Seattle housing boomed in 2023 as pre-Mandatory Housing Affordability projects get put in the ground

[Eric]

It's always completely predictable, but always interesting, to see how the data play out after a new law incentivizes or disincentivizes some kind of economic activity. Seattle's Mandatory Housing Affordability (MHA) requirements, which were passed into law back in 2019, require that new developments include rent-restricted affordable homes (ranging from 5% to 11% of units depending of the intensity of the upzone) or contribute to a City fund for affordable housing. According to the City's website, developers are now required to make these "contributions" in the form of a "performance option" (adding affordable homes to the project plan) or "payment option" (contributing to the City fund), both of which are obviously costly to their bottom line. Predictably, developers rushed to get their applications in before new permit applications were subject to the new requirements. The flurry of pre-MHA activity manifested as a big (non-MHA) housing boom for 2023.

It will be interesting to see how Seattle housing trends continue to play out as MHA takes full effect. I would think we'd start seeing a substantial decline as the pre-MHA builds taper off, but we'll see. The Master Builders Association of King and Snohomish Counties (MBAKS) is saying that prospects for new townhomes in Seattle are particularly dire. The MBAKS put out a report stating that: “Unfortunately, MHA fees are severely limiting new townhomes — a lower-cost, family-sized homeownership option. Post-MHA, townhome permit intake has dropped by nearly 70%.”

 

[Winny]

I hope when the MHA takes effect, it results in this plan of theirs working, especially if we can see more affordable housing for those in need. I suppose all we can do is wait and see what comes of this. Will Seattle become a hub where everyone can find affordable housing? Or will we end up seeing things go backward?