One of the most common questions real estate agents are asked right now is, “Are we in a housing bubble?”
If you’ve read my previous articles, you may recall that most economists do not think of this surge in housing prices as a bubble like the one we saw before 2008. Instead, they warn that the real concern is housing affordability.
Due to a supply shortage, home prices are climbing at historic rates, which then leads to increased rental rates for those priced out of homeownership. COVID-era protections holding down the cost of rent have now expired. Beginning on July 1, landlords can once again raise rents unless they are specifically prohibited by county-level conditions attached to rent assistance, including some here in Thurston County.
In the absence of the temporary rent stabilization necessitated by the COVID pandemic, rents will likely begin to climb for tenants in Washington. According to Carrie Graf, attorney at the Northwest Justice Project, one local apartment building sent out a notice stating that after July 1, they will be raising rental rates by 15 percent.
Graf also saw a notice to a tenant for an over $500/month increase, nearly 50%. “These are ostensibly affordable buildings in Thurston County, renting to people who make minimum wage or rely on disability payments,” Graf stated on her private Facebook page this week.
Most economists believe that this is a crisis that will require policy to fix. The National Association of REALTORS® puts improving access to homeownership at the top of their federal policy agenda. They provide ample information on their website about the changes that need to be made to make homeownership more accessible.
Locally, we’re engaged in a conversation around the Missing Middle ordinance. Conditions and incentives to develop more affordable housing are a must in confronting the housing affordability crisis. More supply will help, naturally driving down prices and creating what we would consider a healthier, more balanced market. We also need both local and federal policy that creates a climate where landlords can provide fair, affordable rental rates.
Fear of a bubble is understandable, but more of our community members will be better off long term if we shift the conversation to housing affordability.
Kristy Woodford is CEO of Holistic Home Group, which is affiliated with Keller Williams South Sound. She has over ten years of experience as a broker of residential real estate in Thurston County and leads a team of realtors experienced in serving local buyers and sellers. Contact her at 360-508-2800 or write to KWoodford@kw.com.
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