Home values in Seattle stayed the same in October compared with September, and are up nearly 14 percent from a year earlier, according to a new study by Zillow.com.
The median home value in Seattle is $306,000; nationally its $162,800, according to Zillow.
The Seattle company (NASDAQ: Z) reported Seattle performed better than the national average, which saw a 0.1 percent drop in home values from September to October. Nationally, home values have increased 5.2 percent for the year.
"The conditions that led to the robust appreciation experienced earlier this year, including historically low mortgage interest rates, high affordability, low inventory and high demand, are waning. In their place, we’re beginning to see more inventory and rising mortgage rates," said Stan Humphries, Zillow chief economist, in a statement.
Ben Miller Contributing Editor-Puget Sound Business Journal
Why Homeownership Is Still So Important
By Robert Dietz
A traditional gateway to the middle class, homeownership remains an important goal for most Americans. Public opinion polling consistently shows that most renters hope to become homeowners once they can muster the necessary financial resources to handle the responsibilities that come with owning a home.
These facts remain in place despite recent questioning of the role homeownership plays in American society. This reevaluation is somewhat understandable given the impacts associated with the Great Recession.
According to the Census Bureau’s Current Population Survey/Housing Vacancy Survey, the national homeownership rate fell from 69.2 percent in 2004 to 65 percent for the second quarter of 2013. It is also worth noting that the 2010 Census reported a national homeownership rate of 65.1 percent, which suggests the HVS numbers are high by perhaps 100 to 200 basis points.
Nonetheless, the drop in homeownership in recent years marks the largest decline since the Great Depression. And these declines in homeownership have been particularly concentrated among younger households. For example, in the graph above it is interesting to note that 35-44 year olds in the 1980s and 1990s had homeownership rates higher than the national rate. And for that generation, those rates continued to increase. For example, those 35-44 year olds of 1990 are now aged 58 to 67 and have a homeownership rate of at least 77 percent.
In contrast, the homeownership rate of those aged 35-44 today, a key group in terms of housing demand, has fallen below the overall homeownership rate. Today’s 35-44 cohort has a homeownership rate of 60.3 percent as of the second quarter of 2013, compared to 65 percent for the overall population. And this marks a dramatic decline from the 70 percent rate for those aged 35-44 in 1982. These trends are consistent with more recent housing data suggesting declines and delays of first-time homebuyer purchases.
While the current overall 65 percent homeownership rate may fall somewhat over the coming year or two (and be reduced when benchmarked with the 2010 Census data), the period of significant declines in ownership has likely ended. However, the age data presented above suggests that homeownership in the future will be slightly more concentrated among older and wealthier households.
Over the long run, this change will represent a loss to younger families and their neighborhoods. Clearly, homeownership is not for everyone at every stage of life. And the purchase of a home is based to a large degree on lifecycle factors, including age and marital status. There’s a time to rent and a time to own for most Americans, and a balanced housing policy should recognize these circumstances.
But with prudent underwriting, the attainment of homeownership confers benefits for families and their communities. These benefits include improved health and school outcomes for children, increased civic engagement and volunteerism, reduced crime and higher lifetime wealth. There exists a rich academic literature spanning the fields of economics, political science, sociology, geography and medicine documenting consistent and measurable benefits for families and their neighborhoods from homeownership.
Why? Economics. Ownership means the residents of a neighborhood gain an additional reason to care about its future – the financial value of their investment. Unlike stocks and bonds, a home’s value is determined by its physical features as well as its environment. Because of this stakeholder status, homeowners are more likely to use their scarce time and resources to improve their community. And this results in more civic engagement, more volunteerism and other socially desirable outcomes.
Our society has long promoted homeownership. For example, after noting some of the lessons of the housing crisis, the Bipartisan Policy Center’s Housing Commission reported:
Despite these experiences, the commission strongly believes that homeownership can produce powerful economic, social, and civic benefits that serve the individual homeowner, the larger community, and the nation.
And for these reasons, ensuring policies that facilitate sustainable homeownership must remain at the core of our nation’s housing policy agenda. The decline of homeownership, particularly among those younger than 45, could be made worse if the mortgage interest deduction is weakened or the housing finance system is restructured so that debt financing is less accessible for the purchase of a home.
In the medium-term, the future of homeownership depends on job creation and income growth for younger workers. Economic policies that promote growth and employment will help younger families save for a downpayment and facilitate successful mortgage underwriting. In contrast, policies that deter investment will have significant long-run impacts, including how and where younger families form and grow. The fact that homeownership promotes positive outcomes with respect to family development means that it in turn is worth protecting.
Robert D. Dietz is an economist with the National Association of Home Builders. Previously an economist with the Congressional Joint Committee on Taxation, Robert writes on housing and policy issues at NAHB’s Eye on Housing blog and @dietz_econ on Twitter.
Does the hometown charm of the three junctions (Morgan, Alaska and Admiral) affect the property values for homes around those areas?
Like any new business owners, Heather and Kevin Dosch had nowhere to go but up when they launched their homebuilding company – in their case, way up, and at rocket speed. Sales grew by 1,512 percent from 2010 through 2012.
The Doschs, owners of John F. Buchan Homes LLC in Bellevue, know they can’t keep growing at such a dizzying pace, but they plan to keep trying. “I love challenges, and we’re taking it as a challenge to keep the growth going,” Heather Dosch said.
After generating virtually no revenue during its first year in 2009, the company recorded nearly $625,000 in sales in 2010, $5.46 million in 2011 and $10.07 million in 2012. The projection for 2013 is $18 million. The company employs 22 people, up from three in 2010.
If the company’s name rings a bell, it’s because John Buchan, Dosch’s father, was a premier local homebuilder for 50 years. Although his company’s official name was John F. Buchan Construction Inc., he and his wife, Gloria, did business as John F. Buchan Homes.
When the Doschs started John F. Buchan Homes LCC, they arranged to adopt the same business name — John F. Buchan Homes — as the original company. “There’s no question there’s a great brand there,” Dosch said. “To be able to (capitalize on that) is very helpful.”
By adopting the name, the Doschs are keeping it alive because the original company, founded in 1961, is no longer in business after the retirement of John and Gloria Buchan.
Over the years, Dosch worked for the original John F. Buchan Homes in various roles, including CEO from 2008 through this year, when the books will officially close. “I basically stepped in to wind (the company) down,” she said. The recession hit the original Buchan Homes hard and contributed to her parents’ decision to retire, Dosch said. With a large inventory of unsold properties that were plummeting in value, she worked doggedly with the company’s lender to negotiate short sales and was able to avoid foreclosure on all but four properties, she said.
Dosch and her husband co-pilot the new John F. Buchan Homes. “He runs everything out in the field, and I do everything that relates to sales and finance,” Dosch said.
She said managing the new company’s growth has been a lot easier than winding down the old company, especially since they were able to hire some of the old staff. “I think the biggest challenge has been the [amount of] time we have personally spent working,” she said.
Although the name and focus on high-quality construction mirror that of the original company, version 2.0 is not a clone, Dosch said. “The business model is fairly different,” she said. “We’re not these big land developers. We’re much more about…remodels and custom homes.”
At its peak, the original company built 100-plus homes a year in plats it developed as spec projects. “The company was a bit of a machine before,” Dosch said. “We didn’t want to do that. There’s a lot more personal aspect to the company now.”
It pays to be flexible, though, and after acquiring three small plats totaling 23 home sites in 2011, the Doschs expanded their business model to include spec projects — which fueled the company’s exponential growth. “We didn’t plan on doing any plat work when we first started, but we were able to take advantage of some great opportunities that were present in the market,” Dosch said.
Each of the plats acquired in 2011 is sold out, and the final eight homes are approaching completion. Since then, Buchan has acquired three more small plats ranging from three to seven lots each that are in various stages of construction and development.
“We’ve decided to keep doing a little bit of plat work,” Dosch said. “It helps our visibility in the marketplace to have some spec listings.”
Buchan also is dipping its toe into the multifamily market, acquiring property on Queen Anne Hill and in Kirkland. It plans to build three condos at the first location and four at the second sometime next year.
The price point for most everything Buchan builds — spec, custom, condos — is $800,000 and up.
The company’s long-range goal is to build 35 to 40 units of new housing a year – half or more of them custom homes – with a sprinkling of remodels. Buchan will complete 10 custom homes and eight remodels in addition to 13 plat homes in 2013.
With custom construction and remodels, the customer already owns the land, reducing the risk compared with plat projects. “We’re not opposed to risk, (but) not having to finance all that land spreads it out and lessens it,” Dosch said.
Contributing Editor-Puget Sound Business Journal
Of the 80 U.S. restaurants listed in a new listing of cheap places to eat, five are in Seattle.
Online restaurant guide Urbanspooncompiled the "Best Cheap Eats in the U.S." list, which were restaurants that "received the most positive reviews from professional food critics, bloggers, and the Urbanspoon community of diners over the past 12 months."
According to Urbanspoon, the five best cheap restaurants in Seattle are:
• Paseo — 4225 Fremont Ave. N;
• Bakery Nouveau — 4737 California Ave. SW;
• Red Mill Burgers — 312 N 67th St.;
• Salumi — 309 3rd Ave. S;
• And Honey Hole Sandwiches — 309 3rd Ave. S.