Already considered by the President of Seattle King County Realtors to be a crisis that is “ugly and getting uglier,” housing affordability in Greater Seattle will worsen unless regional leaders and state lawmakers re-set their approach, starting with a better definition of “buildable lands” and a greater emphasis on suburban density. That was one message from key stakeholders September 15 at the 2016 Housing Summit of the Master Builders Association of King and Snohomish counties (MBAKS).
The warning came just days before the Washington State House Local Government Committee on September 20 was to begin a fall review of the Growth Management Act (GMA) with an eye to legislative reform proposals.
Housing Prices up, Supply Down
According to a news release from the Northwest Multiple Listing Service, in August buyers in the 23 counties they serve paid a median price of $350,000 for single-family homes and condos combined, up 11 percent from a year ago. That contrasts with a combined median of “just under $500,000” in King County in August, almost 11 percent more than a year ago but down slightly from July’s median of $505,000. Median sales prices in August were $380,000 in Snohomish County, $283,225 in Pierce County and in $292,000 in Kitsap County.
Supply of housing in Central Puget Sound counties continues to pace far below the industry benchmark of three months worth. For August, there were 1.33 months of housing inventory in King, 1.90 in Snohomish and 1.95 in Pierce.
Economic Competitiveness At Stake
At the MBAKS summit, King County Councilmember Claudia Balducci, a former Bellevue City Council Member, said “growth is accelerating and with it, demand for housing” that cannot be met by existing supply. Officials, she said, are “keenly aware of risk to our economy if current trends continue.” Population growth in the four-county Central Puget Sound region of King, Snohomish, Pierce and Kitsap counties is projected to grow from the current 3.8 million to 5 million by 2040.
Chief Economist for Windermere Real Estate Matthew Gardner told the Summit audience of builders, realtors and elected officials gathered at the Meydenbauer Convention Center in Bellevue that if leaders allow today’s pressing challenges of housing supply and affordability in the region to worsen, “at some point we will stop being competitive from a business standpoint.”
He continued, “Employers and (chief financial officers) care about cost of living,” asking themselves, “what do I have to pay my staff to live here?” He added, “if it becomes too expensive they’ll start living somewhere else…as escalations continue, companies will say we’re going to move to Coeur D’Alene, Idaho instead. Major companies don’t necessarily have to be here.”
The mechanics of how the GMA is applied are at the root of the problem, said Gardner.
‘Buildable Lands’ Analysis Needs Work
“GMA doesn’t really properly account for growth. It’s all very well to draw a line around where we can live, but it is pushing up land values exponentially. Can we change those boundaries? Likely not. However, we can fix the buildable lands analysis.” Under the Act that analysis “doesn’t really work out” because it fails to account for “unbuildable properties” in part by ignoring the region’s tricky topography, said Gardner.
He added, “There is a huge overestimate of developable land, and that’s what pushes prices higher.” Gardner said lawmakers need to “rewrite the methodology” of the buildable lands analysis so all stakeholders can “see how limited land supply is.”
According to Gardner, ”A discussion also needs to begin on expanding Urban Growth Area (UGA) boundaries outward, under GMA, as “a first and remarkably important step.” Gardner added, if discussions are derailed by political opposition then the conversation must turn back to increased density within UGAs despite the political opposition that it sparks.
State Rep. Joan McBride (D-48) recently voiced similar concerns to Lens, noting that a suggestion by the Washington Research Council to swap unbuildable acres in a UGA for buildable lands beyond UGA boundaries deserves consideration. She said that within UGAs “many slopes are not stable” and there are sometimes wetlands, which are also unbuildable.
Peter Orser is the outgoing head of the Runstad Center For Real Estate Studies at the University of Washington, a former President of Quadrant Homes, and of Weyerhaeuser Real Estate Company.
GMA ‘Due For An Update’
In his presentation to Summit attendees, Orser said GMA is “due for an update, no question” because regarding assessment of buildable lands “we are making bad decisions based on bad data.” He added that “the legislature agrees it’s time for an overhaul. We can’t continue to put our heads in the sand.”
Regional and state leaders, builders and lenders need to be able to correctly “understand our inventory of lots. The legislature is sensitive to this, and math and science can help us understand,” Orser said.
Asked what legislation he’d like to see lawmakers successfully advance stemming from the House GMA review starting this week, Orser said, “I’d like to see Governor Inslee sign a bill authorizing the money” needed for a technical review “to fully understand ‘buildable lands.’ We can’t revamp policy until we understand the data underlying the problem.”
Orser said urban density is important but “the suburban solution also has to be part of the equation” and that means “more lots, and more homes.” Paving the way for more high-density suburban housing development will require careful planning and help from legislators, Orser said.
Housing Problems Add To Transportation Woes
Both Orser and Gardner stressed the interconnectedness of the region’s transportation infrastructure and its housing supply and distribution. Gardner said more and more consumers decide to “drive to buy,” or choose to accept long commutes that snarl limited highway capacity at peak hours, because they cannot afford closer-in options. Orser said we need to find ways to get more capacity out of major highways such as I-5.
Seattle region traffic jams continue to impose a yearly cost of more than $3 billion in lost time and productivity, according to widely-recognized reports on congestion in major metro regions, that are issued annually by the Texas Transportation Institute.
Major employers in the region banded together in a new coalition earlier this year, called Challenge Seattle, to develop and advocate for private-public strategies to ease road congestion. Top priorities of the group include more commute ride-sharing, to be encouraged and tracked by employers, and further consideration of utility-based funding strategies such as the road user charge currently being evaluated by the state, to replace the increasingly ineffective gas tax.