Homeownership: Time to tap unused tools

townhouse
The national homeownership rate has been holding steady, but it is still below the 25-year average. More work is needed to ensure housing opportunities for all. Photo: Master Builders Association of King and Snohomish Counties.

June is National Homeownership Month, which was established to promote the many benefits of owning a home. Homeownership provides stability for individuals and families, helping to build wealth while also creating a sense of community.

The national homeownership rate has been holding steady at 64.2 percent, but this figure is still below the 25-year average of 66.3 percent. Meanwhile, homeownership rates for African American, Asian and Latino households continue to lag significantly behind. Clearly, more work is needed to ensure housing opportunities for all.

Here in Western Washington there are many hurdles to homeownership. Contributing factors include a lack of affordable housing, not enough housing inventory overall to meet the strong demand – including the full range of housing types such as condominiums, accessory dwelling units and townhomes – and the many challenges of navigating the lending and homebuying process.

Regulations and long permit timelines can create obstacles to homeownership as well by driving up costs and pushing new homes even further out of reach for many buyers. There are, however, simple steps cities can take today to help ease some of these regulatory burdens and reduce certain cost pressures on new housing.

For example, the State Environmental Policy Act (SEPA) gives local governments the option to allow some minor construction projects to be exempt from SEPA review, depending on their size and scale.  That includes short subdivisions, or projects that contain four or fewer lots—although local jurisdictions have the option to go up to nine lots in urban growth areas. Despite this authority, many cities in the Puget Sound region still require a formal subdivision for projects of fewer than 10 lots. This can cost months of time and tens of thousands of dollars for small developments, between five and nine lots, which are becoming more commonplace as land capacity has dwindled.

Another commonsense process improvement that cities could make would be to allow administrative approval of final long plats. Last year, Governor Jay Inslee signed into law legislation providing a local option to allow administrative approval of the final plat process on long subdivisions (that is, the division of land into multiple lots). Specifically, the new law allows local jurisdictions to change the final plat approval process for subdivisions to one that is administrative. This means local governments can delegate final plat approval to planning directors or other designated authorities. Administrative approval of final plats can save weeks and even months of delay in getting on council agendas for final approval, bringing greater efficiency to the permit process and reducing an unnecessary cost pressure on housing.

To date, 11 local jurisdictions have made this change, including King and Snohomish counties and the cities of Auburn, Bothell, Kent, Lynnwood, Maple Valley, Marysville, Mountlake Terrace, Renton, and Sultan. Other cities who have not yet done so should consider adopting a similar final plat approval measure.

One more example of a tool cities could use to improve the climate for housing is to adopt a “fee simple” townhouse code, allowing for fee simple, unit lot subdivision of attached homes. In short, fee simple is an ownership style. With condos, you own the space within the unit. With fee simple, you own the lot on which the home sits. These multifamily homes, which are typically townhomes, are subdivided.

The primary benefit of fee simple is that this ownership type makes it easier for buyers and builders alike to obtain financing from banks and acquire insurance. Adopting unit lot subdivision code would remove a hurdle to homeownership and provide better access to townhomes, which are a more affordable housing type. This change would also improve the ability of owners to refinance and sell their homes, allowing more families to enjoy the benefits of ownership. Such townhomes make efficient use of scarce land and help us meet Growth Management Act planning goals.

By tapping these unused tools in the regulatory toolbox, cities can improve the climate for housing, making it easier to add housing supply in a more timely manner, without compromising necessary environmental protections.

Erich Armbruster, of Ashworth Homes, is the 2018 President of the Master Builders Association of King and Snohomish Counties.

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