members of Lifelong Laguna to identify safety and accessibility upgrades in homes that can often be fixed with slight modifications such as installing handrails, better lighting, door widening to accommodate a wheelchair, or even something as simple as removing an area rug that could be a little too loose and pose a slipping hazard.

“In addition to our volunteer participation, we have many seniors among our REALTOR® members,” Jordan said. “This partnership … is a wonderful way to stay connected with our seniors and to provide assistance where and when needed.”

There are many social, economic, physical, emotional and medical needs in this group. Governments at the local, state and federal levels will need to start prioritizing resources for older residents and until they do, aging in place will remain a challenge.

“REALTOR® involvement brings so much value to what we do with Lifelong Laguna,” said John Fay, program specialist for Lifelong Laguna. “Many folks who bought their homes decades ago worked with REALTORS® who are still active, and several REALTORS® are now volunteering with us at Lifelong Laguna. The REALTORS® are the main funders and volunteers for this community model, and we really couldn’t do it without them.”

The State of Housing Supply and Demand

This story originally appeared in the Winter 2019 issue of On Common Ground.

What a difference a decade makes. After being awash in housing amid the Great Recession, the country is struggling through a dry spell. At the low point of the housing bust in July 2010, there was an 11.9 month supply of homes (including town homes and condominiums) for sale, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). Then inventory began to fall … and fall … and fall. A six month supply of housing is considered a balanced market, but inventory didn’t stop skidding until it hit a low of 3.2 months in December 2017.

Rental housing followed a similar — if less steep — decline in supply. Vacancy rates fell from a high of 11.1 percent in the third quarter of 2009 to a low of 6.7 percent in the second quarter of 2016, according to the U.S. Census Bureau.

Now it appears the pendulum is finally swinging the other way. Since hitting their post-bust bottoms, the supply of homes for sale and the vacancy rates for rental housing have stabilized and are inching up again. The inventory of homes for sale stood at 4.3 months as of August 2018 and the rental vacancy rate was 6.8 percent as of the second quarter of this year. Lawrence Yun, NAR chief economist, says “With inventory stabilizing, buyers appear ready to step back into the market. But higher interest rates will cut into affordability, so the supply of moderately-priced homes will become more important in satisfying demand.”

Underpinning the growth in supply is a rebound in housing production. Before the housing crash, housing starts and completions consistently exceeded one million units per year for four decades, but during the crash they plunged well below one million units and stayed there for several years.

After starts hit a low of 554,000 units in 2009 and completions bottomed out at 584,900 units in 2011, starts are now on track to reach 1.3 million units in 2018 while completions are on track to reach 1.2 million units, according to the U.S. Census Bureau.

“Homes are selling rapidly, often within a month, indicating that more inventory — especially moderately priced, entry-level homes — would propel sales.”

Encouraging? Yes, but a slew of data suggests there’s still plenty of ground to make up before housing supply and demand are in sync. “While inventory continues to show modest gains, it is still far from a healthy level and new home construction is not keeping up with demand,” said Yun. “Homes are selling rapidly, often within a month, indicating that more inventory — especially moderately priced, entry-level homes — would propel sales.”

“This is a unique period in housing today,” said Jessica Lautz, director of demographics and behavioral insights research at NAR. “The demand for housing is outpacing the current supply — especially at entry-level points in the market. For first-time homebuyers, for millennials, for (baby boomers) who may want to downsize, that housing inventory has become incredibly restricted.”

While a projected 1.3 million new housing units — single-family and multifamily — will hit the market in 2018, there is demand for 1.5 million units, according to a 2018 Housing Market and Mortgage Market Review from Arch MI, a mortgage insurance company based in Greensboro, N.C.

The report compares new supply (measured by the annual rate of housing starts) to new demand (measured by the annual rate of new household formation plus the number of new units needed to replace obsolete housing). By that yardstick, new supply has lagged new demand by an aggregate 1.5 million units since 2009.

The roots of underproduction may stretch even farther back. Research by a coalition of housing developers, Up for Growth, calculated that from 2000 to 2015 the nation constructed 7.3 million fewer units of housing than it should have based on a matrix of historic demand indicators such as home prices, population and income.

A total of 23 states — primarily in the west and northeast — whiffed on meeting housing demand during that time period, according to Up for Growth’s calculations. California was by far the biggest underachiever with a shortfall of 3.4 million units followed by Arizona (505,000 units), Massachusetts (329,000 units) and New Jersey (320,000 units).

Up for Growth also analyzed the relationship between housing starts and new household formation going back more than 50 years. On average, the nation added 11 units of housing (allowing for units lost to obsolescence) for every 10 new households between 1960 and 2016. However, the nation added just seven units of housing for every 10 new households during the 2010 to 2016 timeframe.

That ratio didn’t budge in 2017. Although the nation gained a net 802,000 units of housing last year (1.24 million new units minus 422,000 units lost to obsolescence), the net gain fell 348,000 units short of matching demand from the 1.15 million new households formed, according to U.S. Census  Bureau data and estimates from the Urban Institute (UI), an economic and social policy think tank in Washington, D.C.

Entry-Level Housing “Not Readily Available”

The deficit is magnified at the low end of the housing market — especially for single-family homes. “Homebuilders are not seeing great value in constructing homes at low price points,” Lautz said. With housing production tilted toward the high end of the market, the imbalance between supply and demand is squeezing entry-level housing the hardest. “That supply is not ready and available,” she said.

Although beginning to pick up, entry-level housing (under 1,800 square feet) accounted for just 22 percent of single family home construction in 2017 versus an average of 33 percent between 1999 and 2007, according to the 2018 State of the Nation’s Housing report produced by the Joint Center for Housing Studies (JCHS) at Harvard University.

The report, which crunches U.S. Census Bureau data and other government and industry statistics, cites a number of housing headwinds that have nudged builders to construct more expensive homes — as well as apartments — to offset rising costs.

The cost of construction material, for example, rose 4 percent between 2016 and 2017, led by the rising cost of lumber after recent tariffs. Labor shortages have inflated wages while land continues to grow scarce and more expensive amid restrictive land-use regulations — including lids on density.

“It basically makes it very difficult to build anything affordable, anything lower end,” said Laurie Goodman, vice president at the UI. “That’s why most of the new homes are higher end.”

The imbalance between housing supply and demand may get worse before it gets better. The NAHB forecasts only a slight uptick in housing starts to 1.31 million units in 2019 and 1.34 million in 2020. Meanwhile, another 1.4 to 1.5 million households are projected to form each year, based on U.S. Census Bureau data mined by the Federal Reserve Bank of San Francisco for a 2016 Housing Formation Among Young Adults report.

“Inventory is still going to be a problem,” said Dan McCue, senior research associate with the JCHS. “It’s a ship that’s hard to turn around quickly.”

The Millennial Effect

The wild card in any housing forecast is the millennial generation, which has been slower to form new households than in the past and could unleash a wave of pent-up demand for housing when more millennials finally do leave the nest.

While the total number of young adults ages 25-34 rose to 20 million in 2016 from 18.6 million in 2000, the share that headed households decreased by 3.6 percent from 49.2 percent in 2000 to 45.6 percent in 2016, according to U. S. Census Bureau data crunched by the Federal Home Loan Mortgage Corp. (Freddie Mac) for its 2018 Young Adults and Household Formation Report.

If young adults were moving out and forming households at the same rate of young adults in 2000, the United States would have had 1.6 million additional households in 2016, according to the report.

Instead, an all-time high 26 percent of young adults ages 25-34 were still living with their parents or another relative in 2017. In addition, an all-time high nine percent were doubled up with nonfamily members, according to the JCHS report.

Like household formation rates, millennial homeownership rates also signal pent-up demand. The 2018 Millennial Homeownership report by the UI found that the homeownership rate of millennials between the ages of 25-34 was 37 percent in 2015. That’s approximately 8 percent lower than the rate of Gen Xers and baby boomers at the same age.

One big reason why is that millennials are waiting longer to tie the knot. The likelihood of owning a home increases by 18 percentage points among young adults if they are married, but the marriage rate for young adults fell to 39 percent in 2015 from 52 percent in 1990, according to the UI report, which relied on U. S. Census Bureau data. If the 2015 rate had been the same as 1990, the millennial homeownership rate would be about 5 percent higher.

Another noose around the millennial homeownership rate is affordability. Thanks to tight supply and rising interest rates, home prices in third quarter 2018 were at the least affordable level since third quarter 2008, according to a quarterly Home Affordability report from ATTOM Data Solutions, an Irvine, Calif., market research company.

The High Price of Homeownership

The report calculates an affordability index based on share of income needed to buy a median-priced home relative to historic averages. An index above 100 means homes are more affordable than historic averages and an index below 100 means they are less affordable.

This year’s third quarter index dipped to 92 as 344 of the 440 U.S. counties analyzed in the report posted an affordability index below 100 — driven at least in part by a mounting disparity between home prices and wage growth.

According to the same report, the median home price of $250,000 in third quarter 2018 was up six percent from a year ago — double the-year-over-year growth in average wages. U.S. median home prices have increased 76 percent since the first quarter of 2012. Meanwhile, average weekly wages have risen just 17 percent.

As a result, 23 percent of homeowners were considered cost-burdened in 2016, meaning they paid more than 30 percent of their income for housing, according to the JCHS report. Nearly half — 47 percent — of renters were considered cost burdened.“Cost burdens are their highest in some high-cost areas like Miami and LA, but they’re everywhere,” McCue said. There are very few places with low cost burdens.”


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Adding to that burden is the heavy load of student debt, which weighs on both household formation and homeownership rates. About 45 million people owe more than $1.5 trillion in student loans and the average debt per borrower among the class of 2016 was $37,172 — up $10,000 from 2011, according to the Federal Reserve and the website Student Debt Relief.

“The share of young adult households with more than $25,000 in student debt went from … three percent to 28 percent,” McCue said.

In terms of what type of homes are in demand, Lautz pointed to several generation-based shifts. Instead of downsizing, more and more older boomers are looking for similar size but more affordable homes in the suburbs farther from the city center but still close to friends and family.

Meanwhile, younger boomers and Generation Xers are increasingly seeking larger homes with room for their aging parents and/or children over the age of 18.

Millennials are more likely to purchase in suburban areas and small towns than they have been historically because of affordability but also because of better schools and a desire to maintain personal ties.

“Millennials are as likely to want to buy a home close to friends and family as they are to want a short commute,” Lautz said. “That really speaks to a different family dynamic and a different way generations are organizing where we live and what our priorities are.”


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