Can the Year of Housing Be Repeated in 2024?

Recapping the Re-Wire Housing Panel | Will there be Local Pushback?

First Things First, Why was 2023 the Year of Housing?

Before diving into the potential for future housing legislation and whether there may be hope for a second “Year of Housing” in 2024, let’s recap 2023. Aware of the mounting statewide housing crisis, legislators responded in bipartisan fashion to adopt over a dozen pro-housing legislation which included a missing middle housing bill, beefed-up allowances for accessory dwelling units (ADUs), allowances for conversion of existing buildings to housing, the Covenant Homeownership Act, and more. Now while many have embraced this housing legislation as a start of a solution¹, there were some detractors, including local officials (elected and staff) frustrated by the current rate of growth and satisfied with a status quo that gave them some local control² on what types of housing to allow.

So, Will We See a Second Year of Housing in 2024?

This was the key question for the housing panel at Tuesday’s Re-Wire Conference, put on by the Washington Observer. And the answer (in my opinion) was a pretty resounding yes.

This is based on on the opinions offered by many legislators, as well as representatives from groups like the Association of Washington Cities (AWC), the Washington Realtors Association, and the Tenants Union of Washington. Among the most likley pieces of legislation that may be proposed in the forthcoming 60-day session are:

• Transit Oriented Development (TOD) bills to legalize more housing/higher density housing near transit, which I found to be very interesting given that our firm has worked on several rezones in the last year that were denied even though they would have increased density within the walkshed of transit lines.

• Single Room Occupancy (SRO) legislation to address allowing shared housing (boarding houses, co-housing, etc.) to be constructed by right. This is an issue that interests me because a few years ago our firm helped a co-housing client navigate obtaining permits after they’d been cited for a zoning code violation.

• Rent Stabilization, which would look to control what many see as dramatic rent increases in the post-COVID era. There are likely to be several proposals discussed, including a hard cap or a hard cap + some additional adjustment for inflation (albeit the panel noted concerns with recent inflation figures that a cap + inflation may still allow for too high of a jump in rent). Also, expect to see discussion and debate about requirements

• Increased notice to tenants in advance of future rent increases. Advocates contend that it can take 30 days to get a decision on a rental application, so 60 days’ notice doesn’t give many people enough time to respond to rent increases by looking for different housing options.

• Lot splitting, which is the concept of allowing anyone with extra land to have a one-time split of their lot to create a new lot that can be sold (or an additional unit built). The big concern here last session was whether this created issues in cities where the lot split allows for smaller lot sizes than the minimum lot size on the books, as well as whether such a change during the GMA³ mandated comprehensive plan updates might impact ongoing environmental review under SEPA⁴ because buildable lands assumptions would change.

• Potential for a “Tenant Opportunities to Purchase Act” which is essentially a law to grant a first right of refusal to the tenant to purchase where they live. Supporters note that this helps preserve affordable housing options, limits displacement, etc.

• An adjustment to the Real Estate Excise Tax (REET) that would reduce the rate paid by homes under $1 million and increase the rate paid by homes over $3 million with the monies raised used to fund affordable housing.

Want to view the panel for yourself? You’re in luck. TVW⁵ was on hand at the event has the “The Year of Housing Part II” panel up on their site here.

More On The Re-Wire Housing Panel

The “Year of Housing Part II” panel at Re-Wire included Representative Bateman (who as a member of the Housing Committee was an instrumental force in some of last year’s significant housing legislation), as well as Terri Anderson (interim Executive Director for the Tenants Union of Washington), Nathan Gorton (CEO of the Washington Realtors®), and Carl Schroeder (a Government Relations Advocate for the Association of Washington Cities). We recommend you view the recap at the Washington Observer, but I’ve provided some summary below.

Some housing policy news from Re-Wire

Note: If you don’t subscribe to the Washington Observer, you should. They cover Washington State politics and government, including news on the legislative session and the happenings of the upcoming Gubenatorial race.

The housing panel was moderated by Lieutenant Governor Denny Heck, whose office led the work behind the 2022 Washington Business Competitiveness Analysis (WBCA), which dug into the magnitude of our state’s housing crisis and the implications for the state’s business and economic development competitiveness.

Looking back at some takeaways from that 2022 WBCA report:

• Washington State has the fewest number of housing units per household of any state in the country, and the housing crisis is getting worse as the number of units built has not kept pace with household formation over the last decade.

• The lack of supply puts strong upward pressure on home prices and rents. 44% of Washington renter households are cost-burdened and spend more than 30% of their income on housing; 22% of renters are severely cost-burdened and spend more than 50% of their income on housing.

• Chronically undersupplied housing is the principal driver of the state’s homelessness crisis. Washington’s homelessness rate—30 per 10,000 residents—is well above the U.S. average (18 per 10,000 residents).

• Homeownership is becoming more unattainable, particularly for BIPOC households. The Black homeownership rate is 11.5% lower than the national average, which ranks last among peer states, and the 7th lowest nationally.

• There are only 1.06 housing units per household in Washington State compared to 1.14 nationally.

Lt Gov. Heck made some similar points at the outset of the panel and pointed out that the state continues to under produce housing at the rate of 10,000 to 20,000 units per year.

Noteworth from the panel was insight provided by Nathan Gorton, CEO of the Washington Realtors, who pointed out how long it takes new housing policy to have an affect, namely that the full effect of last year’s housing legislation is likely still years out from contributing to the solution as policies still need to be locally adopted and projects subsequently permitted and constructed. In sum, expect 3-5 years before the impact begins to be felt.

Gorton also provided some startling statistics on multifamily housing development in greater Seattle that should raise the alarm over how we keep working to solve the housing problem:

• Of multifamily projects slated to start in 2023:

  • 71% of the projects have been delayed

  • 19% of projects terminated

  • 10% started construction as scheduled

• Q3 of 2023 was the 9th consecutive quarter in which debt financing became less available to multifamily projects and the 7th consecutive quarter in which equity financing also became less available.

So, Is Housing Driving A Wedge Between State & the Local Officials?

With all these policy action on housing, a key question is emerging about whether more housing legislation will drive a wedge between state and local elected officials, as some local jurisdictions express exhaustion by the pace of growth and frustration with state mandates on what housing to create. It’s a fair question and here are some thoughts.