“Water doesn’t run up hill.” This was the simple yet profound explanation that Dr. James Young, director of the Washington Center for Real Estate Research, used to illustrate some of Clark County’s challenges with affordable housing as he addressed attendees during the 2019 Legislative Review Luncheon on June 18.
This year’s luncheon, held at Warehouse ’23, was put on in collaboration with BIA Clark County, the Greater Vancouver Chamber of Commerce, Clark County Association of Realtors, Columbia River Economic Development Council, Southwest Washington Contractors Association and Identity Clark County.
The main topic of discussion at the event was the issue of housing affordability in Clark County, and attendees were able to hear from Young about the impacts that the current home prices in the county are having. Senators and legislators from Southwest Washington in the 17th, 18th and 48th districts also provided attendees with updates from the recent session, and discussed several questions from audience members.
Participating legislators included Sen. Lynda Wilson, Sen. Ann Rivers, Sen. Annette Cleveland, Rep. Vicki Kraft, Rep. Paul Harris, Rep. Brandon Vick, Rep. Larry Hoff and Rep. Sharon Wylie.
During Young’s roughly 30-minute presentation, he went into quite a bit of detail about some of the housing prices and their trends in the Clark County area over the last several years. He looked at the county’s housing affordability index, the county level of affordability statistics, some of the supply-and-demand dynamics, affordable rental and ownership dynamics and more.
“Traditionally, Clark County has kind of followed the state more or less, with a bit of lag,” Young said of home prices. “So, if you look at the state numbers, you’re relatively underpriced. People are going to start coming into your market from other areas since you are relatively underpriced here.”
Statewide, Young said house prices are defined as “affordable,” with the statistical assumption that 25% of a homeowner’s income is going towards their mortgage payments. However, he said first-time homebuyers are the ones facing some of the biggest challenges when it comes to housing affordability.
“This is what is known as the ‘housing ladder,’ how housing markets work,” Young said. “You have to step back from the mechanics and look at the bigger picture. Most people, before they buy their first home, they rent, save money and then buy their first home. After a while, they want a bigger house, more land, etc., and they cash in their equity and get something better. However, in order for this to work, the market has to provide housing throughout the whole continuum of what people demand in the marketplace, not just one area.”
Young pointed out that in 2018, 55% of new housing in the entire Portland Metro area was multi-family housing. However, of that new housing, none were condominiums that would meet the requirements of something a first-time homebuyer would have. During the last legislative session, there was some condominium reform that aims to make it easier for more condo development, and Young said that should be a big help.
But for now, Young said numerous residents in Clark County are stuck in the rental market. As their rents keep rising, it’s hard for those people to save for their first home. Additionally, there’s no supply for those first-time homebuyers, and they don’t get that equity they otherwise would. Young said all of this leads to homelessness and a host of other problems.
“Not providing that housing in this cycle has helped make these problems worse,” Young said.
Another troublesome scenario that Young pointed out: You have teachers, nurses, people in good professional jobs who are currently renting … what are their expectations on housing?
“Do they expect to be renters all their lives? No, they want to eventually save enough money to buy a house,” he said. “If I’m expecting that one of these days I’m going to buy a house, I might rent somewhere like Vancouver, etc., and as it becomes more and more unaffordable, I’m going to save my money and then move somewhere else where it’s more affordable to buy. Is that good for the growth in your community? Will that lead to good economic outcomes for Clark County?”
Legislators answer questions
After Young’s presentation, all of the legislators present formed a panel at the front of the room and answered some written questions from audience members. Discussion centered around changes/increases to real estate excise tax on certain properties; what has been done to address homelessness in the state and in the county; thoughts on a bill that would make contractors liable if their subcontractor doesn’t pay its employees; and of course their thoughts on the replacement of the I-5 Bridge.
On the issue of homelessness, Rep. Vick said this is an issue that everyone has been grappling with.
“There was a good amount of investment made into the Affordable Housing Trust Fund,” Vick said. “Also, looking at the mental health factor, the University of Washington is going to have a new mental health center school. A lot of work needs to be done on the contributing factors, like opioid addiction and other things that might lead to homelessness other than just lack of a house. There’s plenty of work to do on the opioid front.”
Young also addressed the issue of homelessness as it related to the housing prices in the county.
“When you have those high housing prices, and you have prices that are continuing to go up quite a bit, you end up with a lot of homelessness because you have that missing middle,” Young said. “That idea that water doesn’t run up hill. You create the problem of homelessness … Homelessness is usually the most prevalent in areas with the highest priced housing and the biggest restrictions on development.”
The legislators all agreed that the issue of homelessness in the community is definitely one that is multi-faceted .
“Not one tool fits every community,” Rep. Wylie said. “A lot of bigger ideas became local options. We invested in the housing trust fund, which helps build housing stock. There was a multi-pronged approach and a menu of options.”
The 2020 Legislative Outlook Breakfast, an event similar to this one that looks at the hot-button issues in the next year, will be held Friday, Dec. 13, 7:30-9 a.m., at Warehouse ’23.