By Morf Morford

Tacoma Daily Index

You’d think something as basic as housing would never be the source of layers of expensive, complicated and sometimes contradictory social problems.

Housing, to put it simply, is where we live, it is the place we inhabit, the place we call our own.

Housing sustains economies, providing both livelihoods and skill development, they are the basis of neighborhoods, they can be historic if not architectural attractions. And yes, they are where we live.

Why, if they are so basic to survival, identity and our economy, are our homes so complicated?

Perhaps like everything else, from business to relationships, housing is as complicated as we make it.

Who, (apparently) among us wants a straight-forward, mutually rewarding and respectful relationship when we could have a convoluted, tortured, drama-filled soap-opera filled with deception, secrets and mystery?

If you look at the movies and television series that we love to binge on, that would be it.

The same with housing. Simple, safe, attractive and affordable housing is easily within reach, after all, every culture, civilization and tribe through-out human history has housed its people in some way.

But you’d never know it by looking at the typical housing situation in the 21st Century.

Based on a recent survey, at least one out of five Americans pays at least 40% of their income on housing – and that was when the economy was good.

As a reminder, 50% is half, so 40% is only 10% less than half the typical income. Imagine a personal economy where you have approximately half of your income to cover all of your expenses beyond housing – don’t forget car payments, credit debt or outstanding student loans. Millennials often face criticism for not saving for retirement. Do the math if you want to see why.

An emergency savings account should ideally hold three to six months’ worth of expenses – how many of us are doing this? Even if we wanted to, how many of us could do it?

If you’ve had the adrenaline-raising experience of looking at the increase in rental costs lately, you might find that the 40% wage deduction for housing is a low estimate.

Factor in appeal, proximity to employment or mass transit, walkability to essential services or cost per square foot, you might wonder why, instead of renting, these financially pressed families don’t just buy a home.

A quick glance at real estate prices would dispel any faith in that as an alternative.

But even with prices high – and higher with each offering – demand keeps going.

My daughter and her husband have been house-hunting lately. Their expanding family needs more square footage.

Their routine strategy has been to offer $30,000 more than the asking price on any home they are interested in. $30,000 could buy a nice North End home not that many years ago. To put it mildly, not everyone can afford to offer that. But many are. They have been outbid on eight houses so far in 2020.

Most of us remember the real estate “bubble” of 2008. Prices grew rapidly and imploded even more rapidly.

We are not in a bubble now. Our housing prices have been growing steadily, but not always rapidly. And the demand increases even more each month.

I must admit that this makes me even more nervous.

The real estate bubble was a feeding frenzy where everyone seemed to be wondering how long it would last. The crash was inevitable, just not visible or predictable.

The next housing crisis will almost certainly be a slow moving, glacial, all-consuming loss of value that will hit us all in a myriad of unforeseeable ways.

Real estate, depending on your timing, may turn out to be the best/worst investment of a life-time.

But no matter what the investment possibilities or regrets might be, housing will still be a basic human need.

Will the wave of forecasted evictions suck the life out of the real estate markets? Will a seismic tsunami of foreclosures follow the mass evictions of renters?

Will real estate prices go up, down or sideways in the next year or two?

As most of us know, when housing thrives or shrinks, a whole host of miscellaneous jobs goes along with it.

From landscapers to plumbers and electricians, a new house employs dozens of co-occurring contractors, inspectors, vendors and providers.

Home ownership in particular defines a community.

A ratio of 60% renters is the tipping point. Under that percentage, neighborhoods do well, above that number, neglect, even abandonment, settles over the neighborhood like a simmering, semi-permanent storm.

Will the typical local neighborhood hold more rental? More foreclosures?

Demographics kick in as well.

One of the largest generations America has ever seen is downsizing.

In Tacoma in particular, those big homes that held families now hold widows or widowers who have little interest or ability to maintain a large home, will hit the market, probably, statistically at least, all at once.

Who will want them? Who will be able to afford them?

Will many of them, as during World War II, be sliced and diced into affordable apartments, apodments or neighborhood shared working spaces?

Will people flock to – or away from – the suburbs?

Will dilapidated homes, as in much of Detroit, be torn down and be replaced with urban farms?

Urban centers, once the focus of employment and finance, will, thanks to the acceptance, if not institutionalization of remote/online work will become irrelevant – at least for those purposes.

Those same urban cores just might become cultural, instead of financial centers? If so, will they become havens of creatives and those with time and resources to support them?

No matter what happens, I think we all know that after 2020, our landscape will change far more than most of us might ever imagine.

According to recent data (https://www.wsj.com/articles/u-s-existing-home-sales-rose-20-7-in-june-11595426758) from the National Association of Realtors (NAR), previously-owned home sales jumped 20.7% in June compared to May, to a seasonally adjusted annual rate of 4.72 million. This marks the biggest monthly increase recorded since 1968.

Prices rose in every major area of the U.S., with the median existing-home price being $295,300, up 3.5% from a year ago. 62% of all properties sold in June were on the market for 24 days, three days less than in June 2019.

In Tacoma’s North End, if a house is on the market for a week, it is unusual.

Is this the crest of a wave or the final pulse of the mother-of-all real estate bubbles?

Based on Census data, mid-July saw about one-fourth of adult Americans either miss their latest mortgage or rent payment or express concern about being able to make the next payment on time.

Since homes normally go under contract a couple of months before a sale closes, data for June mostly reflects purchase decisions that were made and set in motion in April or May.

Fall of 2020 will reflect the real estate atmosphere of summer.

My biggest fear, and the possibility looking even more likely every day, is that our real estate market will grind to a halt as we get closer to the end of the year. Fortunes will be made or lost, the number of homeless both local and national will expand dramatically and we will claw our way back to a balanced and stable real estate landscape. And my sense is that the decade or so recovery from the 2008 mortgage crisis will seem like the proverbial walk in the park.

Housing is perhaps always a precarious balance between home and hospitality, necessity and investment, public and personal, durable and temporary and possibly even today and tomorrow.

“Curb appeal” is one of the first principles of housing.

We can make housing attractive as well as practical, whether housing is, or should be an investment, is an entirely different question.