I'm Brandi Fullwood, host of Seattle Eats, and on the latest episode, we give you the scoop on Seattle's diverse and delicious cold treat scene. There's a lot more in the world of cold treats than just ice cream. Bing su, takigori, shave ice. We'll tell you about the ones you are going to want to try this summer. Listen to Seattle Eats on the KUOW app or wherever you get your podcasts. Washington state was in the top 10 fastest growing states last year. That's despite lots of anecdotes about people leaving because of the high cost of living. Statewide, we need to build 55,000 new homes per year to house these new residents. But we're only producing 75% of that. That makes housing really expensive. And it's not just Washington state that's facing a long-term housing shortage. For years, Americans have been begging politicians to do something about the high cost of finding a decent place to live. In late June, something happened that almost never happens in D.C. Republicans and Democrats came together to pass a major bill aimed at unlocking the housing supply. We are closer than ever to passing the biggest housing bill since 1990, when the average price of a home in America sold for $150,000. Today, 36 years later, the average home is selling for over $500,000. We see this as taking care of Americans who desperately want to experience the American dream. The bill is called the 21st Century Road to Housing Act, and it just became law over the weekend. This is Booming. I'm Joshua McNichols. And I'm Monica Nicholsberg. Some lawmakers are calling this bill the most consequential housing reform in decades. It's meant to address a national shortage of 4 to 7 million homes. So that's the dream. Today, we look at what it can really deliver. That's coming up. All you people don't know about lost causes. Mr. Payne does. he said once they were the only causes worth fighting for and he fought for them once for the only reason any man ever fights for them because of just one plain simple rule love thy neighbor joshua before we get into the question of whether this new bill will actually build more housing and make it more affordable. I want to ask, are we actually still in a housing crunch? Because lately you hear things like there are more sellers than buyers, and it's just a little bit hard to gauge where the market is right now. Yeah. Well, you're right. The demand has come down just a little bit recently, but over the long term, we still don't have enough houses for all the people moving here. And that longer term problem is much bigger than the sort of short term oversupply of housing. The reason for that is because people keep getting drawn here to Washington State, to the Seattle area for, you know, the natural beauty, for the jobs, for the wealth. And over the long term, that hasn't shut down. I mean, it's hard to see it shutting down. This is the best place ever. Yeah. And, you know, there are other metro regions in other states that are kind of in the same situation we're in. You know, you can look at San Francisco, Boston, New York City, Miami. They're all places that people are flocking to, and they all need more homes than they have. Okay. So that brings us to this big housing bill that just passed Congress. The president said he wasn't going to sign it for political reasons, but you said it just became law. Yeah. I mean, the bill passed out of Congress on June 23rd, and it reached the president's desk on the 29th. And the U.S. Constitution says if a bill isn't signed or vetoed within 10 days, excluding Sundays, it automatically becomes law. And that's what happened. Okay. So what's in this new law? Is it going to help us here in the Seattle area? Well, that's what I wanted to know. So I reached out to the brand new Housing Futures Center at the University of Washington and spoke to its leader, Greg Colburn. He's been studying this link between housing supply and housing prices for years. I started by asking him about his first impressions of the bill. I would say that my overall impression is that I am grateful that we are seeing an action from the federal government which acknowledges the huge housing problems we have not only here in Washington but across the nation. And we have been waiting for federal support on housing for decades. So from a signaling standpoint, to me, it's very powerful. The actual nuts and bolts of the bill are helpful. I think we will, as a community, as a nation, be better off because of it, but I would not describe it as a game-changing piece of legislation And I know Elizabeth Warren called it the most important piece of housing legislation to come out of Congress in 30 years Is that an overstatement I don think it an overstatement because they haven really done much in 30 years to be perfectly honest. The bar is low. The bar is low. It's a small sample. And so this is kind of the first thing in a while, which is why it's a big deal. Okay, so understanding that this is not going to solve all of our housing shortage problems, I want to walk through some things in the bill that could actually be helpful. The first is streamlining regulations. What does this bill do to streamline regulations on housing? Yeah, there are incentives and supports and in some case requirements from the federal government for local jurisdictions to alter the way that they either approve or permit housing. Some of those deal with environmental review. In some cases, it might be incentivizing communities to create pre-approved designs such that if you have a design that's pre-approved, you don't have to go through that approval process and deal with the cost and time associated with that. And then there's also some support for more industrialized or manufactured housing, which is, I think, really important and something that's been overlooked for a long time. What does that mean exactly? Does that mean building homes in factories so that they can be assembled on a site and making that easier to do or something? That's right. Construction is one of the least innovative parts of the economy. If you were building cars for Ford Motor Company in 1960, you wouldn't recognize that plant right now. If you were building housing in the 1960s, you could show up at a job site right now and still work because we're doing the same thing. And so that lack of innovation has contributed, I think, to the fact that we've not been able to bring costs down. Whereas the cost of computers and phones and televisions and automobiles have all come down pretty dramatically because of innovation and manufacturing advances. That hasn't existed in housing. So bringing this out of the abstract and into something I might see in my neighborhood in the future after this law goes into effect, how would a house look different built under these new rules? Well, I was in Boston last February and toured three facilities that are building these types of housing. And I got to walk through some of the models. And the answer is, you might not know. Because they look like any other home? They kind of look like homes. They might have different design elements or they might be a little smaller, but as I walked into one of them, I was like, I would live here. I mean, it was a nice looking home with nice furnishings and it's just, it comes out of an assembly line. You put it on a truck and they end up at the job site. And instead of building housing, you're assembling housing on site. Is one way I would notice this in my neighborhood that the for sale signs might be for a lower price? Ideally, that's the whole idea. Okay. Another thing that you told me this bill has that could help move the needle on housing costs and housing supply is it's got some carrots in there. It's got some incentives. What are the most significant carrots that you see in this bill? Yep. So I am a big believer in carrots and policymaking. If you do A, B, and C, you'll get more money or you get this support. So the federal government is incenting behavior here. One of the things is that you'll get a few more dollars if you build more housing, meaning if you lag behind and are not creating sufficient housing, you will not get the same federal resources as the neighboring state that is building more housing. So there's an incentive to build more. So you being the state. So states can get more money from the federal government if they build more housing. Yes. You know, one thing that gets a lot of attention in this bill is this idea of banning corporate ownership of large groups of homes. Is this a problem in Washington state and does this bill solve it? Well, I think that activity is nowhere near as prevalent in our state as it is elsewhere. We see tremendous amount of this activity in the Sunbelt, in Atlanta, Las Vegas, Phoenix. Those communities have really, really high percentages of investor activity. And part of the reason is because the homes were just less expensive there. You could buy a lot of homes for $250,000 apiece. There may be less interest in buying million-dollar homes in Seattle and accumulating that portfolio. But there definitely is investor activity. And so this is probably the most contested element of this entire bill, and it was hotly debated. And actually, that provision was changed over the last couple of months because there was a concern that it might be a disincentive for some investors to build housing for rent. And so that was actually negotiated out of that provision. And so I think depending on people's perspective, they might be thrilled or less thrilled with this provision. I think for our community, it is probably less of an issue than it is elsewhere in the country. What exactly is happening in these places like Las Vegas that is creating so much trouble? Well, I think there's a couple potential issues with investor activity. Investor activity, you mean one company? Institutional investors buying up homes, and that could be single family homes. It could be them building homes that they ultimately want to rent. It could be them investing in multifamily housing. I think there's a couple potential concerns. One is there is a market power argument. That is, if one entity or a group of entities control a significant share of the market, that they might have pricing power. And that really an antitrust argument I think the other thing especially in the single family home side and this is what we looked at in the paper that we wrote was it potentially just could be crowding out first homebuyers And I actually have a colleague who, as we were writing the paper, she said, I just realized that my husband and I were competing against Blackstone in Phoenix in 2011 or 2012 when we were trying to buy a house. Because they were coming in and they had cash and they would just buy up portfolios of foreclosed homes that are really starter homes that all of a sudden they got converted into the rental stock. They would argue, hey, we're providing single-family homes for rent for families. That's a good thing. It might be. There are other people who want to buy a home, and all of a sudden that stock isn't available. And so depending on one's perspective, you might be able to say that this is a public service. On the other side, you might say it's crowding out first-time homebuyers, and you're doing it because you want to make a return. So just to be clear what the concern is here with these companies buying large groups of homes in a single community, The idea is that they could achieve something kind of like monopoly power, where they would be able to raise the prices higher than market demand would otherwise allow. That's right. OK, so those are a few major things that you feel like could help a little in this bill. But I'd like to also acknowledge that, you know, here in Washington state, in some ways we've gone farther than what you see in this bill. We've had a state law that opens up more of cities to so-called middle housing, which can mean duplexes, triplexes, fourplexes, and even sixplexes. Is it fair to say that this bill sort of trails behind a lot of the reforms we've had here in Washington state? I think one could certainly make that argument. There's no doubt that our state, especially since 2020, has been really active in housing and have passed a lot of bills on a variety of different domains. middle housing being one, but there are a whole bunch of other ones as well. And so I am proud that our state has stepped up. I think part of the reason we stepped up is because we had to, and that the federal government has really not been a huge partner in housing. And therefore, states like Washington have said, we need to act. And I'm grateful that we have. So I think that's a fair assessment. Absolutely. Okay. So it sounds like for you, the 21st century Road to Housing Act is not a big game changer that's going to solve everything here. It's a little helpful, but there's a lot more it could have done. What are some things that we could hope for in a next bill that really would make a big difference in housing availability and housing prices in a place like Washington State? From my perspective, there's two things that the government can do. You know, when we think about housing access and affordability, what we really need from the federal government is more dollars. And some people might roll their eyes at that, but I think the context is really important here. You know, we used to build public housing, and the government owned and operated that housing, and low-income folks lived in that housing, and we moved away from that beginning in the 1970s. And so now federal housing policy is rental assistance, which is very important, but only about one in five people who are eligible for that assistance actually get it. So you have people with very limited incomes who are now navigating the housing market in Seattle or Spokane or wherever, which is not very amenable, you know, if you have very low incomes. and the federal government is not there for help, which is why the city of Seattle and King County and the state of Washington and jurisdictions all around the state have really been struggling because households are coming to them saying, hey, I need support. And so a big part of our affordability problems in the United States is because the federal government has just said this is going to be a state or local issue. And so when I think about fundamental changes to housing and I study homelessness, what would help dramatically? What would really help is a federal government who would say we're going to treat housing like we treat food support, which is rental assistance would be an entitlement. We would then have rental assistance flowing to low-income households in our jurisdiction. And then the job of states and localities is not to always do housing levies and come up with dollars, is to build the housing. And then how do we get our act together to say, let's make it easier, cheaper, and faster to build housing. And now we've got households with purchasing power who can reside in those units. Will that fix all of our problems? No, but that is a world that I kind to root for. And that support does not exist in this bill. You know, you mentioned that some people might roll their eyes at the idea of just needing more funding. And I think the reason a lot of people roll their eyes is because they don't necessarily trust government to be a good steward of housing or a good reliable builder of housing. So what would you say to those skeptics who feel like really what we just need to do is open up the market more so that more people can build market rate housing and let that sort of trickle down. Yeah, I don't think those things are mutually exclusive. I think when we talk about expanding voucher capacity and the voucher program, what that is doing is giving people purchasing power. That is not the federal government building housing like we did in the 50s, 60s, and 70s with public housing. We would still rely on the private market to build the housing. In fact, it probably would be asking the private market to build more housing. And developers would then say, this is better for me because I know that I can actually We get people who can pay market rents because they have government support. That, to me, is a much better system than what we have right now, which is a whole bunch of people with limited incomes having no support. And the state of Washington is saying I don know how we support these households How do we build housing that affordable for someone who can only afford a month Just the math doesn work Okay you mentioned there two things we could do What's the second thing? Yeah, so I think the second thing is a lot of development activity isn't happening. And one of the reasons is the cost of money is really high. Interest rates are high. Interest rates are high, exactly. Anyone who has tried to buy a home in the last couple of years recognize that the cost of doing that is far greater than it was in 2019 when mortgages were 3% or 3.5%. Now mortgages are 6%, 7%. That's a huge increase on a monthly basis in that mortgage cost. That same dynamic is affecting developers in terms of the cost of the money that they're using to construct housing is a lot more expensive. And so I have kind of flippantly said in a number of settings, if I were Treasury Secretary of the United States, I would push low-cost capital to states. And what I mean by that is pushing money to the state of Washington, saying here are loans, the federal government will only charge 1% on that instead of 7%, and that you as a developer can use that money in exchange for something. And this would be back to the carrot conversation that we had before. In exchange for that low-cost capital, we might want you to build starter homes that people can buy that are more affordable for middle-income folks. We might say we need more family-sized rental units in our state, and therefore in exchange for delivering something that we need, you get low-cost financing. To me, that's a good use of federal power, of federal resources to incentivize an outcome that we want and also make it more financially feasible for the developers who are doing that work. Fascinating. Well, Greg, thanks so much for talking with us today. My pleasure. Great to be here. okay so one of the things that i heard from greg there is that a lot of what's in this federal bill are ideas that are not new here in washington and in some cases things that we've implemented i guess my question is just why hasn't it worked better here a big part of that is that many of the reforms that we've passed in recent years happened, you know, right before interest rates went up. So there hasn't been a ton of new construction. Building construction tends to be cyclical. You know, there's boom years and then there's bust years, really. And it's almost like a sine wave going up and down. And so we passed all these reforms when we were kind of on the downslope. So once we start seeing interest rates go down or some financial uncertainty that's currently in the market disappear, I think we'll start seeing a lot more homes being built. And it should be easier because of the reforms we've seen in Washington state and also easier because of some of the reforms at the federal level in this bill. But for people who are really struggling to afford rent or feel like they're never going to be able to buy a home, they just have to wait for that unknown future when interest rates are not quite so high? Well, the unfortunate thing is it also takes several years to build the new housing, even when you say, OK, now economic conditions are right. So, you know, it's going to be a generational change before we get enough homes to, you know, really start bringing down prices. So what I'm hearing is we dug ourselves into a pretty big hole by not building enough housing, and we are slowly crawling our way out. Maybe these regulations at the state level and now these new federal ones give us a little boost, but we've still got a long way to climb. Yeah, for sure. But there is stuff that the federal government could do and the state government to move things along even faster. A bigger boost. A bigger boost. Yeah. The more you sort of make it easier to build housing, the more it reduces the costs of that housing. And you could have less expensive housing coming online fairly quickly if you built the rules correctly. Okay. Well, something we'll continue to keep our eyes on. Yeah. Thanks, Joshua. No problem. That's it for Booming. Thanks so much for listening. If you have a story idea for us, you can shoot us an email at booming at KUOW.org or leave us a voicemail at 206-221-7158. And booming is a product of KUOW Public Radio. The public means you. We are powered by listener donations. So if you would like to donate, go to KUOW.org slash booming. And thank you. Our producers are Alec Cowan and Lucy Suchek. Our editor is Carol Smith. I'm Joshua McNichols. I'm Monica Nichols-Burn. And we'll catch you next time. On the latest Sound Politics, Katie Wilson made some big promises when she ran for Seattle mayor. She's more than 100 days in office and her first big self-imposed deadline is coming up. Can she set up 500 shelter bets in time for the World Cup? Deadlines. Who cares about them, right? I mean, journalists, definitely. And voters, maybe? Also, why some of Wilson's supporters are not happy with their moves out of the gate. All of that on Sound Politics wherever you get your podcasts.
