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Townhome permit applications dropping

By December 17, 2021

Townhouses

The Master Builders Association of King and Snohomish Counties (MBAKS) is raising concerns about the recently enacted mandated affordable housing fee and The Seattle Times just did a deep dive on it, Town home developers lobby for changes to Seattle housing fee:

In 2016 and 2017, city officials created the Mandatory Housing Affordability, or MHA, program as a way of boosting density and raising new money for affordable housing. Seattle then up-zoned 27 neighborhood hubs in 2019, offering developers the ability to build taller or larger buildings.

In exchange, the city requires developers to either include affordable units in their projects or pay fees toward affordable housing. The vast majority opt to pay the fee instead of including affordable housing on-site. State law allows those types of fees when cities offer a benefit such as allowing taller buildings. 

MBAKS also recently tweeted out the above graph of construction permit intake showing a sharp decline in the number of developers applying for permits to build townhomes.

Certainly, there are many factors possibly at play to result in a decline in permit applications (difficulty getting permits in the city of Seattle, increased interest and ease in building SFH + ADU + DADUs, escalating construction costs due to Covid, etc.) but it could very well be the MHA fees which the MBAKS estimates at $32,700 per townhouse unit.

Regardless of the reason, that townhome construction is potentially declining at a time we are so starved for more houses the impact will be felt.

For potential buyers of townhomes, the drop in permit applications is bad news as decreased supply will likely increase pricing even more.

For owners of townhomes, the drop in permit applications is good news as the decreased supply of new townhomes will likely increase the value of their no longer new townhome.

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