Hot Topic on Housing Affordability Crisis at Eastside Real Estate Event | News

Housing taxes, revisions to building and zoning codes, unsustainable increases in housing prices relative to incomes, housing shortages and the tough policy discussions ahead were all topics aired this morning at the Symposium. Eastside estate of the Bellevue Chamber.

But keynote speaker and real estate analyst Jonathan Woloshin, in a presentation he titled “Black Clouds and Silver Linings,” doesn’t see a repeat of the 2008 housing crisis when prices crashed, hitting markets particularly hard. like Phoenix and Las Vegas. Asked after his speech where he sees house prices going after calling the surge in appreciation rates unsustainable, Woloshin, of UBS Global Wealth Management in New York, said: “I think we are seeing a flattening of the curve and some markets will see a pullback, but again, I want to stress that in our view…it’s not 2008 yet.”

The symposium included a panel examining the future development of the Wilburton neighborhood immediately east of downtown and Interstate 405, another panel on the need for more affordable housing for middle and low income levels in particular, and Woloshin’s keynote on broader national real estate. economy.

Tom Parsons, executive managing director of Holland Partner Group, a developer, contractor and investor in mark-to-market housing, said there has never been more need for housing at all levels of affordability.

This is particularly acute for those earning 60 to 100 percent of the region’s median income, he said.

“We know the freight train is coming,” Parsons said of the roughly 40,000 new jobs expected in Bellevue over the next few years, many of which won’t be for software engineers earning six-figure incomes. “Everyone repeats: We have a housing crisis, we have to move responsibly and quickly. We need to remove certain aspects of the code and certain inspection requirements that allow us to move our projects forward at a decent speed, because every day that we delay, we just add more and more cost to the system, and we let’s avoid this huge group of people who need to be supported… and be part of the 40,000 new jobs that will double the number of jobs in Bellevue over the next three years.

Parsons said he would be happy to help and open the conversation about a housing tax in the Eastside, for example.

He also cited floor area ratios (FARs) in Bellevue, noting that the FARs allowed for office and downtown residential, for example, are the same, making one square foot of land for one office, or FAR, is worth about 50% more than housing. This essentially makes anything other than a high-rise condo impossible to develop, he said.

“So looking at how the comparison between housing and office capacity is structured makes a big difference,” Parsons said. Moreover, there is a difference of about 35 to 40 percent between building a high-rise housing project and a wood-frame project of nine stories or less, he said. “We need zoning that maximizes height for density so we can build this product that is more affordable across the board.”

Jeremiah Jolicoeur, Pacific Northwest general manager at Alliance Residential Co., also cited the time it takes for projects to come off the ground in Bellevue, which adds cost pressure, especially for housing projects in the center. -city. With a focus on improving development efficiency, he also called for the reassessment of costly mechanical, electrical, and fire codes at Bellevue.

Jessie Clawson, a lawyer at McCullough Hill Leary PS, who moderated the housing panel, cited issues on the table for Bellevue government leaders to discuss, including a potential housing tax, affordable housing charges for business development and mandatory inclusion policies. She asked Patience Malaba, executive director of the Seattle-King County Housing Development Consortium, what she thinks might help move the needle in terms of affordability.

Malaba called the Eastside housing tax an essential tool.

“I think first, with any tool, we don’t want to discourage development,” she said.

She suggested a discussion on tools like link fees to mitigate the impact of development that affects housing demand.

“I think if we can work on economics and political language without calling it that, we can get to a place where we can create tools for growth that develop more housing, develop more commercial development, but bring also affordable housing, it brings affordability,” she said. “And I believe there are business partners here who are proactively thinking about what that might look like, and we can be at a table where we can negotiate those partnerships.”

Malaba added, “We were able to overcome a lot of political and legal concerns on the other side of the region and I think we may be able to do that here.” She cited Seattle’s 41-year-old housing tax as a tool that can be looked at and learned from as a commitment to affordable housing. “So it’s the land use policies and the changes there, but it’s also the necessary investments in funding that really need to be strong for them to be transformative.”

Wilburton

Steve Kramer, Director of KG Investment Properties (KGIP), and Andrew Coates, Managing Director of Investment and Development at KGIP, reviewed their organization’s vision for an approximately 300-acre slice of the Wilburton community. and more, in particular a 6.6 acre site between 116th Avenue Northeast to the west and Eastrail pedestrian-bike path. They plan to connect the Eastrail, a road being developed from Renton to Snohomish County, to the Bellevue Grand Connection, a main pedestrian thoroughfare from Lake Washington to downtown and through a proposed lid on I-405 to at Wilburton.

“We cannot stress the importance of opening the Grand Connection as quickly as possible,” Coates said. “We believe this will be a complete game-changer for the region and for Bellevue”, providing a seamless link for the many cyclists and pedestrians using Eastrail to access the city center and vice versa.

Says Kramer, “We want to activate the 116th, we want to activate and develop directly on the track and just make it a dynamic experience.”

KGIP wants to do placemaking, Coates said, noting that density can populate projects and activate infrastructure.

“With that kind of density, with that kind of location, it allows you to curate this place-making experience to attract moms and local pops, exciting community facilities, indoor-outdoor experiences, art installations — all that stuff comes with the density that allows this place to begin.

Kramer thinks Wilburton can become an iconic destination.

KGIP is also intrigued by the thermal energy potential of a possible sewer heat recovery program for the 6ft sewer line running through the Eastrail Corridor. KGIP would like to collaborate on such a project, which Coates says could heat and cool 4 to 5 million square feet of development in an eco-district in Wilburton.

Opening speech

Woloshin, noting rising house prices nationwide, said the big increases are not sustainable in the long term and “when we’re talking about affordability issues, it just doesn’t work.”

Rental rates have also increased, he said.

“For each of you in the multi-family business…your biggest risk, in my view, will be regulation, rent control,” Woloshin said. “There is a lot of talk about rent control. Don’t think it’s happening nationally,” but St. Paul, Minnesota just passed strict rent control and Minneapolis is on its way, he said. “Just be very, very careful and think about that when you think about your multi-family plans.”

Interest rates are the story du jour, he said, encouraging listeners to borrow as long and as hard as possible, locking in rates rather than playing on floating rates.

For investing, Woloshin likes to study where people and companies are going.

“(Personally), I think long and hard about what has the best regulatory environment, who has the best fiscal environment, who has the most growth, where the jobs are going,” he said.

“You’ve got a nice market here, you’ve got a big market, you’ve got a lot of job creation here – you’ve got a housing problem too,” he said. “The key is…finding those solutions to say, ‘How can we balance the needs of all voters?’ It can be done,” he said of the politics involved. “If we sit down and cool heads prevail, I think we can achieve those goals.”

Jessica C. Bell