Housing is the largest cost for the average household in the Seattle area, accounting for a third of total spending. Ensuring a supply of housing affordable to a diverse population is essential to creating an equitable, vibrant, and thriving community and a fundamental goal of the Comprehensive Plan.
Housing is considered affordable if a household
spends no more than 30% of their income on housing costs.
The cost of housing affects not only the quality of life for families and individuals – for instance many families with children feel that their options for living in the city are limited – but housing costs also influence the ability of businesses to attract workers and impact our environmental footprint.
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The Commission's analysis provides:
- Data-driven insights on housing affordability in Seattle.
- Measurements of progress towards meeting Seattle’s Comprehensive Plan housing goals.
- Findings, recommendations, and priorities for City housing policies and programs.
Our report focuses on quantifiable metrics: looking at the numbers allows us one way to measure housing affordability for specific sectors of the population. However, data that measures the quality of housing is not available.
While subsidized housing is highly regulated and inspected for quality, market-rate housing is not. The City of Seattle recently passed a “rental inspection” ordinance to help ensure a basic level of safety and code compliance. This program could provide insight about the quality of market-rate rental housing in Seattle.
While our report does not attempt to measure trends in homelessness, we recognize that a lack of affordable housing options is one of the most important factors that can precipitate and prolong individuals’ and families’ struggles with homelessness.
A number of other excellent sources, such as Seattle’s Consolidated Plan, the One Night Count, and Safe Harbors, provide insights on the extent of homelessness in Seattle and the degree to which progress is being made in addressing homelessness.
Much of the analysis in this report focuses on the time period between 2000 and 2009, the latter part of which was an extraordinary period of ‘boom and bust’ in the national housing market and broader economy. During this period in Seattle, record numbers of new housing units were built. From the beginning of 2005 through the end of 2009 almost 21,000 units were added in the city, bringing the total to 289,000 housing units.
Seattle saw a dramatic surge in housing prices to their peak in 2007, followed by a rapid decline that occurred as the national economy entered a recession and the mortgage crisis began in earnest. It is necessary to understand that analyzing data from a period this dynamic may not accurately predict future trends.
Additionally, much of the data available only included the beginning of the downturn in the housing market, the aftermath of which, even now, continues to play out.
Nonetheless, this analysis of Seattle’s housing provides useful findings that inform the Commission’s recommendations. New data are coming in all the time on the housing market and the economy.
For instance, a recent article in the Seattle Timesiv makes the case that the decline in home prices and interest rates is actually increasing affordability in the King County area. Such trends are fairly typical for the business cycle after a recession.
Measuring affordability for households involves looking at the proportion of income spent on housing. Spending 30% or less of monthly income on housing costs is regarded as affordablevi. Households spending more than 30% of their income on housing are considered ‘cost-burdened,’ while those who spend more than 50% of their income on housing are considered ‘severely cost-burdened’.
In reality, affordability depends on individual circumstances. The amount of money a household can afford to spend on housing depends on total financial resources relative to other costs. It is not uncommon for households with low incomes to find it difficult to spend even 30% of their income on housing; households with high incomes might comfortably spend more than that amount on housing.
Measuring affordability of the housing supply is complicated and relies on an abstract set of calculations that compare housing costs to the amount a household could afford at a particular income level. This approach factors in the number of bedrooms and a corresponding household size but is blind to any particular household living in the unit.
Additionally, monthly costs are calculated and tracked differently for owner and renter housing. For subsidized housing, affordability is specified based on the income categories the units serve.
While it is difficult to capture nuances within this type of analysis, this report presents important findings about the broader trends in Seattle’s housing.
The U.S. Department of Housing and Urban Development (HUD) deems housing to be affordable if a household spends no more than 30% of their income on housing costs (rent plus basic utilities or gross monthly owner costs).
Area median income (AMI):
Half of the households have higher incomes and half have lower income than the AMI. Public agencies use AMI to establish eligibility criteria for housing programs.
Multiple housing units in one or more buildings.
Land use document providing the framework and policy direction for where and how growth projections will be met. Cities are required to have a comprehensive plan under Washington State’s Growth Management Act (GMA).
Households spending more than 30% of their income on housing costs.
Countywide Planning Policies:
Common set of policies and guidelines for cities in King County to use in developing their comprehensive plans.
Development with multiple cottages facing onto common open space (courtyard).
Design Review Program:
A forum for citizens, developers and the City to review and guide the design of qualifying commercial and multifamily development projects.
Householder and one or more people related to the householder by birth, marriage, or adoption (per Census Bureau).
Frequent transit areas:
Locations within one-quarter mile of one or more bus routes with frequent service and/or within one-half mile of a light rail station.
Frequent transit service:
Runs Monday to Saturday from 6am to 6pm at least every 15 minutes and from 6pm to midnight at least every 30 minutes. Runs all day Sunday at least every 30 minutes.
Essential components of livability:
Those components needed for livable, and well-functioning communities including open space, comfortable and safe sidewalks and bikeways, housing affordable to a mix of income levels, and opportunities and activities for the people who live and/or work in the neighborhood. See also “transit community.”
All the people who live in one housing unit.
Person in whose name a home is owned or rented, or an equivalent member of the household.
Basic expenditures for housing—for renters this includes monthly rent and basic utilities; for owners this includes monthly mortgage, property tax, homeowner’s insurance, and other related costs.
Total wages or salary, interest and dividends, retirement income, monetary public assistance, and other similar income, before taxes.
Entire housing supply including both vacant and occupied housing units.
Single house, apartment, or other home.
Incentives for affordable housing:
Seattle’s incentive affordable housing programs include the Multifamily Property Tax Exemption (MFTE) Program, and two Land Use Code incentives: (1) Residential Bonus and (2) Transferable Development Rights Potential (TDP).
Maximum yearly income that allows a household to qualify for subsidized housing; typically expressed as a percentage of area median income (AMI).
Land Use Code:
Includes zoning designations and zoning codes identifying the regulations and development standards that apply in different zones, regulating how property can be used.
Market-rate rental housing:
Housing unit without rent or income restrictions where landlords set the rent based on what they think tenants will be willing to pay.
Structures containing two or more housing units. Examples include duplexes, apartments, and condominiums in multi-unit buildings.
A change from one zoning designation to another. Rezones from a lower density designation to a higher density designation are considered upzones.
Seattle Housing Authority (SHA):
Public agency that provides long-term rental housing and rental housing assistance, and owns and operates affordable housing properties throughout Seattle.
Seattle Housing Levy:
Voter-approved levy that creates and preserves affordable housing and provides related assistance to households.
Severely cost-burdened households:
Households spending more than 50% of their income on housing costs.
Housing units designed for one family or household including accessory dwelling units/ backyard cottages.
Financial assistance provided to aid the construction, preservation or rehabilitation of affordable housing for income-eligible households.
Housing units, primarily rentals, subsidized by the City and/or other agency(ies) restricted to households who qualify based on income.
An area where people can walk, bike, or take transit to accomplish many of their daily activities including getting to work or school, picking up groceries, or going out to a restaurant or event. Refer to the Planning Commission’s Seattle Transit Communities report for details.
Urban Village Strategy:
Directs most of the city’s growth to areas designated as Urban Centers and Urban Villages.
Areas with the greatest housing and employment densities as well as access to the regional transit network.
Areas that contain concentrations of housing where people live in proximity to services (and in the case of hub urban villages, significant concentrations of jobs).
A look at the kinds of families and individuals who live in Seattle and the housing units in which they live. In this section, graphics show the proportion of renters and rental housing units on the left in brown and the proportion of homeowners and owned housing units on the right in grey. Each symbol represents approximately 2,000 households or housing units.
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There were approximately 280,000 households (families and individuals) living in Seattle. Understanding the make-up of the households in Seattle — age, race, and family sizes — helps us to better understand the needs and the gaps in being able to provide affordable housing to a diversity of household types and sizes.
Correspondingly there were over 280,000 occupied housing units in Seattle. As with households, they were evenly split between renter- and owner-occupied units. Understanding the characteristics of these housings units, i.e. number of bedrooms, year built, whether single-family detached homes, units in a big apartment complex, or something in between, helps us better understand how it serves the diversity of people who live (or want to live) in Seattle.
Seattle has clear goals and policies meant to achieve housing affordability vital to allow for families and individuals with a spectrum of incomes to live in the city limits. Our aim in this report is to highlight the most salient challenges to achieving those goals so that City officials may prioritize resources and energy where the most effort is needed.
The following findings focus on the most compelling results of our research. To provide context for the findings, these observations provide a broader, overarching understanding of Seattle’s housing market:
- In general, new rental housing is less affordable than older rental housing.
- Energy costs for newer housing is generally much lower than for older housing.
- Rental housing accounts for roughly half of all housing in Seattle and is typically less expensive than paying off a mortgage.
- Seattle’s overall homeownership rate reached a historical peak in 2008. However, data from the 2010 Decennial Census reveals that Seattle’s homeownership rate is once again on the decline.
- Multifamily housing, whether rented or owned, makes up about half of the housing in the city, and it is generally more affordable than single-family detached housing.
- Increased transit availability and walkable communities can reduce transportation costs, making overall living expenses lower, even where housing costs are slightly higher.
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Households who spend more than 30% of their income on housing are considered cost-burdened; the share of cost-burdened households has increased since 1999. This is true for low and middle-income, and for households overall. Almost two-thirds of very low and low-income households (0-80% AMI) and about one-third of middle-income households (81-120% AMI) are cost-burdened.
Very low-income households (0-50% AMI) are most likely to be severely cost-burdened, which means that they spend more than half of their income on housing. Seattle has more than 34,000 very low-income households who are severely burdened by their housing costsi. About three-quarters of these severely cost-burdened households have extremely low-incomes (0-30% AMI).
The share of very low-income households who are severely cost- burdened has increased from 43 percent in 1999 to 52 percent.
Half of those who are severely cost-burdened are spending more than three-quarters of their income on housing.
In general, renters are more likely to be severely cost-burdened than owners. Renters most likely to spend more than half of their income on housing costs include seniors, persons of color, single mothers, and other households with more than one child.
Nearly 75 percent of rental housing is unaffordable for very low-income households. Virtually all housing for sale is unaffordable for very low-income households.
Almost half of all rental housing that is affordable for very low-income households is subsidized or otherwise restricted to households who qualify based on income. This helps ensure that households do not spend a disproportionate amount of their income on housing.
Of the approximately 24,000 subsidized rentals in Seattle, roughly 16,000 serve households with low-incomes (0-50% AMI). Over 12,000 of these subsidized rentals are set aside for households with extremely low-incomes (0-30% AMI).
Newly constructed housing is affordable for very low-income households only when subsidized by government funds, such as the Seattle Housing Levy, or by other organizations dedicated to providing low-income housing.
Families with children make up a smaller portion of households in Seattle than in King County as a whole. Approximately 19 percent of households in Seattle have children, compared to 29 percent for the county as a whole.
Seattle’s Comprehensive Plan has a specific goal to attract a greater share of the county’s families with children; there does not seem to be a long-term trend in this direction. Access to affordable housing with enough bedrooms to accommodate larger households is one factor that contributes to this disparity.
Most family-sized housing units are detached single-family homes, which are rarely affordable to households with low- and very low-incomes.
In 2009, five percent of homes sold were family-sized and affordable at 80% AMI, and 28 percent of homes sold were family-sized homes and affordable at 120% AMI.
Detached single-family, duplex, and triplex rentals are an important source of family-sized housing that is affordable at 80% AMI. Neverless, the supply of this housing type is very limited.
There is also a shortage of affordable family-sized apartments affordable to middle-income households (80-120% AMI). There are many studio and one-bedroom apartments with rents affordable at 80% AMI. However, just two percent of market-rate apartments have three or more bedrooms, and just half of this tiny fraction is affordable at 80% AMI.
Overall, slightly more than one-third of Seattle’s households of color own their own home compared with more than half of the city’s White householders. White and Asian households are much more likely to own their homes than other racial groups.
Over the last decade there was a slight increase in the homeownership rate for White householders, but a slight decrease for householders of color. Homeownership among Black householders decreased from about 37 percent in 2000 to 29 percent in 2010.
Householders of Hispanic and Latino ethnicity are also much less likely to own their homes than Whites. Homeowner rates among these householders increased slightly from about 25 percent in 2000 to about 27 percent in 2010.
Urban Centers and Villages contain about 40 percent of the total housing units in Seattle and more than half of all rental units in the city. Largely because of higher concentrations of rental and multifamily units, housing is more affordable in areas with frequent transit service and in Urban Centers and Villages than in the city as a whole.
Almost three-quarters of market-rate rentals in complexes with 20+ units are near frequent transit service. The location of rentals in smaller complexes is harder to measure, but most also seem to be near frequent transit service.
While housing on and around arterials often has better access to transit, such housing is not always desirable for families with children or for elderly persons. Arterials tend to have faster driving speeds and higher traffic volumes and frequently lack elements that make streets safe and comfortable for pedestrians like wide sidewalks, appropriate residential street edges, safe crossings, or vegetation.
Market-rate rental units tend to be somewhat less affordable in Urban Centers and Villages than in the city as a whole, generally because they are newer and provide more amenities. Subsidized rentals are affordable regardless of their location.
Measuring housing affordability provides empirical benchmarks against which to track progress toward City goals, helps to clarify and direct policy, and most importantly aids in determining the allocation of resources. Regular monitoring and measurement is essential to achieving a constructive feedback loop, where changes in data can help inform ongoing decisions.
Housing affordability goals should reflect the nature of the market and take into account what cannot be influenced by housing policies. For example, Seattle cannot significantly affect the supply of single-family houses because there is little land left to develop.
While we can measure some characteristics of housing affordability in Seattle, it is difficult to satisfactorily measure progress toward important affordability goals set forth in the Comprehensive Plan. Some of these challenges are related to the design of the metrics, for example, affordability goals do not reflect differences in the ways that rental and owner housing can be measured. There are also gaps in available data.
Some housing policies in the Comprehensive Plan express unrealistic numerical targets. We found other policies and goals in the Comprehensive Plan that are redundant and a few that are outdated.
As our findings make clear, it is essential to use a broad range of policies, programs, and tools that will provide affordable housing for households with different incomes, backgrounds, and sizes.
We acknowledge there are limits to how local government can influence housing cost. Markets are a big factor in determining housing costs: the more desirable a location, the more costly housing is likely to be. Therefore, local government must use available tools like zoning regulations, building codes, land use regulations, development standards, incentives, and subsidies wisely to affect the market.
Based on our findings, the Planning Commission offers the following nine recommendations for City officials and departments to consider. Our common goal must be to prioritize programs and policies that better ensure Seattle is a community where all have access to quality housing they can afford.
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Subsidized housing programs and other housing set-aside tools, such as grants and low-cost loans, provide the best means to ensure households with the lowest incomes get access to quality, affordable housing. This is particularly true for newly built housing, which tends to be more costly.
- Continue with subsidized housing programs and prioritize City investments focused on housing dedicated to serve the lowest-income households who have the greatest need and are more likely to be ‘severely cost burdened’.
- Partner with Seattle Housing Authority and other non-profit housing developers that focus on addressing the needs of low- and very low-income households.
- Support programs that focus on rehabilitation to ensure existing, older housing stock provides safe, high quality, and affordable housing.
- Effectively use tax abatement solutions such as the Multifamily Tax Exemption (MFTE) program to spur production of affordable housing for a range of income levels that includes setting aside units for low-income, as well as some moderate-income, households.
On average, transportation costs are the second largest household cost. Mobility options and close proximity to jobs and activities may offset higher housing costs.
- City policies, strategies, and affordability measurements should also consider combined housing and transportation costs.
- Low- and very low-income households are more likely to be transit dependent. Public investments in low-income housing should be made predominately in transit communities.
- The vast majority of new affordable housing should be located within a 10-minute walk of frequent and reliable transit service. We recommend the City set a goal to specify that a large portion of newly built, subsidized units should be located within a transit community.
- Continue to invest in the ‘essential components of livability’ such as bicycle and pedestrian elements, public safety and wayfinding that make access to transit easier.
Housing along and near our busiest streets makes up a significant portion of housing units affordable at low-income levels, in part because these areas are often less desirable and lack the essential components of livability.
- Certain arterials may be rechanneled to slow down traffic and include more pedestrian-scale comforts like places to sit, trees, lighting, and crosswalks. Places that have good transit access should be prioritized for investments and other actions.
- Update elements of the Land Use Code to encourage appropriate housing types and urban design strategies that support a safe, secure, and inviting street edge along and near arterials.
- Invest in pedestrian and bicycle features that focus on providing safe and comfortable access for residents in multifamily housing to transit and other daily activities. Create stronger connections along arterial corridors to adjacent neighborhood business districts.
- Look for more opportunities to include ground floor commercial uses in multifamily residential zones.
Home ownership generally supports a household’s financial stability by ensuring a consistent housing payment over a long period of time, even through market ups and downs, which can be particularly important for seniors and others living on fixed incomes. Home ownership can also provide an opportunity for financial security in retirement and create an asset that can be passed along to heirs.
- Pursue cost-effective means to reduce barriers that low- and lower-middle income households experience in accessing and holding on to long-term affordable home-ownership opportunities.
- Pursue reforms to federal and state lending policies to enable households with non-traditional sources of income to show that they are a good credit risk.
- Lobby for more financing options like location efficient mortgages that recognize families can afford a higher mortgage if they only own one car or less and live in a walkable, transit-rich neighborhood.
- Require home buyer education and counseling for all down payment assistance funded by the city recognizing that such assistance is likely to prove a long-term benefit for households in overcoming barriers to purchasing or keeping a home. Specifically ensure financial counseling that is geared and accessible to lower-income households as well as immigrant and refugee communities.
- Strengthen and recalibrate Seattle’s existing Foreclosure Prevention Programs and ensure that these are accessible to immigrant and refugee communities.
- Pursue strategies that address disparities related to wealth, education and culture in homeownership opportunities. As example, the city could work with nonprofit providers to develop culturally-sensitive mortgage products and underwriting processes to growing numbers of prospective buyers, such as observant Muslims who cannot pay for or collect interest under Sharia Law.
Tools are needed to create more affordable housing units large enough to accommodate families with children. Seattle should provide incentives or requirements to produce more family-sized housing as redevelopment occurs. For instance, San Francisco requires new development projects in a ‘residential transit overlay’ district to set aside a percentage of housing for larger, family-sized units.
- Adopt a definition of family-friendly housing and update zoning and design guidelines to encourage such housing near schools, parks and community services. Update policies and codes to encourage family-friendly housing near schools and parks in new developments, especially in transit communities.
- Identify locations that may be desirable for families like quieter tree-lined streets, or in neighborhoods in close proximity of parks, schools, community centers and playgrounds.
- Rezone more areas to allow ground floor housing like townhouses, which are preferred by families with children. Townhouse and other building types can be an affordable alternative to single-family homes. However, this type of housing is limited in part because Seattle has a miniscule amount of available multifamily zoning for these types of housing development.
- Modify bonus development programs to include as a priority the creation of larger, affordable units sized suitably for families, either citywide or in particular locations such as near to schools and in transit communities.
Codes, entitlement periods, and design review processes can add costs to building housing. For example, parking requirements and the length of permitting processes are perhaps the biggest development costs that cities can directly influence.
Upzones allow greater housing density, impact performance, and return on investment for developers. Programs that provide flexibility in how projects meet the intent of the code while streamlining the entitlement process can aid in achieving the City’s affordable housing goals.
- Enact policies that put an emphasis on housing people over housing cars. In Urban Centers and Villages and areas with frequent transit service, reduce or eliminate parking requirements as bonus for providing low-income housing.
- Allow and encourage low-rise housing types that create more diversity and opportunity for affordable (and family) housing. For instance, under some conditions in single-family zones, allow duplexes, triplexes, courtyard cottages, and cohousing developments. In addition, allow existing larger single-family houses to be converted into legal duplexes and triplexes. Also provide more flexibility to expand backyard cottages.
- On neighborhood streets in multifamily and commercial zones, create more opportunities to provide housing for families and seniors.
- Multifamily housing is a limited commodity in Seattle, particularly in frequent transit areas and near parks and schools. Look for strategic, context-appropriate rezone opportunities in single-family and other areas to allow more multifamily or neighborhood commercial.
- Although the recent update to the multifamily portion of the Land Use Code provides a more flexible framework for development, a few changes would provide greater opportunities for affordable housing. Explore eliminating density limits in low-rise zones or making it a design departure through the City’s Design Review programs. In addition, allowing for departures from height or providing additional incentives for additional floor area will allow greater flexibility to create affordable, and perhaps larger, units.
- Limit the Master Use Permit/Design Review process in order to streamline permitting and planning review for developers who produce affordable and family-sized units.
- Implement the use of Transfer of Development Rights to preserve existing stock of affordable housing.
- Increase development capacity in transit communities to avoid shortages in developable land that would increase housing prices in places we most want housing for a diverse spectrum of households.
We recognize that it matters where housing is located. Many Seattle residents pay more for housing in the city than elsewhere in the region. In order to mitigate higher housing costs, it’s essential that people have access to other important life essential needs such as healthy food, healthcare, child care, quality education, retail, living wage jobs, efficient and convenient transportation, and reliable utilities.
- Set a goal of creating complete communities where people can find most of the products and services they need within a 10-minute walk. Zoning to allow a mix of uses in close proximity can help support this goal.
- Encourage joint development and acquisition funding can create more publicly-owned affordable housing opportunities in transit communities.
- Recognizing that rising and volatile energy costs can contribute significantly to financial instability, the City should better promote and use programs that focus on improving energy efficiency and reducing energy consumption among low- and very low-income households by subsidizing the initial capital costs to create homes that will reduce operating costs year after year.
- Incentivize affordable commercial space for health care, childcare and other uses that provide essential needs.
- Support farmers markets, healthy corner stores, and other opportunities for residents to access affordable, healthy food.
Because we are falling short of our goals in providing housing affordability, the City should explore all of the tools at its disposal including those it is using on a limited or pilot basis. In addition, the City should continue to explore best practices used in other cities.
- Expand the practice of acquiring and using surplus, underutilized, or foreclosure properties, and rehabilitating or repurposing properties to provide quality, affordable housing.
- Investigate more aggressive incentive zoningi practices as a potential mechanism for addressing shortfalls in the market. Under recently adopted state legislation, the City may be able to alter or introduce incentive zoning programs requiring developers to provide affordable housing when additional development capacity is provided by the City, regardless of whether the developer takes advantage of the added capacity.
- Support legislation that would enable inclusionary zoningii in which developers are required to incorporate affordable units into developments.
- Encourage more renters and other traditionally-underrepresented communities to get involved with community planning and neighborhood capacity building efforts.
- Begin using appropriately the new Transfer of Development Rights for Tax Increment Financing (TDR for TIF) authority in Seattle. In addition, support legislation to enable tax increment financing (TIF).
The City is involved in the first major update to the Comprehensive Plan in over seven years. Our work to measure housing affordability uncovered basic challenges with the measurability of some of the housing goals in the Comprehensive Plan.
We found redundancy between goals, and uncovered policies that are not useful or that are difficult to measure. The Planning Commission will be engaged closely with City departments and policy makers throughout the update process.
- Seize the opportunity presented by the update to revise affordable housing goals to provide the most meaningful tools for guiding and monitoring progress.
- Support regular evaluation of the City’s performance in meeting the affordability goals. Numeric targets should be set only where data are available or a reasonable proxy can be identified for measuring progress. Targets should be set based on a realistic understanding of housing markets and the costs of production.
- Advocate for an update to the affordability targets in the King County Countywide Planning Policies using measurable and achievable targets for Seattle that reflect the significant role and responsibility that Seattle holds in providing affordable housing.
- Pursue countywide and regional data collaboration to enhance overall consistency, completeness, and cost-effectiveness with which local housing affordability can be measured.
- Utilize upcoming rental inspection data to analyze the quality of affordable housing.
If you would like details on the methodology and data sources used to generate the findings in the report, please download the Technical Guide at the link below.