What Housing Crisis?
“There are three types of lies: lies, damned lies, and statistics.” This quote has been attributed to many sources including Mark Twain, UK Prime Minister Benjamin Disraeli, a French physiologist, an English journalist, and the Duke of Wellington. It’s not without irony that this quote itself has some dubious attribution but regardless of who first said it, the phrase stuck around and is unfortunately, applicable again today.
The Q4 Apartment Market Report came out this week from the Runstad Center for Real Estate Research at the University of Washington. We watch this report closely as well as its companion the Washington State Housing Market Report because they give us valuable insight into how our markets are doing and where we should focus our efforts in the upcoming months and years. There are lots of valuable insights and indicators to mine from these reports and one we pay particularly close attention to are rental vacancy rates. That is the number of apartments that are open for a new renter at any given point in time. In a healthy market, a typical market-wide vacancy rate should be around 6-8%. This allows enough open units for new renters to find a place but still keep rents stable. We first started tracking this number for Yakima County in 2013. Since then it has never been above 5% and as recently as Spring 2021 was at 0.5% which is, in a word, alarming. At this low of vacancy, a household that is displaced for any reason, has very little chance of finding a new place fast enough to avoid being homeless for a time, which in turn puts strain on all our support systems and drives worse outcomes for everyone experiencing homelessness.
These number are what drive a lot of our decision making about where we need to focus our efforts for building housing and with vacancy rates below 1% we’ve taken a “throw-everything-and-the-kitchen-sink” approach to our current “housing crisis” (media phrase not mine).
Fast forward to Fall 2022 when Runstad changed the format of their report from semi-annual to quarterly. We applauded this shift because it gives us a more regular look at the data to inform decision making. The change happed first with the 2022 Q3 report and is now followed up by Q4. Right away as we took a look at the new format something felt a little off. Where Yakima had previously been gasping for air with our almost nonexistent vacancy rate, suddenly in Q3 we were at 6.7% which is, in a word, fine. On top of that, average rents in Yakima were reported at $1.12 per square foot, less than half the state average of $2.25/sf. which means not only is Yakima not in a housing crisis, we are leading the State in housing affordability and access!
When I dug deeper to figure out what might have caused this miraculous turnaround I ran into this phrase buried mid-page toward the end of the report:
“Because this report represents a modified approach to data collection and analysis, the statistics presented here cannot be compared directly with statistics in reports published by WCRER prior to the 3rd quarter 2022”.
What? I mean, really? What is reality any more? Does that mean for the last ten years we have been lied to about our lack of affordable rental housing? Or is this new number a random blip that will calm down once you iron out your new process? We waited until Q4 to see but our newly discovered healthy vacancy rate held fast at 6.9%. Assuming its true, this is good news for renters for sure but it made me feel like I’ve been like Chicken Little these past few years.
It turns out, in the second half of 2022, Runstad hired a third party data gathering firm called CoStar to find and report the numbers they had previously gathered on their own. The new firm tripled the number of units surveyed for Yakima County and our hunch is, in so doing, created a much more accurate picture of the current market.
Despite all these changes and the disclaimer mentioned above, Runstad is still referencing its previous data in the new reports to draw comparisons and interpret trends. Not only is this inconsistent but it creates additional noise that makes the truth even harder to see.
There are other sources that indicate our housing issues have not been miraculously solved by a statistical adjustment. Most notably the City of Yakima Housing Action Plan shows steady population growth that continues outpace new home construction and puts pressure on our market, but the radical shift in the Runstad Report has called into question all our assumptions about the housing market and where it is headed.
Over the coming months we will be diving deeper into the details to get a better understanding about what is happening in our county but for now we will plan to take a closer look before screaming that the sky is falling.
