Low homeownership rate could make Everett ripe for renewal

  • <span class="HBJ Black text">By Jim Davis</span> The Herald Business Journal Editor
  • Tuesday, December 1, 2015 12:08pm
  • BusinessEverettReal estate

In a city of rentals, the house at 2311 19th St. in north Everett could be a tipping point.

Real estate broker Saman Kouretchian bought the house in March when it was being rented room by room.

At the time, five people were living in the home and Kouretchian had heard as many as 15 had been living there. After he got the keys, Kouretchian waited a few days before he showed up.

“I opened the door and I immediately knew something was wrong,” Kouretchian said. “I said, ‘Hello, is anybody here?’ And a lady came out of one of the bedrooms. She was sleeping there. She just ran out.

“A couple of the other people were also here and they said they needed to come back in to get some stuff and that we had just kicked them out early even though we had given them a few days grace period.”

The home was like a lot of houses around of Everett, a falling-down wreck. And like a lot of homes around the city, it was a rental.

Everett has one of the lowest rates of homeownership in the state. Just 44 percent of the houses in Everett are owned by the people living in them.

To see how Everett’s homeownership rate stacks with other cities in the county and the state, click here.

That’s the lowest homeownership rate of the top 20 largest cities in Washington, according to the U.S. Census Bureau. And it’s the lowest of all the cities in Snohomish County.

With real estate prices climbing around the Puget Sound area, and more people looking farther and farther from Seattle for a place to live, homes like the one at 2311 19th St. will become too valuable to rent.

Or that’s what Kouretchian believes.

He bought it for $172,000 and put $100,000 into fixing it up before putting it back on the market.

Kouretchian, who lives in Seattle, thinks that more and more people like him will be looking for homes to invest in around Everett as housing prices return to pre-recession levels.

“The nice thing about Everett is the prices are a lot lower than Seattle,” he said. “So the barrier to invest is a lot lower, while the market is going up over the past year.”

But shifts in real estate take time, said Mike Pattison of the Master Builders Association of King and Snohomish Counties.

The home ownership rate is tied closely to income in a community.

And yes, Everett’s median household income ranks as the lowest in the county, according to the Census Bureau. It’s also among the lowest of the 20 largest cities in the state.

“Everett is eventually going to gentrify,” Pattison said. “It’s a matter of when. I often point to Belltown in Seattle. The city tried for decades to rejuvenate that entire area. It took time, but it eventually happened and Belltown became frankly one of the nicer parts of Seattle.”

Pattison calls it axiomatic — self-evident that people who own their home are better for a city than people who rent.

Plenty of landlords and tenants mow lawns and fix chipping paint.

And plenty of homeowners let the weeds grow or replace broken windows with cardboard.

But it generally works out that people who own take greater care of their property than renters and become more invested in the community, Pattison said.

It’s a point that Everett Mayor Ray Stephanson doesn’t concede. He thinks there was a stigma attached renters in the past. But he said that attitudes are changing.

He said plenty of younger professionals prefer to rent. And plenty of empty-nesters prefer to live in apartments with views of Port Gardner, like those at Potala Place or Aero Apartments, which just opened in downtown Everett.

As for the ownership rate, Stephanson said, it’s skewed low since the city annexed areas to the south decades ago along Casino Road and near Silver Lake, which include large apartment complexes with many renters.

Still, Everett’s 44 percent home ownership rate is 20 percentage points lower than many cities around the county. Mukilteo has a 68 percent home ownership rate, for instance. Marysville has a 70 percent rate. Lake Stevens is at 74 percent. The state has an overall rate of 63 percent.

The Census Bureau computes the home ownership rate by dividing the number of owner-occupied housing units by the number of occupied housing units or households in a community; the numbers are an average from 2009-2013.

What makes Everett’s rate so perplexing is the fact that there are so many jobs in the city.

Everett is the seat of county government and is home to major health institutions like The Everett Clinic and Providence Regional Medical Center Everett, as well as one of the world’s biggest manufacturers in the Boeing Co.

“Everett has Boeing in its backyard, but from my experience many of those jobs go home at night to Mukilteo, Lake Stevens and Arlington,” Pattison said. “Why that it is, I’m not sure.”

For more people to buy, Everett needs to see local incomes rise, Pattison said. And that will happen with time.

“You can plan all you want for it and sow the seeds for it all you want but it has to happen organically,” he said.

City planners expect Everett’s population to grow by nearly 40 percent, or 40,000 people, for a total of 143,000 by 2035.

County planners put the number even higher, at about 60,000.

The number of jobs in the area is already growing and is expected to keep pace with population, according to economic forecasts.

To house all of those people, the city needs diversity of housing, Stephanson said. That includes homes owned by the people living in them but also rental homes and apartments.

“We need to make sure that we have housing available that’s both ownership and rental, that provides housing for all incomes,” Stephanson said. “I don’t want us to become a community where a middle-income family can’t afford to live.”

And he thinks that there are older homes that will need to make way for newer development.

“Particularly in north Everett, in my neighborhood, as we move on in our community life, I think you’ll see some tear-downs and rebuilds occur,” Stephanson said.

Kouretchian could have torn down the house on 19th Street, which sits on the border of Everett’s Delta and Riverside neighborhoods. It was older and needed a lot of work and had been lived in hard. The Google image of the house shows a group of people just milling about outside.

Kouretchian saw what the home could be. He liked the charm of the house, built in 1942. And he liked the space with 2,800 square feet.

After the tenants left, Kouretchian cleared out the garbage that was piled floor-to-ceiling in the attic and basement, put in new all new stainless steel appliances, quartz counters, shaker cabinets and re-finished the original hard woods.

The worst part was replacing the landscaping in the back yard, where they found carpeting and old Christmas ornaments buried in the ground.

He’s put the house on the market for $349,000. Someone could buy the home as a rental investment, Kouretchian said, but it’s unlikely that the house will be rented room by room.

He’s fairly new to the flipping game — buying a house and improving it with the idea of selling it for a profit. He’s bought investment properties from Everett to Kent. But he enjoyed turning around this house.

“Every day, people were walking by saying, ‘Thank you so much, the house looks amazing. You’ve done so much for the neighborhood,’” Kouretchian said.

He said other investors have asked him why he put so much money into the home. He could have invested less and maybe made as much profit, if not more.

But he said that wouldn’t be any fun. When he gives the keys to the new buyer, he wants to be sure that everything works right.

“When you take the worst house in the neighborhood and you put a lot of money into it and make it so it’s not the eyesore of the neighborhood, it raises everybody’s property values.”

Home ownership (2012-2013) Populations (2014) Median household income (2009-13)
Arlington 63.00% 18,808 $61,301
Bothell 66.20% 36,567 $74,769
Brier 88.30% 6,434 $96,307
Darrington n/a n/a n/a
Edmonds 69.50% 40,896 $72,244
Everett 44.70% 103,019 $47,482
Gold Bar n/a n/a n/a
Granite Falls n/a n/a n/a
Index n/a n/a n/a
Lake Stevens 74.00% 30,284 $72,451
Lynnwood 52.10% 36,687 $49,931
Marysville 70.10% 60,020 $65,054
Mill Creek 61.10% 19,200 $87,331
Monroe 67.50% 17,899 $67,238
Mountlake Terrace 59.50% 20,817 $59,007
Mukilteo 68.30% 20,993 $93,717
Snohomish 53.00% 9,544 $53,038
Stanwood 60.00% 6,739 $53,858
Sultan n/a n/a n/a
Woodway n/a n/a n/a
Top 20 cities
Seattle 46.80% 608,660 $65,277
Spokane 57.00% 208,916 $42,092
Tacoma 51.50% 198,397 $50,503
Vancouver 49.40% 161,791 $48,979
Bellevue 56.90% 122,363 $90,333
Everett 44.70% 103,019 $47,482
Kent 53.50% 92,411 $57,553
Yakima 53.50% 91,067 $39,462
Renton 54.40% 90,927 $64,141
Spokane Valley 62.40% 89,755 $47,897
Federal Way 55.10% 89,306 $55,872
Bellingham 45.50% 80,885 $40,648
Kennewick 61.30% 73,917 $51,510
Auburn 59.80% 70,180 $55,483
Marysville 70.10% 60,020 $65,054
Pasco 65.90% 59,781 $53,571
Lakewood 45.00% 58,163 $43,362
Redmond 49.10% 54,144 $50,093
Shoreline 64.10% 53,007 $64,096
South Hill CDP 74.20% 52,431 $72,789
Washington 63.20% 7,061,530 $59,478
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