The Seattle Real Estate Market – WHERE TO START???
I don’t even know where to start! So much housing related info came out this week… I guess I’ll just let the bullet points tell the story:
· Seattle passed sweeping short-term rental laws
o Hosts for AirBnB, VRBO, HomeAway, and other short term rental platforms can now only rent out two dwelling units (including a room in the host’s primary residence)
o Hosts must now be licensed, which means they will likely be taxed by the local government for operating a short-term rental
o Overall, this should help preserve an adequate supply of long-term rental stock for the city’s permanent residents
§ Effect on local housing market – Neutral
· Amazon hiring has slowed dramatically
o As recently as June, Amazon had over 9,000 job postings for Seattle-based jobs…There are only 3,503 postings for jobs currently
o This is the fewest Seattle-based job postings Amazon has had in almost 4 years
o Nonetheless, the 3,503 postings is still more than the combined postings for Microsoft, University of Washington, Nordstroms, and Starbucks
§ Effect on local housing market – Slightly not good… but an additional 3,500 highly paid employees still adds a lot of pressure on an already pretty tight housing market (currently 458 homes for sale out of 129,331 total single family residences), so we may not notice a difference. Nonetheless, it’s something to keep an eye on
· New Tax Plan
o Interest deduction on home equity lines of credit goes away
§ Effect on local housing market – Neutral
o Interest deduction on mortgages up to $750,000 (used to be up to $1,000,000)
§ Effect on local housing market – Slightly not good
o State and local taxes (SALT) deductions capped at $10,000
§ Effect on local housing market – Slightly not good
o There was no change in the requirement for people to qualify for the gain-exclusion on sale of a personal residence. It was talked about that the current gain-exclusion of living in the house 2 out of the last 5 years was going to increase to 5 out of the last 8, but that didn’t happen.
§ Effect on local housing market – If the gain-exclusion increased to 5 out of the last 8 years, then we would have less sellers, and therefore prices would rise. However, nothing happened, so housing is unaffected
· Overall, the new tax plan will put downward pressure on higher priced homes. Seattle’s current median home price is $754,000… so the vast majority of us aren’t affected yet (since a homebuyer did put some money down on that $754,000 purchase price), but the tax plan could play a larger role in the next couple years as Seattle home prices continue to appreciate
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