By Allison Butcher, Senior Policy Analyst, MBAKS

On Wednesday, January 31, the Master Builders Association of King and Snohomish Counties (MBAKS) kicked off its first general membership meeting of the year—an economic forecast breakfast presented by the association’s Sales & Marketing Council.

The breakfast took place at The Westin Bellevue and featured presentations by Metrostudy Regional Director Todd Britsch and Morgan Stanley Financial Advisor Dan Becraft, C(k)P QPFC.

Becraft touched on highlights of Morgan Stanley’s investment outlook for 2018. In short, the report states that global economic expansion delivered strong returns last year but we should not expect the same in 2018. Morgan Stanley is not anticipating a recession this year, but rather that markets will begin to normalize.

The forecast already factors in recent tax cuts, Becraft said. A look back at the U.S. stock market over the last 37 years shows that tax cuts are not correlated to market performance. In the year after President Ronald Reagan’s tax cuts took effect in the 1980s, for example, the market dropped.

Morgan Stanley Financial Advisor Dan Becraft, C(k)P QPFC (Alabastro Photography)

Becraft offered additional observations, including ways in which demographics influence a country’s economy, predictions on interest rates (he expects they will stay low and may even be cut), and more.

The biggest risk to our economy going forward, he noted, is our national debt, which stands at $20 trillion. However, China’s national debt is significantly higher. Whereas the United States’ debt-to-GDP ratio is around 100 percent, the ratio in China is closer to 460 percent. Becraft said some are speculating this could lead to a move by China within 36 months to repatriate capital that has flowed out of their country in recent years. If this were to happen, it could result in investments being pulled out of real estate in the United States, including the Seattle market, and transferred back to China.

Britsch focused on economic and housing data in the Puget Sound region and provided compelling information in his presentation as well, particularly related to the lack of future housing inventories.

Britsch’s presentation highlighted the fact that population and job growth continue to be very strong in the Puget Sound region, with 137,000 jobs added since 2015 and continued low unemployment in King and Snohomish counties. Furthermore, data from the Department of Licensing show that net driver in-migration into the region has averaged more than 6,300 per month since 2012, for a total of 460,000 new drivers from outside the area.

Metrostudy Regional Director Todd Britsch (Alabastro Photography)

Britsch also stressed that housing supply is not keeping up with demand. Looking at the driver license data, he estimates this growth has created a demand for 100,000 owner-occupied homes between 2012 and 2017. However, during this time, we have built and sold roughly 60,000 homes, creating a housing supply shortfall and causing upward pressure on home prices. The average list price for new construction within formal subdivisions, Britsch stated, has risen 20 percent in Snohomish County and 24 percent in King County year over year.

Britsch warned we are running out of land at a rapid pace. With 10 months’ supply of vacant developed lots in Snohomish County, he said we’re at "crisis level" in terms of lot inventory. The North Creek market area, which has been very robust in recent years, has dried up, Britsch said.

Since 2009, the entire Puget Sound region has had a net loss of 3,018 lots coming out of the system, not to be replaced. More importantly, in that same time frame, the available finished lot inventory has declined by 17,879. Britsch also pointed to Northwest Multiple Listing Service data, which shows King and Snohomish counties have just over a two-week supply of homes for sale.

Although the current housing market is showing signs of weakening, Britsch believes it will remain strong. The housing market is all part of a cycle and we can expect an adjustment in sales, he said. Britsch predicts core areas from King County to South Snohomish County will continue to see double-digit appreciation due to lack of inventory.

Founded in 1909, the Master Builders Association of King and Snohomish Counties (MBAKS) has grown to become the largest residential homebuilders association in the United States. With 2,900 member companies, the association is dedicated to membership value, housing advocacy, community service, and financial stewardship throughout the Puget Sound region.

HIGH-END EASTSIDE HOME BUILDERS

Terrene Homes is a family-owned, Bellevue-based company specializing in residential building, specifically single-family and multifamily construction. Most of the 13-employee firm’s projects are on the Eastside and include both spec and design/build projects, at the higher end of quality and price. Terrene designs homes that “emphasize livability without sacrificing style, power, luxury, or comfort.” Danielle wears lots of financial and administrative hats at Terrene. “I’ve been with the company for eight years. My official title is accountant, but I also handle HR and I’m the liaison between employees and EPK Benefits, which administers our MBA Health Trust plan.”

THE MBA HEALTH TRUST PROVIDES AFFORDABLE RATES FOR SMALL FIRMS

Danielle says that it is tough for small businesses to maintain affordable health insurance. “As a company with a small number of employees, it’s hard to find coverage with affordable rates. We joined the MBA Health Trust eight years ago,” says Danielle. “We had just four employees when we first got health insurance and we now have 13 who are currently enrolled. And while remaining a relatively small firm, we’ve been able to keep insurance affordable during that whole period.”

Terrene is now enrolled in a Regence BlueShield PPO plan that provides competitive premiums. “We looked at other options,” Danielle says, “but it was most affordable through the MBA. Our monthly premium is significantly lower—around 10% savings.”

REGENCE BLUE SHIELD EXCELLENT FOR PREVENTIVE CARE

Terrene’s coverage includes Delta Dental of Washington, along with Regence, and Danielle says employees couldn’t be more pleased. “They are very happy with the Regence coverage and the flexibility and ability to see doctors they need to see, particularly in the preventive care area. We’ve had instances where employees were pleasantly surprised at what they had initially thought would be expensive out-of-pocket fees for preventive care, but they didn’t have to pay much at all.”

RESPONSIVE ADMINISTRATORS

EPK is the third-party organization that administers the plans for the MBA Health Trust. “They are extremely helpful and responsive,” says Danielle. “If there is a question of coverage, they are very quick to solve the issue.They are a great middleman for us and our employees to use as a resource.”

TERRENE ALSO PARTICIPATES IN THE MBA GRIP PROGRAM

The MBA also provides access to the GRIP program, which helps improve safety and reduces the overall cost of workers’ compensation for MBA members. “It’s a great program for loss prevention,” says Danielle. “And the GRIP safety team was just out here to do an overhaul of our current safety procedures. It’s a fantastic resource for safety and injuries, though we have never had to make that call.”

By Logan Riely, Seattle Times

The 24th Annual Gingerbread Village was unveiled Monday at the Sheraton Seattle Hotel lobby. Creations were inspired by scenes from the wizarding world.

The event came together with more than 1,000 volunteer hours, an estimated 1,200 pounds of dough, 800 pounds of icing, 200 pounds of white chocolate, 250 pounds of almond paste, and hundreds of pounds of candy.