Reports Highlight Flaws in Mandatory Affordable Housing Fees

by MBAKS Government Affairs

Two new reports from ECOnorthwest shed light on key shortcomings in inclusionary zoning policies and the nexus studies often used to justify mandatory affordable housing requirements on new market-rate development.

MBAKS commissioned ECOnorthwest, an independent third-party public policy research firm, to prepare these reports in support of more informed local dialogue around affordable housing strategies.

The first report, Mandatory Affordable Housing Fees Carry Unintended Consequences, examines the real-world impacts of imposing affordable housing fees without corresponding incentives. It finds that mandatory affordable housing fees, though well-intentioned, disproportionately affect middle housing projects, often tipping them from risky to infeasible and preventing them from being built altogether. 

The second, How Nexus Studies Misunderstand the Affordable Housing Challenge, highlights a core flaw in the logic underpinning many nexus studies: the assumption that new market-rate housing is the primary driver of demand for affordable housing. The report describes several issues with this assumption, arguing that the framework used to justify mandatory inclusionary requirements misrepresents the true dynamics of housing markets. It does so by ignoring the broader supply shortage and the filtering process through which new housing helps ease pressure on lower-cost homes. By attributing the affordability crisis to new development rather than to structural undersupply, nexus studies risk reinforcing policies that further constrain housing production—ultimately exacerbating the very problem they aim to solve.

The ECOnorthwest reports reinforce the need to continue advancing solutions that increase supply at all levels. MBAKS is committed to being a collaborative partner in addressing the region’s housing shortage so our communities can be more affordable and inclusive for all.

King County home prices hit their lowest point for July since 2012

Is that faint rumbling we hear in the distance carryover from Seafair Weekend and its barrage of air and sea entertainment? Or could it be that ever-elusive housing bubble finally popping and coming back down to normal levels of absurdity?

After all, even the Blue Angels have left town.

Maybe they saw the inevitable spin back down to earth. Or perhaps we’re all just blowing this housing cooldown out of proportion. Whatever stance you take, one thing’s certain: the Seattle-area real estate market has fallen to its lowest point in four years, shedding a crevice of light for homebuyers and inducing a fleeting shock of panic for owners sitting on their plots of gold-laden land.

The number of homes for sale throughout King County rose a staggering 48 percent in July as compared to a year ago, according to the Northwest Multiple Listing Service, which means inventory now exceeds 2015 levels. The 48 percent jump is the biggest we’ve seen in a decade and is mostly due to homes that have been waiting patiently for owners on the market. All signs point to a noteworthy dip in demand, as July home sales reached their lowest prince since July of 2012, when the market was at a low point.

How big was the decrease? King County’s July median home price of $699,000 is down $27,000 from the record highs we saw earlier this year. Last year, July was the most expensive month of the year.

In Seattle, home prices were down $25,000, making the median $805,000. Eastside prices also saw a dip, falling $30,000 in just a month to a median price of $947,000. Snohomish County, not one to be left out, also saw an increase in active listings, up almost 16 percent from this time last year.

Have we finally hit the ceiling? If we have, it’s not just regional; the national trend at the moment is one of a long-awaited inventory uptick just as hotspots like Seattle, Silicon Valley, and Austin are finally cooling off—metaphorically, of course (enjoy 90 degrees this week). Seattle is unique in the fact that its home sales saw the second-biggest jump in the country, according to info gathered from realtor.com, right on the heels of our neighbors down south in Silicon Valley.

Why is this happening?

Those in the know point to stabilized rents, high mortgage rates, slightly less frenetic population and job growth, and waning interest from Chinese buyers.

Many are already shouting, “I told you so!” at the top of their lungs but, as always, time will tell if we’ll continue this down-surge or if we’re all just suffering from a curable case of “buyer fatigue.” In the meantime, inventory levels are still an issue; while King County has doubled its March inventory, we’re still significantly below a healthy four-to-five months of inventory, according to Robert Wassa of the Northwest MLS board of directors. And people still need a place to live in some capacity.

We’ll be hearing a lot more about our region’s housing trends, whichever way they end up going, in the weeks and months ahead. Stay tuned.

Originally reported by Mike Rosenberg in the Seattle Times, “More Seattle-area home sellers lower list prices as market cools way down,” August 6

Data gathered from realtor.com and the Northwest Multiple Listing Service

By MBAKS Senior Policy Analyst Allison Butcher

Housing data contained in the latest Builders Bulletin show single-family and multifamily permits are down in the three-county Puget Sound region through February 2019, compared to the first two months of 2018. Single-family permits fell 25% and multifamily permits were down 7%. The notable exceptions are multifamily permit activity in Snohomish and Pierce counties, which rose 79% and 25%, respectively. Multifamily permits fell 24% in King County, causing the regionwide total to go negative. Meanwhile, the month’s supply of housing inventory is below two months in both King and Snohomish counties as of March.

The Builder's Bulletin is intended to provide a convenient way to track housing in our market and includes information from the Northwest Multiple Listing Service, State of the Cities Data Systems, Office of Financial Management and the Washington State Employment Security Department.

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