Halting development to slow growth? It’s a bold strategy, Cotton, let’s see if it pays off for ‘em.  

If a building clad in a color you didn’t think fit your city’s personality suddenly popped up overnight, would you take action? 

That’s what the City of Issaquah did in 2016 when a multi-hued apartment complex started gaining attention for all the wrong reasons. The building in question, the Atlas Apartments, featured colors (including a brazen blue) that many residents deemed unacceptable to their city’s persona. The outcry resulted in an emergency ordinance at the Sept. 6, 2017 council meeting that paused development in the area, the reasoning being that new construction was not meeting the standards of the 2012 Central Issaquah Plan. 

On the moratorium, which was extended an additional six months after the original verdict last September, Issaquah Economic Development and Development Services Director Keith Niven stated that the decision was made not to deter future growth but to ensure the right kind of growth for the city. 

Critics claimed the Atlas complex served as an example of what the city didn’t want or need, citing its lack of mixed-use ground floor space and unsightly “Orlando architecture.” City leaders instead wanted to see denser projects fit for growth and which add vibrancy to the central Issaquah area. Twenty-one months after the original moratorium, city staff had revamped code to solidify areas such as parking requirements for new development and introduced a design and architectural manual to streamline future project aesthetics—including acceptable colors. 

Development changes also included a plan to help diversify the city’s available housing, including reducing hurdles for accessory dwelling units (ADUs) and experimenting with a tax exemption for multifamily housing. 

The moratorium officially ended May 21, and so its effects are yet to be determined. But the underlying question is this: Are moratoriums like the one instituted in Issaquah ultimately beneficial or an unnecessary hindrance to providing much-needed housing? MBAKS Senior Policy Analyst Allison Butcher states the latter, calling halts to facilitate growth a “drastic measure” that won’t do anything but put our region even more behind the effort to give residents the shelter they demand. 

“We are obviously continuing to grow at a fast pace and instituting a building moratorium isn’t going to stop that,” says Butcher. “The growth is coming whether there’s a moratorium in place or not.” 

That sentiment hasn’t stopped other cities from following suit, however, as cities such as Federal Way, Duvall, North Bend, and Newcastle have all recently adopted moratoriums for a variety of reasons, from reworking zoning standards to policy updates and more. 

But the question remains, are these sudden stoppages ultimately preventing the very thing we need in this unprecedented time of growth and home prices? 

Butcher further explains the potential backfire our cities could see while instituting construction stoppages, saying, “While a moratorium is legal, it does not mean it is good policy. At a time when demand for housing is far outpacing housing supply, which drives up both home prices and rents and makes housing less attainable, building moratoria certainly are not good for housing. They also are not good for our economy or the families and workers looking for a home closer to job centers. Furthermore, they potentially could run counter to our region’s transportation investments that contemplate the need for more transit-oriented development in certain areas.” 

Butcher goes on to address housing affordability and how it relates to moratoriums, stating that “perhaps the biggest problem with building moratoria is that they are counterproductive to solving our housing affordability crisis. Simply put, moratoria are a bad deal for anyone looking for housing—they only make it harder for current and future residents to find a home they can afford.”

Butcher also says that stoppages also lose significant revenue from new construction, as participating cities become devoid of local income, taxes, and other benefits to new housing. Her solution? “Instead of enacting policies designed to slow or halt housing, local governments should work within their communities to expand housing supply and choices for families. Housing goes hand in hand with a strong economy and vibrant community.” 

Those looking for affordable housing options might not care about a wild blue tint outside their window. Cities must look out for their residents but must also be willing to let growth flourish because, as Butcher points out, the people are coming, and it shouldn’t be our self-imposed lack of available housing that leaves them feeling blue. 

By Allison Butcher, Senior Policy Analyst, MBAKS

On Wednesday, January 31, the Master Builders Association of King and Snohomish Counties (MBAKS) kicked off its first general membership meeting of the year—an economic forecast breakfast presented by the association’s Sales & Marketing Council.

The breakfast took place at The Westin Bellevue and featured presentations by Metrostudy Regional Director Todd Britsch and Morgan Stanley Financial Advisor Dan Becraft, C(k)P QPFC.

Becraft touched on highlights of Morgan Stanley’s investment outlook for 2018. In short, the report states that global economic expansion delivered strong returns last year but we should not expect the same in 2018. Morgan Stanley is not anticipating a recession this year, but rather that markets will begin to normalize.

The forecast already factors in recent tax cuts, Becraft said. A look back at the U.S. stock market over the last 37 years shows that tax cuts are not correlated to market performance. In the year after President Ronald Reagan’s tax cuts took effect in the 1980s, for example, the market dropped.

Morgan Stanley Financial Advisor Dan Becraft, C(k)P QPFC (Alabastro Photography)

Becraft offered additional observations, including ways in which demographics influence a country’s economy, predictions on interest rates (he expects they will stay low and may even be cut), and more.

The biggest risk to our economy going forward, he noted, is our national debt, which stands at $20 trillion. However, China’s national debt is significantly higher. Whereas the United States’ debt-to-GDP ratio is around 100 percent, the ratio in China is closer to 460 percent. Becraft said some are speculating this could lead to a move by China within 36 months to repatriate capital that has flowed out of their country in recent years. If this were to happen, it could result in investments being pulled out of real estate in the United States, including the Seattle market, and transferred back to China.

Britsch focused on economic and housing data in the Puget Sound region and provided compelling information in his presentation as well, particularly related to the lack of future housing inventories.

Britsch’s presentation highlighted the fact that population and job growth continue to be very strong in the Puget Sound region, with 137,000 jobs added since 2015 and continued low unemployment in King and Snohomish counties. Furthermore, data from the Department of Licensing show that net driver in-migration into the region has averaged more than 6,300 per month since 2012, for a total of 460,000 new drivers from outside the area.

Metrostudy Regional Director Todd Britsch (Alabastro Photography)

Britsch also stressed that housing supply is not keeping up with demand. Looking at the driver license data, he estimates this growth has created a demand for 100,000 owner-occupied homes between 2012 and 2017. However, during this time, we have built and sold roughly 60,000 homes, creating a housing supply shortfall and causing upward pressure on home prices. The average list price for new construction within formal subdivisions, Britsch stated, has risen 20 percent in Snohomish County and 24 percent in King County year over year.

Britsch warned we are running out of land at a rapid pace. With 10 months’ supply of vacant developed lots in Snohomish County, he said we’re at "crisis level" in terms of lot inventory. The North Creek market area, which has been very robust in recent years, has dried up, Britsch said.

Since 2009, the entire Puget Sound region has had a net loss of 3,018 lots coming out of the system, not to be replaced. More importantly, in that same time frame, the available finished lot inventory has declined by 17,879. Britsch also pointed to Northwest Multiple Listing Service data, which shows King and Snohomish counties have just over a two-week supply of homes for sale.

Although the current housing market is showing signs of weakening, Britsch believes it will remain strong. The housing market is all part of a cycle and we can expect an adjustment in sales, he said. Britsch predicts core areas from King County to South Snohomish County will continue to see double-digit appreciation due to lack of inventory.

Founded in 1909, the Master Builders Association of King and Snohomish Counties (MBAKS) has grown to become the largest residential homebuilders association in the United States. With 2,900 member companies, the association is dedicated to membership value, housing advocacy, community service, and financial stewardship throughout the Puget Sound region.

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