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Housing advocates, professionals question new city report suggesting supply mostly meets demand, push for action

UPDATED: Mon., Dec. 14, 2020

Heavy machinery is clearing the undeveloped area southwest of the intersection of 29th Avenue and Southeast Boulevard, in the area of Lincoln Heights, for the planned Garden District development for Greenstone Homes, shown Wednesday, Dec. 9, 2020. Jim Frank, the founder of Greenstone, believes development and zoning rules in Spokane are too restrictive and prevented him from incorporating denser housing in the new Garden District.  (Jesse Tinsley/The Spokesman-Review)
Heavy machinery is clearing the undeveloped area southwest of the intersection of 29th Avenue and Southeast Boulevard, in the area of Lincoln Heights, for the planned Garden District development for Greenstone Homes, shown Wednesday, Dec. 9, 2020. Jim Frank, the founder of Greenstone, believes development and zoning rules in Spokane are too restrictive and prevented him from incorporating denser housing in the new Garden District. (Jesse Tinsley/The Spokesman-Review)

Spokane is building enough housing, and rents have risen at a slower rate than renters’ incomes.

Those are two of the surprising – and contested – conclusions included in a recent draft report produced as part of a Housing Action Plan study the city of Spokane is now completing.

“To accommodate forecast housing needs for the City of Spokane, around 357 housing units need to be produced per year through 2037,” that report, known as a Housing Needs Assessment, reads. “Meeting this forecast housing need is achievable given the City of Spokane has seen 537 units on average built annually between 2010 and 2019.”

But the notion the city has produced 180 more houses than needed each year for the past decade doesn’t jibe with the reality on the ground or with other data, many observers say. Nor does the report’s determination that rents for two-bedroom apartments are up 11% over the past decade, while renter incomes are up 21%.

Foremost among the critics of these findings and the housing assessment in general is Jim Frank, founder of Greenstone Corp., which has developed Kendall Yards and many other major Inland Northwest housing projects.

“I mean, good grief,” Frank said. “It sounds like they’ve decided there’s not a housing problem. And those numbers are … I don’t know what to say. They’re ridiculous. They bear no relationship to reality.”

He’s not alone in questioning the report.

Darin Watkins, government affairs director for the Spokane Association of Realtors, and Ben Stuckart, executive director of the Spokane Low Income Housing Consortium, have both questioned the report’s data and conclusions.

Even Mayor Nadine Woodward, City Council President Breean Beggs and the city planning department staffer who has been leading the city’s Housing Action Plan effort acknowledge there appears to be a disconnect between the report and real-world experience of real-estate professionals and aspiring homebuyers.

“For several years I’ve heard that we have a housing crisis,” Woodward said. “If you listen to the Realtors association, they’ll tell you we’re thousands and thousands” of units behind in the effort to build enough residences to meet demand.

Maren Murphy, assistant planner in the city’s Neighborhood and Planning Services department, said she’s heard from people who have said that “the urgency felt in the housing market is not fully captured in the needs assessment.”

But she also noted that she and her colleagues have been “looking at more data” to understand that disparity between the report’s relatively optimistic outlook and the near constant drumbeat of claims that Spokane has been gripped by a housing crisis.

Murphy also emphasized the Housing Needs Assessment contains much more information than these two data points, including breakdowns of housing trends by demographic, income and other factors. On the whole, the full report is far from glowing about the city’s housing situation, finding that “people are finding it increasingly difficult to afford housing” and that “low and moderate-income households have been disproportionately affected” by the growing cost burden of housing in Spokane.

She also notes that the assessment is just one facet of the broader effort to draft a Housing Action Plan, which also involves stakeholder roundtables, a working group, and community and industry surveys. All of that together, she said, will work to “look more holistically at all the different parts of housing to address not just a single solution but the menu of options that is out there.”

But Tyler Bump, a project director with ECONorthwest, which produced the report on behalf of the city, defends it, saying last week that questions about the accuracy of its determinations about how many houses will have to be built to meet demand and how much rents have gone up “have easy answers in terms of the data sources.”

Regarding housing demand, Bump noted that his report used population projections included in the city’s most recent Comprehensive Plan update, in 2017. He said it was selected because it was a projection city officials formally agreed to use in a document subject to a public process.

As for the 11% rent increase, he said that assessment factors in inflation, which decreases the magnitude of rent increases as they would appear in real dollars. Overall, “I think the information in here is good and it helps fill the gaps of knowledge,” he said.

And he said it will help serve the broader purpose of the Housing Action Plan to define “strategies and implementing actions that promote greater housing diversity, affordability and access to opportunity for residents of all income levels,” according to the state Department of Commerce, which is funding and overseeing the development of such plans throughout the state.

With the assessment as a guide, Bump said, “I think we have a really good baseline for people to … have a robust conversation about how to move forward as part of the Housing Action Plan.”

‘Facts on the ground’

Robust conversations about housing, however, are already well underway, according to those interviewed for this story. And those conversations are based on different data, as well as anecdotal reports, that paint a significantly different picture of the housing supply in Spokane.

Frank points to an assessment from the University of Washington that shows the median resale price of a home in Spokane County is up 16% compared to last year. It also says the number of building permits issued is down 30%. Those kinds of numbers alone show the housing supply isn’t keeping up with what’s needed, Frank said.

Watkins said the SAR’s data for November show the average price of a home in the city of Spokane is up 25% just this year compared to last year. It also shows an inventory of just 335 properties in the entire county, which isn’t enough to meet even one month of the anticipated demand.

He argues those kinds of numbers paint a more accurate picture of a housing market where it’s not uncommon to see 30 or 40 offers on a single home and for people to offer as much as $80,000 over asking prices.

A Realtors association-sponsored survey in April found that 51% of the approximately 90,000 people living in rentals in the city of Spokane were actively looking to buy a home, Watkins said. Among minorities, the number was 54%.

While that suggests a huge pent-up demand among current residents, it doesn’t factor in the growing number of new and prospective residents, Watkins noted.

Just this week, a National Association of Realtors economist predicted the Spokane metro area will be among the nation’s 10 top-performing housing markets post-COVID-19. A key factor is an influx of people from the West Coast, who account for almost 25% of people coming to the city.

Stuckart, a former City Council president who lost to Woodward in the race for mayor last year and who now works on affordable housing issues in the city, said he agrees with the basic assessment of the SAR and the Spokane Home Builders Association: more housing needs to be built.

“It’s at its most dire point that it’s ever been,” he said of the city’s housing situation. “I just think we really need to be looking at the facts on the ground. There’s no inventory of houses, so that’s jacking up the prices.”

The effects are being felt by everyone, even those who are far from being able to enter the housing market themselves, Stuckart said. He said it’s important to “look at all of the different segments” of the market; when someone is able to buy a larger home, that means their smaller home is now available for someone in an apartment.

When people climb the “housing ladder,” he said, it opens up badly needed opportunities for people on lower rungs.

Those at the bottom, trying to get out of homelessness and into subsidized housing, he said, are feeling the effects of a market where back-up offers and escalation clauses are increasingly common, even as prices climb. Waits for low-income housing are three years long, Stuckart said:

“Three years of doing everything right in Spokane, you’re waiting three years for subsidized housing. That’s utterly ridiculous.”

‘Not just a single solution’

With people already feeling the effects of a tight housing market, Stuckart, Frank, Watkins and others say it’s time to move on from diagnosing the problem to fixing it.

Though they differ on some specifics, all argued there are practical changes to city code and zoning rules that could begin to chip away at the problem.

“I mean, look, it’s been a long walk into this housing crisis,” Frank said. “It’s not going to be fixed by two or three easy things, and all of a sudden we’re done. … So there’s a need for consistent and persistent incremental change. And when you find it, you need to fix it and go onto the next (problem) and fix it. So there are a lot of things that are clear that need to be fixed right now and over the next few years that needs to be done. And one simple example are the lot-size-transition rules.”

Those rules, in city code, require newly platted lots to be the same size as adjacent lots, up to a maximum of 7,200 square feet.

When Greenstone was planning its in-progress Garden District development on the South Hill, Frank said his company “wanted to do some small cottage lots, like the ones we did in Kendall Yards.”

But after laying out 60 lots, he said, they learned of the rule and had to reduce the density to 35 units instead.

“So the lot prices have to reflect that. So instead of building houses in the $300,000-$350,000 price range, we’re left building houses that are over $500,000.”

Frank has provided city staff with a long list of such changes that he believes would begin to make a difference in boosting density, allowing for more infill and ultimately making housing more accessible.

Stuckart said his group has “endorsed all of the changes Jim Frank has recommended.” He also said some areas zoned for single-family housing are going to have be rezoned as multi-family. “You have to have density,” he said. “If you can’t spread out, you have to spread up in neighborhoods.”

Isaiah Paine, SHBA government affairs director, said the city should pursue other strategies, such as reducing fees for developers who agree to build homes in certain price ranges or pushing to expand the city’s Growth Management Act-set boundaries, opening up more land for builders.

But he and his colleagues said they worry the Housing Needs Assessment and the Housing Action Plan could delay any action being taken or make doing so more difficult.

Watkins worried “bad data leads to bad decisions” and “a three-hour committee” meeting would be enough to get started.

Murphy, the city planning staffer leading the Housing Action Plan effort, argued the process of putting the study together is providing decision-makers with a rare and vital opportunity to hear from residents and from those involved with housing issues to understand the situation more thoroughly.

While the plan won’t lead directly to any changes to city housing policy, Murphy said it will give leaders a more complete picture of what options exist to improve both housing and housing equity.

“We really want to capture what’s going on and then help provide that guidance and help prioritize how we could address our needs,” she said.

Woodward and City Council President Beggs said they are committed to reforming city code and zoning to boost the supply of housing, but both said they plan to wait to take action until the plan is complete.

“The good thing about the grant (that funded the study) is it puts us on a schedule to consider a lot of things,” Beggs said. “And even if this study isn’t the best study … it will get us there. That’s the lemonade I’m choosing to view this as.”

Ultimately, though, he said “the study is secondary to what the plan is.”

“The plan is to robustly make it easier for people to build more housing units throughout the city,” Beggs said. “I’m saying in general throughout the whole city. That’s the only equitable way to do it. You can’t say we’re just going to do it in East Central. You have to say, ‘No, we’re going to do it everywhere.’ It will just look different depending on what neighborhood. … It will be concentrated in our centers and corridors and along transit lines. That’s where we’re going to concentrate density so we don’t need cars as much and we can walk places.”

Woodward suggested she prefers a somewhat more selective approach that would hone in on certain areas for change.

“I think we need to rethink what housing looks like,” Woodward said. “Not everybody needs a five-bed three-bath home on a double lot. I think we need to get creative.”

While she pointed to the success of projects like the dense and environmentally conscious Blockhouse Life project in South Perry, Woodward said “not every neighborhood can do that.”

In some historical neighborhoods, she said, “there might be pushback. But in some the neighborhoods that need to revitalized anyway, there’s an opportunity there.”

Both Beggs and Woodward suggested those formal conversations about what actions the city should take will have to wait until after the Housing Action Report is complete, likely in April.

“It’s not going to slow it down,” Woodward said of the report’s timeline. “I think it’s going to give us some insight and direction.”

Woodward said she hopes to do something else around the same time: hire the first permanent planning director of her administration.

The city has been without one since in 2018, before Woodward took office, when Mayor David Condon laid off the leader of the department that oversees growth management, comprehensive planning and neighborhood planning.

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