Toward A Housing Summit
Wednesday, November 27, 2019
TOWARD A HOUSING SUMMIT: Why is housing so expensive in Bellingham? A gap between average incomes and housing prices. A lag between population growth and home construction. A mismatch between laissez-faire “hands off “policy to spur growth and more directed public policy to keep housing affordable.
Bellingham City Council last week took a deeper dive into the issues of housing affordability, receiving a more detailed forensic analysis of trends that delivered glimmers of good news: The number of housing units completed over the past five years has begun to “move the needle” on Bellingham’s citywide vacancy and median rent rates, according to city planning staff. More preceisely, it has momentarily bent the curve on rents that have been rising faster than incomes.
“Trends as of January 2018 would have put today’s median rent at about $1,400,” planning staff reported. “Instead we are at about $1,300,” with median rental rates fairly flat for the past 24 months.
“Things are starting to stabilize, and we’re encouraged by that,” COB Planner Chris Behee said.
A key element in the equation, Bellingham’s vacancy rates have risen above 2.1 percent in all residential types for the first since early 2015.
A healthy rental vacancy rate hovers around 7 percent, according to analysis by the federal Department of Housing and Urban Development (HUD); however, Bellingham’s rental vacancy rate hasn’t risen to even half that figure for more than a decade. And for the past five years in particular, the rate has held below an anemic 2 percent. It’s one symptom of a chronically inelastic, noncompetitive housing market for more than half of the city’s residents.
“We hear talk about ‘what is a healthy vacancy rate for Bellingham,’ and that may be somewhere around 5 percent is a healthy rate,” Behee explained. “When we look at the historical data, looking at units that are actually for sale or for rent at any given time, 3.5 to 4 percent is really as high as we’ve been,” looking at data that ranges back to the 1990s.
Council emphasis in their current analysis focused particularly on middle incomes—those that do not qualify for subsidized or specialized housing—and how housing options for those incomes are distributed around the city. Turns out it is distributed fairly equitably, but an increase in something like interest rates or transportation costs could shift that balance.
“We actually know a fair amount,” Behee said. “We have good data on the mix and distribution of housing types. We have, with our rental registration program data, a good sense of what tenure is in various areas of the city. We have very good information on production through our permit data, what we’ve built recently. And we also have much better information than we’ve had in past years on vacancy and median rental rates.”
Robust construction of new housing units appears to played an outsized role in stabilizing rental rates, Behee reported. Through the end of October Bellingham has issued permits for 834 housing units.
“If that rate continues, the end-of-year total for 2019 is projected to exceed 1,000 units,” he noted—a stunning number in comparison to the average produced over the past decade. “It looks like the next year or two will continue to be fairly large years as far as the number of units we’re considering issuing permits on,” he said.
Yet the city likely will have added at least 1,000 new residents to its population each of those years, every year. This is a problem the city can’t just build itself out of. It’s also a problem the city alone can’t solve.
As an indication of the growing scope of the problem, roughly 74.8 percent of housing units in Bellingham were considered affordable to median family incomes in 2000, according to city data. By 2019, 57.5 percent of housing units were considered affordable to median family incomes in Bellingham, according to the city’s data modeling.
The market alone can’t shift the balance, because the construction industry will produce the housing the market will bear—not the housing forms that are most needed. A market-based approach that kicks out one lower-cost dwelling for every ten built cannot achieve city policy goals, and would create a city a majority of residents would find unbearable.
Frankly, the Bellingham Home Fund has done more to shift the balance on home affordability than any other single city policy. That’s because while the city holds the purse strings, it also controls outcomes.
Approved by voters in 2012 and again in 2018, the fund supports the development of new rental housing units for households that earn less than half the area median income, and has created hundreds of new housing units in support of that goal. A small property tax levy, the Home Fund is projected to accommodate a project budget of $40 million over a 10-year period. That’s money to solve housing problems.
Toward the end of their afternoon session last week, Council member Michael Lilliquist suggested broadening the involvement of policymakers in the county and smaller cities who are at work on issues of housing security.
“It’s important that at the policy level, the elected level, we need to have oversight on the vision about how monies are distributed throughout the county,” Lilliquist said, suggesting a coordinated countywide effort. He was speaking primarily on topics of homelessness, which is—we’ll suggest—the grim end-point of our society’s inability to grapple with housing access and affordability. The county has not held such a coordinated discussion since the Countywide Housing Affordability Task Force (CHAT) in 2008.
It’s a marvelous idea and, for a topic as complex and far-ranging and vital to our future as housing, it’s a summit long overdue.