With construction cranes at nearly every turn in downtown Seattle, it is easy for one to look around at all of the high-rises under development and assume they are condominiums. Yet, as Curbed Seattle reports, “the majority of new residential projects going up in the city—and downtown specifically—are destined to be rentals.” This means that out of the new residential projects in the city, only 7.1 percent will be offered for sale. And this is a far-reaching figure, that covers “not just downtown proper, but lower Queen Anne, Belltown, Pioneer Square, Sodo, First Hill and western parts of Capitol Hill.”
Looking to statistics from 2017, Curbed reports that no new condominiums were delivered last year while 5,600 rentals were brought onto the market. Though price gains continue across the region, condos have historically represented a less expensive market segment yet affordability is increasingly difficult to find amidst high demand: “the condominium shortage has only driven prices up, especially among the lower price points, gating an increasing number of would-be homeowners—especially first-time buyers—out of the market.”
As the article outlines, a lack of supply is being attributed by many to the stringent requirements outlined by the Washington State Condominium Act, which was enacted to protect buyers purchasing homes within new development projects.
Curbed Seattle references an op-ed Blaine Weber, Senior Principal of Weber Thompson Architects, wrote for the Daily Journal of Commerce, in which he called the affordable housing crisis “one of the more perplexing problems facing rapidly growing cities like Seattle.” He discussed the liability associated with building multi-family units for sale in Washington state, given the regulations outlined by the Washington State Condominium Act.
See article, SEATTLE’S “CONDO CONUNDRUM”
As Weber outlines, most new condominium projects are doomed to a lawsuit at about the four-year mark. “There are many reasons for this fourth-year phenomena,” he says. “The first is the way the state Condominium Act is structured; the second most salient being the aggressive behavior of some plaintiff attorneys who approach HOA board members at this four-year mark to convince them to initiate a construction claims lawsuit.”
The solution, according to Weber, is to augment the existing Act to incentivize developers to build condominiums. “As long as the economic opportunity for developing condos fails to offset the risk of ‘automatic’ litigation and non-meritorious claims,” he says, “we will continue to see a diminution of this much needed housing stock.”