‘Lack of affordable housing’

It’s a buzzphrase used by both sides of the growth argument — but what does it mean for the local economy when so many residents can’t buy a house in Bellingham?

Paul Schissler of the Kulshan Community Land Trust said it is often a city’s most vital workers — teachers, nurses, nonprofit workers, police, and the like — that can find themselves squeezed out of skyrocketing housing markets such as Bellingham, where the average home has risen 80% in price in five years.

J.J.Jensen
   Many longtime Bellingham residents — and even newcomers within the last decade — can remember a time when just about anyone with a decent job, good credit and even a few debts could buy a house in town.
   In fact, as recently as 2000, according to records from The Muljat Group South’s office, the average price of a single-family home was $182,012.
   However, in the last few years, as thousands of new residents have moved to the area and the demand for homes has greatly overwhelmed the supply, housing prices have skyrocketed. At the end of last year, according to Muljat Group South figures, the average sales price of a home in Bellingham was $327,825 — up 80 percent from just five years ago.
   “If people with a lower income have a big down payment, some equity, or family help, they can still get into home ownership. But for so many people who don’t have that, they’re priced out of home ownership, even though they’d love to put down roots in the community,” said Paul Schissler, executive director of Kulshan Community Land Trust, a nonprofit corporation that, among other things, helps low-income families with down-payment assistance.
   “Often (the people who can’t afford to buy homes) are the people we need in the community, like nurses, policemen, librarians, nonprofit employees, newspaper reporters and teachers. If they want to buy a house, they have to leave the community and go somewhere where it’s more affordable.”

Why is affordable housing important for communities?
   Like Schissler, city officials and others worry about the consequences of what will happen when the people who help make the city run can no longer afford to live within its boundaries.
   “The reason that affordability is so important is because the more a family has to put toward shelter, the less they can put toward things like insurance, cars, furniture, schools, children and health care,” said David Cahill, the city’s Block Grant Program manager, who oversees federal funds that go toward various housing programs. “When people are paying 50 percent or more of their incomes for shelter, it impacts the economic engine for the local area because that’s money that’s no longer being spent on things that make the economy grow.”
   When housing prices are no longer affordable, and core people of the community have to live outside the area and drive farther distances to work, it also creates pollution and congestion, added Cahill, who cited Seattle and Bellevue as examples of other cities grappling with the issue.
   “Of the top 25 largest employers in Whatcom County, 18 of them are located in Bellingham,” said Chris Comeau, a senior planner with the city. “But, as Bellingham becomes less and less affordable for people, they have to go further out into the county to find housing that’s affordable for their income. When we project our traffic impacts over a 20-year period, given the current trends that we’re seeing, we can predict that the roads in and out of Bellingham are going to become increasingly congested.”
   Many commuters who drive in and out of town on roads like Guide Meridian, Northwest, Sunset and Lakeway already notice the difference.
   Along with helping the economy and easing transportation issues, Comeau and Cahill, along with others, say there are also societal benefits of affordable housing.
   “If you can house someone and give them stability, you may be able to reduce your needs for police, emergency services and medical services, because they become more stabilized,” Cahill said.
   Added Comeau: “A vital part of any community is a diverse population. When you have increasingly exclusive neighborhoods, where only certain people can afford to live, you’re losing your diversity and a vital segment of the population who provide services that everyone uses.”

What led to the dramatic rise in the cost of homes?
   The main thing contributing to Bellingham’s lack of available affordable housing, said Comeau is simple: supply and demand.
   “Housing is a commodity, so there are supply and demand issues,” he said. “When you limit the supply, in the face of demand, what you’re going to see is upward pressure on housing prices. I really want to stress that, because I think there are some folks who believe it’s not a supply and demand issue.”
   Building new housing units has also become more expensive for builders and developers, added Cahill, pointing to increased costs for materials like sheet rock, steel and plastic.
   Bill Quehrn, executive vice president of the Whatcom County Building Industry Association, believes costs charged to builders and developers by the city — such as fees for parks and transportation, and hooking up to water and sewer — also add to the rising cost of homes.
   David Moody, a real estate agent at Fairhaven Realty for more than 20 years, said he doesn’t expect housing prices to go down anytime soon.
   “An entry-level lot in Bellingham is currently $150,000-plus,” he said. “If you’re paying $150,000 for a lot, the minimum price for a house is going to be more than $300,000, and most builders are trying to build $400,000 to $600,000 homes on those lots. The new housing stock starts at $330,000, and it’s going to continue to get worse unless there’s some slowdown in the marketplace, which most people don’t believe is going to happen. Also, more and more people want to come here because they’re finding out what a beautiful lifestyle we have in Bellingham.”

Who can afford homes here, and where are they coming from?
   For average blue-collar workers in town, buying a house today is extremely difficult, because wages haven’t been increasing at the same rate as housing prices.
   While the average sales price of a home in town is more than $300,000, Bellingham’s median household income, according to Census 2000 figures, is $32,530 (although local officials say it’s now closer to $45,000).
   Getting into the most affordable housing units today, say something under $200,000, requires, at a minimum, two people with full-time jobs that pay about $18 an hour each, Schissler estimates.
   Meanwhile, many of the new people moving here, Moody said, are coming from large cities where average home prices are even higher than Bellingham’s, and who view the housing market here as a relative bargain. Many of these new residents have discretionary income and built-up equity, or are retirees with sizeable savings.
   And once they get here, they tell others about it.
   Said Moody: “Once you have several thousand people move here, their friends visit them and say, ‘Look at this beautiful view,’ and ‘How much did you pay for it?’ When they find out it was for $400,000, and they realize their house back wherever is worth $800,000, they say, ‘Get my agent’s number.’ It’s a phenomenon that’s going to continue.”
   Also, while many people reassessed their lives and decided to move to smaller, slower-paced communities after 9/11, Moody said there’s a theory why many chose Bellingham.
   “Ironically, the September (2001) edition of Outside magazine, which has a circulation of around 2 million, ranked Bellingham as one of its ‘Dream Towns.’ Right there, the subscribers, and everyone else who saw it, saw the place they should be moving to,” Moody said.
   Since 2001, Bellingham has also been ranked as a top place to live or retire by other publications, including National Geographic Adventure, AARP the magazine, Men’s Journal, and Money magazine.
   The Internet, too, has helped direct people to Bellingham, Moody said.
   “Everyone thinks they’re individuals but they’re actually more similar to each other than they think. When they go to a search engine to look for their ideal town, typical criteria includes: a town with between 50,000 to 100,000 people, a low crime rate, good hospitals and schools, a university, moderate temperature, near cities with events like opera and sports, and places to golf, fish, ski and sail. You put in that criteria and Bellingham will come up every time.”

What’s being done to ensure the people already living here can afford to continue to do so?
   Every year, the city contributes millions of dollars to groups and organizations working to provide affordable housing, and seeks other regulatory approaches to encourage it.
   However, when the city puts resources toward affordable housing, it’s typically aiming to help a specific group — households with incomes at or below 80 percent of the area median.
   Typically, explained Cahill, the city addresses the affordable housing issue through the provision of subsidies, zoning and regulatory practices, and fee waivers and tax reductions that encourage the development of certain types of housing.
   With direct subsidies, the city can, among other things, use federal funds, such as the Community Development Block Grant and HOME Investment Partnerships Program, to make low-interest loans to:
   • Landlords, in target neighborhoods, who commit to renting to low-income renters.
   • Elderly, handicapped or low-income homeowners seeking home rehabilitation.
   • Nonprofits, developers and others seeking to acquire or develop low-income or special-needs housing.
   Since 1989, said Cahill, Block Grant and HOME funding acquired by the city has contributed to the creation of nearly 1,300 affordable housing units.
   City funding also fills a gap in financing for low-income housing projects, like the Mt. Baker Apartments, Varsity Village and Washington Grocery Building conversion; homeless or transitional housing, like Dorothy Place and Lydia Place; and special-needs housing, like the Sean Humphrey House.
   The city can also promote the development of certain types of housing with fee waivers and tax reductions. Examples include the Building Permit Fee Waiver Program, which provides funding to pay building permits for low-income housing, and the Multi-Family Tax Exemption Program, which encourages the creation or conversion of residential units in targeted areas by making property owners exempt from some taxes for 10 years.
   Through other efforts, the city can also:
   • Establish certain zoning that establishes the type of housing units that may be established in neighborhoods.
   • Create regulatory policies that can influence private actions to further city goals. One example is the Demonstration Program for Permanently Affordable Homeownership, utilized by Kulshan CLT.
   • Include within formal plans, such as the Consolidate Plan and Comprehensive Plan, policies that establish housing for all economic segments of the community.
   Other organizations, such as the Bellingham Housing Authority, Catholic Community Services, Whatcom-Skagit Housing, and Habitat for Humanity are also working to provide affordable housing.

Is affordable housing a priority?
   By most accounts, city officials, nonprofits, developers and community members believe the topic of affordable housing must be brought to the fore of community discussions.
   “I think citizens need to be aware of the issues around it and thinking about why affordable housing is important,” said Cahill. “Stopping growth will not make housing affordable, because those with the most money will have the homes. On the other hand, growth without management leads to increased transportation costs and does not drive affordable housing.”
   The community needs to ask itself, said developer Ted Mischaikov, what the priority of affordable housing truly is.
   If it’s a high priority, he said, then the city should review its policies to ensure incentives for projects and costs for new developments are fair for everyone.
   In ensuring affordable housing, said Schissler, Bellingham has some factors in its favor.
   “We have smart people here who care about each other and the community,” he said. “We have educated home owners, developers, builders and landowners who all say they want to help solve this problem. And we have elected officials and civil servants who are eager to figure this out, and banks that are eager to loan more money to more homebuyers.”

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