Fixing the Housing Ladder by Addressing Affordability

fixing the housing ladder by addressing affordability

 


 

The Washington Center of Real Estate Research’s James Young tells what REALTORS® can be doing to make an impact on affordable housing in their local areas.

During the fourth quarter of last year, median home prices in the U.S. dropped to their “least affordable” level since late-2008. This represented a more than 10-year low, according to ATTOM Data Solutions, whose most recent home affordability index of 91 was down from an index of 94 during the third quarter of 2018.

“While poor home affordability continues to cloud the U.S. housing market, there are silver linings in the local data as home price appreciation falls more in line with wage growth,” ATTOM’s Daren Blomquist pointed out in a press release. “Affordability improved from the previous quarter in more than half of all local markets, and one in five local markets saw annual wage growth outpace annual home price appreciation.”

However, Seattle made the list of the top places where homeownership remains financially out of reach for much of the population. This doesn’t come as much of a surprise for Dr. James Young, Director of the Washington Center for Real Estate Research at the University of Washington. While some of the affordability issues are statewide in nature, Young says many of them are unique to certain regions of the state, including Puget Sound, Spokane, and other locales.

“Every market in our state is different than the other,“ says Young. “These differences throw up something new all of the time and makes for interesting analyses, like price growth moving along the I-5 corridor in the Puget Sound and affordability challenges throughout the rest of the state for similar but distinct reasons.”

“The Growth Management Act has resulted in a lot of issues around statewide planning and zoning that keep cities and communities from going through the [development] process, or that are forcing higher densities,” says Young. “The problem is that time is risk for developers.” The Condo Act has also taken its toll on the housing supply, he points out, noting that “no one’s building condos at all at this point.”

“On one hand, the lack of affordable housing can be traced back to the Growth Management Act and other regulations that say we need to be building higher-density housing,” Young explains. “On the other hand, the condominium laws are also impacting the situation. Until the property price reaches a luxury level—at which point developers can afford the liability insurance—they’re not going to build new condos.”

Young says the real estate industry has so far done a good job of staying in front of these and other issues, and particularly when it comes to the condo laws. “REALTORS® tend to know a lot about the Growth Management Act, and about the planning and zoning processes (and how they restrict supply),” says Young, who points to Washington REALTORS® "Unlock the Door for Affordable Homeownership” campaign as a step in the right direction (for more information, visit https://unlockthedoorwa.com/).

“In terms of housing policy and lobbying, the REALTORS® are all over this at the state level,” says Young, who sees more opportunity to do the same at the local level. “Locally, REALTORS® should find out how they can get involved with the planning and zoning process to see what they can do to increase the supply of affordable housing—either in terms of density or in the smoothing over of the development cycle.”

 


 

Bridget McCrea

Bridget McCrea is a freelance writer who has been covering real estate, technology, and education since 1996. She can be reached at bridgetmccrea@gmail.com.

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