Why are Even Affordable Homes Unaffordable in WA?

In Washington State, "affordable housing" generally refers to housing where the occupant pays no more than 30% of their gross income for housing costs, including utilities.

For rental housing: Affordable housing is typically defined as housing for households with incomes at or below 60% of the area median income (AMI).

For owner-occupied housing: Affordable housing is generally defined as housing within the means of households with incomes at or below 80% of the AMI.

Just a refresher here, King County's median income is (as of this writing) $116,225. The median household income for Washington state is $91,306.

Anyways, let's mark clear distinction here that definition "affordable" housing varies greatly. What's considered affordable for one household may not be for another.

Even "affordable" homes in Washington State can be out of reach for many due to a combination of factors:

High Demand: Washington is a desirable place to live, leading to strong demand for housing. This drives up prices across all segments of the market, including those considered "affordable."
Low Inventory: There's a significant shortage of housing units in Washington, particularly in desirable areas. This scarcity further fuels price increases.
Rising Costs: Construction costs in Washington are high, impacting the price of new homes.
Stagnant Wages: While housing costs have risen significantly, wages for many workers have not kept pace, making it difficult to afford even moderately priced homes.
Competition: Even "affordable" homes often face competition from investors and those seeking to rent them out, driving up prices.

These factors contribute to a challenging housing market in Washington, making homeownership a significant financial hurdle for many residents.

Costs remain high for WA affordable housing projects

Many affordable housing projects in Washington are funded in part by the state’s Housing Trust Fund.

A new report from the Department of Commerce looked at the cost of building more than 1,200 new affordable units with money from the fund last year. It shows project costs dipped but remained up overall statewide.

Many affordable housing developers layer multiple types of funding to get projects built, including the Housing Trust Fund and the federal Low Income Housing Tax Credit. About 81% of projects included in the report had both these types of funding.

Here are three takeaways from the report:

Costs are down, but still high compared to earlier years.
The median cost per unit for multifamily housing that received Housing Trust Fund support in 2023 was $301,744. That’s down from 2022 when the median was $316,097.
Fewer projects submitted cost data in 2023 than previous years.
According to the data, the Housing Trust Fund helped build 21 multifamily projects across the state in 2023.
That’s a drop from 32 the year before and way down from 2019 when there were 51.
Projects yielded less housing.
The number of housing units in multifamily projects was down compared to past years. In 2019, multifamily projects covered in the report had a median of 114 units. Last year, the median was 56. In 2022 it was 99.
Rural projects had the least units, with only 46 per project. That’s compared to about 65 units in urban areas.