For a city that vows to wipe out homelessness by 2015, and whose anti-density old timers pine for the semi-urban, working-class neighborhoods of yore, it is instructive to look at how the rest of the nation is achieving the laudable goal of assuring an abundant stock of affordable housing. From the AP:
Sales of new homes plunged in March to the lowest level in 16 1/2 years as housing slumped further at the start of the spring sales season.
The median price of a new home in March, compared with a year ago, fell by the largest amount in nearly four decades.
The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.
The median price of a home sold in March dropped by 13.3 percent compared with March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.
And from Reuters:
Falling U.S. home prices and a lack of available credit may result in foreclosures on 6.5 million loans by the end of 2012, according to a Credit Suisse research report on Tuesday.
The foreclosures could put 12.7 percent of all residential borrowers out of their homes…
The new forecast includes 2.7 million subprime loans whose risky characteristics sparked the worst housing market since the Great Depression. Subprime foreclosures, on top of the 676,000 already in or through the process, will hit 1.39 million in the next two years alone, an upward revision from the 730,000 predicted by Credit Suisse in October.
Falling home prices have made an increasing number of U.S. homeowners more vulnerable to default, they said. Nearly a third of subprime borrowers owed more than their home was worth at the end of last year, and that figure will double to 63 percent in 2009, they said.
[…] Credit Suisse expects home prices will fall by 10 percent in 2008 and 5 percent in 2009, before rebounding.
That’s about a 25% drop from peak prices (a projection many analysts consider very conservative), which puts a lot more than just subprime borrowers at risk. While Credit Suisse projects an astounding 50 percent or more of subprime loans could ultimately end up in foreclosure, Alt-A and prime mortgages represent a much larger pool of borrowers, and as many as 4 million of these are also at risk, including many young couples who had the poor judgment to come of age and start families during a real estate bubble.
Yup, that’s one way to address our shortage of affordable housing, but I’m not sure that knocking the bottom out of our local market is a palatable solution, or that dumping millions of families out of their homes and onto the streets is a constructive step toward ending homelessness. Nor do I think we should embrace the BIAW’s dream of make WA state a zero regulation zone, were they can freely perfect their innovative new black-mold-and-kindling building technology.
It is a complicated issue, and any attempt by one side or the other to claim that they have the solution should be met with skepticism. As our region has grown, and congestion has grown with it, the days when homebuyers could reasonably trade commute time for square footage has come to an end.
If we want to maintain the natural splendor that makes our region so attractive, while accommodating the hundreds of thousands of new jobs and residents that continue to prop up our housing market above the rest of the nation, then both consumers and builders are going to have to change their expectations. And judging by the dozens of condo towers continuing to sprout throughout the downtown, and the thousands of townhouses and apartments being built along Sound Transit’s light rail route, it looks like expectations are starting to do exactly that.