Crisis in the Housing Inventory of Seattle and King County

According to real estate experts in the city of Seattle, condominiums could be an excellent solution for the housing shortage for the middle class, for families who cannot afford an expensive single-family home. Dean Jones, director of Realogics Sotheby’s International Realty, a very prestigious agency, says: “Even if the land were free, developers would not build due to high construction costs, obligations, and taxes linked to municipal mandates. Condominiums are a good idea, but when it doesn’t add up financially and taxes remain, builders stop.”

And that is the reality; since 2020, no new condominium projects have started in Seattle. But it’s not just the lack of condominiums that affects Seattle; the city has the lowest housing supply in the country, and what little is available is too expensive for many.

Recent laws aimed at improving housing availability have backfired. The Growth Management Act, the Seattle Mandatory Housing Affordability Program, and the Washington State Condominium Act, all intended to boost urban growth and manage the city’s growing population, have inadvertently increased housing prices.

In this situation, Mr. Jones continues to say: “Housing is a for-profit business; unless developers get subsidies to build, they won’t.” It is difficult to buy a home when starter condominiums cost $400,000 or more. If we add to this problem the high mortgage rates, inflation, utilities, the fear of foreclosure, and homeowners insurance, owning a home in Seattle is barely possible.

Erik Mehr, founder of Erik Mehr & Associates Real Estate, has focused on new condominium sales for 22 years and says the condominium conundrum is worse in Seattle, but it is part of a national housing shortage. He adds that a problem for all housing is that construction costs are very high, and that’s why we don’t see many new condominiums because people can’t afford them.

According to Jones, it could be years before Seattle resumes condominium development, but the supply gap could be shortened if the government incentivizes developers to build affordable products. He also suggests modifying existing laws to shift the affordability burden to developers, creating a fairer risk-reward balance. The Condominium Act, for example, requires developers to generate all the equity and construction debt, while buyers are limited to 5% earnest money deposits.

Sol Villareal, a broker with Windermere Real Estate, also shares her opinion and says: “We haven’t built new affordable single-family homes for middle-income families since 1970. Most new constructions are townhouses, ideal for those without children, but there is a lack of market-rate homes that middle-income families can afford, and supply is stagnant or decreasing; moreover, the inventory we are building does not match the demand for family-friendly housing.”

Villareal’s favorite solution is “lot splitting,” dividing a single-family lot to create two parcels. She adds: “That would work statewide and generate many new small houses. The simplest solution is to split lots everywhere, and many people with large yards they don’t need could split their lot and sell it to a developer to build a small house.”

Available Foreclosures:

Seattle: 150 homes available

By Elías DaSilva | 26 de Noviembre de 2024.