Housing Supply Solutions in Washington

In Seattle, the cost of housing - both rental and purchase - is some of the highest in the country. Nevertheless, and in spite of rainy stereotypes, the city's vibrant arts scene, its access to stunning natural beauty and outdoor activities, as well as the region's high-tech industries and their innovations have helped Seattle become a dream home for many Americans. In fact, according to the United States Census Bureau, the Seattle area is the ninth fastest-growing metro in the nation, gaining about 1,100 residents per week.[1] (The Seattle Mayor's Office of Planning and Community Development maintains detailed statistics on its website http://www.seattle.gov/opcd/population-and-demographics/about-seattle). This has helped contributed to the acute affordable housing shortage in the region and the area's resulting high costs.

Like any other community in American facing this issue, the Seattle region has a list of contributing factors that can be cited and which reflect local manifestations of broad national issues such as availability of construction labor and building supplies. There are also more specific local issues that those in the real estate finance industry can point to such as cost and time involved in the process for approving development. The region's unique geography, particularly in the City of Seattle, makes acquiring and developing land for multifamily housing all the more expensive and challenging.  

The real estate finance and homebuilding industry in the state is well aware of these challenges, and believes that there is at least one way to more rapidly expand the existing supply of housing and encourage the creation of additional much needed new inventory without increasing consumer risk. The changes they seek require the collaboration of industry stakeholders, state and local law and policy makers, and others. The focus is to reduce legal liability which stems from the state's condominium insurance laws - The Washington Condominium Act. Industry participants in the state believe the unintentional effect the Act's resulting legal uncertainty has been to either drive current housing stock under development towards rental high-priced housing rather than affordable homeownership, or constrains a project's development entirely.  

While this judgement about the effect of the state's insurance law as an obstacle is certainly a conclusion open to other interpretations, it is with this difference of opinion in mind that real estate industry leaders have begun meeting and working towards the development of consensus proposals for legislative consideration in 2019. While informal discussions are ongoing, a more formal structured group began its meetings in May 2018 and it included real estate and insurance attorneys, realtors® and real estate agents, academic researchers, homebuilders and developers, homebuilders and mortgage lenders.  

Early discussions have focused on appreciation of past legal debates as well as the current state of the area's housing market as well as the challenge of campaigning for any legislative change. Subsequent discussions have (and will continue) highlighted the need to identify specific statutory amendments which could be proposed that would achieve broad, i.e. more than real estate finance industry, support. Those involved strongly believe there is opportunity to build a larger coalition by engaging with community groups such as those whose missions are focused more specifically on affordable homeownership and community development such as chapters in the state of Habitat for Humanity. Often these groups are organized into larger affiliated groups and could provide additional momentum legislative change.  

Also, there has already been some preliminary outreach to involve local and state policy makers and elected officials. Informal discussions have begun to help focus attention on this issue and a potential solution in the coming 2019 legislative session. The State's Senate Law and Justice Committee held a hearing on this topic in June this year, and it is anticipated that there will be at least one, and perhaps more, legislative hearings on the topic before the Legislature reconvenes in January. The hope is that by expanding the discussions to include more than just industry stakeholders, the debate may evolve beyond one that only includes traditional industry participants.

[1] https://www.census.gov/newsroom/press-releases/2017/cb17-44.html