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Housing—a ‘crisis’ we have no intention of solving

In 2023 Washington legislators proclaimed a housing crisis. Their solution? Build more housing! In the words of Rep. Jessica Bateman (D., Olympia) on March 5 of this year, “We must address our growing housing crisis by expanding our housing supply, stabilizing costs for families and providing more support for affordable housing and first-time home buyers.”

Six weeks later, this is what they actually did. The centerpiece of their solution is HB 1110, which requires cities to allow developers to build more housing units on smaller lots: expanding our housing supply.

Nothing to stabilize costs for families or support affordable housing. First time home buyers might get a better chance at owning a home once the Covenant Homeowners Account kicks in.

Someone repealed the law of supply and demand

Our legislators assume that developers are the solution—when in fact they are the problem. If “demand and supply” were anything but a slogan, the huge and enduring demand for housing that working people could afford would have produced a continuing supply! Unleashing developers by eliminating zoning requirements might add more housing for high income earners, but no developer is going to build modest housing or apartments no matter how lax the zoning.

How does the private sector work, again?

Our legislators have apparently been prevented from understanding how “free market forces” actually work, by our system of campaign finance and the otherwise inexplicable adherence to the idea that private investors are motivated by something other than the highest returns they can get. Generally, the benefits of allowing greater density are captured by developers who price new units above cost, at a market rate.

According to a May 25 article in the NY Times, “Last year, one in four home sales was to someone who had no intention of living in it. These investors are particularly incentivized to buy the sorts of homes most needed by first-time buyers: Inexpensive properties generate the highest rental-income cash flows.”

What is the crux of the “housing crisis?”

Housing affordability problems have far more to do with poverty and income disparities than with housing supply. Half the people in the country must pay more than a third of their income to pay for housing. Most of the next generation can’t afford to buy a house. According to a McKinsey report, “the growth of asset values has outstripped returns on labor for four decades, and a majority of those assets — 68 percent — are real estate.

Money for homeless programs not housing

Thurston Regional Planning Council projects that there will be 66,100 low, very low, or extremely low-income households (those earning less than 80 percent of the median family income) in Thurston County in 2045. This is an increase of more than 26,000 from the 2012-2016 average. The number of extremely low-income households—those earning less than 30 percent of the median family income—will increase by over 6,000 units. There are about 1860 units available at below market rents—well below the number needed by those who are most at risk for becoming homeless. (TRPC, Housing Needs Assessment)

Out of $1.2 billion in funds appropriated by the 2023 legislature for “housing” needs, less than half goes to the construction of affordable housing. The bulk is devoted to programs that are proposed in order to deal with the problems created by the absence of affordable housing.

Cities and legislators are more willing to spend money on homeless programs than on building housing that can help stem the tide of homeless. The 2023 legislature put $400 million into the state Housing Trust Fund but rejected a proposal to increase the tax on real estate sales to direct additional funds there. The Trust Fund has never been funded at a level to make a meaningful contribution to housing needs.

“Market forces” are not going to produce places for working class and struggling middle class families to live. Someone has to build housing outside the reach of market forces. Market forces have brought us radical inequality and a frightening and always expanding homeless population.

Mary Jo Dolis writes occasionally for Works in Progress. She has lived in Olympia for a long time.


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