Affordable Housing in Washington

Washintonians face a housing affordability crisis, with skyrocketing rents and home prices putting pressure on everyone. The state’s ability to find new and creative ways to tax homeowners and landlords paired with increasing insurance costs add to the problem but that is another discussion. With the median home price in Washington in 2023 over $550,000, and the average rent for a one-bedroom apartment around $1,800 per month, it’s easy to see why this is top voter concern. Addressing this crisis requires solutions that include both immediate relief for renters and long-term strategies for increasing the housing supply in Washington. I’d like to start with two approaches, offering tax incentives for landlords to keep rent low and optimizing the permitting process for new construction.

Providing tax incentives to landlords who agree to keep their rents below market rates as well as reduce annual increases would go a long way in keeping rental housing affordable. There are a couple of ways to do this:

• Reduced Property Tax: Landlords who commit to maintaining affordable rents could receive reductions on their property taxes. Establishing a tiered system where the greater the discount on rent, the larger the property tax reduction.

• State Level Tax Credits: Offering state-level tax credits for landlords who keep rents affordable is an important step in the right direction.  Ensuring those credits are stable and that landlords don’t have to worry about a government rug pull (SB 6136) every year is equally important.

• Sales Tax Exemptions: Incentivize landlords to invest in their properties without passing the cost to renters by reducing or exempting sales tax for purchases related to property maintenance and improvement. This would offset some of the cost and extreme inflation landlords struggle with to keep housing affordable.

• Capital Gains Tax Exemptions: Exempting or reducing capital gains tax on Landlords who sell properties to non-profit organizations or community land trusts that are committed to affordable housing would encourage more sales to such entities.

I’ve experienced the permitting process first-hand, it’s a bureaucratic nightmare with general contractors, architects and structural engineers all agreeing that the process is getting worse, not better.  The bottlenecked permitting system in place for new construction delays construction projects and increases costs.  Streamlining this process is an important step in speeding up the volume of new homes coming on the market and making housing more affordable:

• Streamlining: Implementing a fast-track approval process for housing developments that include a significant percentage of affordable units would bring these projects to market faster.

• Standardizing: Reviewing and consolidating regulations that apply to multiple counties & cities within the state to reduce the complexity and the time it takes to meet the requirements.  The goal is to help developers quickly and efficiently navigate the permitting process.

• Online Service Expansion: Expanding online services and investing in technology to make the system more user friendly, fast & efficient would reduce administrative burdens in both the public and private sector and improve transparency in the permitting process.

• Incentives: From tax credits to grants, it’s crucial we show support for affordable housing through incentives.  We need to be investing in strong, self-reliant communities and ensuring stability for the community. By encouraging the development of affordable housing, we support low-income families and essential workers, reduce homelessness, and stimulate local economic growth.

• Pre-Approved Building Designs: Working with developers on pre-approved foundational plans/designs they can used across multiple municipalities would expedite the approval process for housing projects, reducing time and costs for developers.

There is not a single fix all for housing affordability.  We need to approach this issue on several fronts. By offering tax incentives, optimizing the permitting process and expanding and making online portals more user friendly we can make significant strides toward ensuring that all residents have access to affordable housing. These strategies are a starting point in creating a more affordable housing market in Washington.

1. Zillow Research. (2023). Washington Home Prices.
2. RentData.org. (2023). Washington Fair Market Rent.