Data shows drop in multifamily home construction in Washington

Building permits for apartments and other multifamily housing in Washington were down in the second quarter of the year while permits for single-family homes continued to rise.

Numbers the state Economic and Revenue Forecast Council released Tuesday showed housing construction overall in the last four years slowed, but mostly because of a 7,000-unit drop during April to June of this year. Multifamily permits fell to 20,700 from 27,700 in the first quarter of the year.

Single family permits increased by 4,600 to 18,800 in the second quarter.

Steve Lerch, executive director at the Economic and Revenue Forecast Council, said residential construction continues to be below last year’s levels.

Multifamily permits totaled 32,900 in the second quarter of last year, and 26,500 in the second quarter of 2019, the last full year before the disruption of the COVID-19 pandemic.

The slowdown comes as Washington leaders continue to push for more housing construction, particularly multifamily buildings and rental units, to help with the state’s affordable housing shortage.

Lawmakers this year passed a number of bills to help increase housing production, such as expanding where duplexes and triplexes can be built, loosening some regulations on backyard cottages and other “accessory dwelling units” and attempting to streamline permit review processes.

The Legislature also set aside record amounts of funding for multifamily, affordable housing.

But most of those laws only went into effect in July and could take years to be fully implemented.

“We haven’t seen a shift yet,” said Josie Cummings, legislative director at the Building Industry Association of Washington. “It’s definitely not an overnight effect.”

Permitting continues to be the biggest obstacle to building multifamily housing, Cummings said.

Sen. Lynda Wilson, R-Vancouver, who sits on the revenue forecast council, said the state is focused on building multifamily units, but also noted a decline in available rentals.

“There’s a disconnect here because we’re losing rental housing,” Wilson said at the Tuesday council meeting.

Nathan Gorton, at the Washington Realtors, said the single-family inventory is “so, so low,” so builders are likely looking to build more single-family homes to meet demand.

While the new laws could take years to drive changes on the multifamily front, Gorton said there are some things that could be done to boost the housing supply sooner, such as creating new incentives or relaxing rules on splitting residential lots.

A lot-splitting bill failed to pass the Legislature last year, but Gorton said the realtors group would continue to push for it when lawmakers are back in session in January.

— By Laurel Demkovich, Washington State Standard

 

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  1. So this is applications with new legislation it is likely property owners will be reevaluating their options, but sure as a new day is government pushing for more and more dense growth regardless of citizen concerns. Lynnwood and mount lake terrace, shoreline have exploded with multi family development so you can be assured the growth will have regional affects. Our government leaders sell this as a good thing, without data to support the change in demographics. But hey you voted for this direction, good bad or indifferent. My opinion, green acres is the place to be when Rome fails.

  2. The slowdown is because of market cap rates and the Feds playing with the interest rate dial in attepts to curb inflation. It presents too much risk for multifamily developers given the environment, even when the demand for such units is high. Once interest rates stabalize there will most likely be an increase in applications.

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