Definition: “Housing Crisis”
The definition of “housing crisis” per Wikipedia and other sites I looked at, is simply this:
Generally speaking, a housing crisis may occur anywhere affordable housing becomes extremely scarce.
Scarcity can *result* from a lot of different causes:
- Wildfire takes out entire towns in nearby states, inspiring the term “climate refugees”
- Construction labor and materials become backlogged and prohibitively expensive
- Interest rates plummet and the buyer pool explodes in size
- Pacific NW town with a super-mild climate is “discovered” as the ultimate place to call home, there’s hardly any traffic, air quality is pristine, home prices are a fraction of what they are elsewhere, 3/4 of the entire county is public lands and is a giant playground, there’s a university, international airport, a world-class ski mountain, outdoor sports galore… and oh, now you can work from home with nothing more than internet connection so you don’t really care if there are jobs available.
Sound at all familiar?
That list above is just a partial list of causes that lead to scarcity, and boy oh boy did they hit here in Whatcom County ALL AT ONCE.
So, Yes, let’s agree that there is an extreme level of scarcity here — and we don’t need to limit that to just “affordable housing.” There is scarcity at every price range.
There are more $1M+ Bellingham listings already under contract with buyers than there are Active listings still available to buy.
Want a house within 3.5 miles of Lake Samish? Not a single one currently available.
Want to look at everything Active in Sudden Valley? There are three.
Loaded and wanting to look at the new 9000 square foot 5-bedroom in Edgemoor that hit the market at $5.5M? Too late. It sold after 6 days on the market.
You get the picture.
It’s fair to say that we indeed have, by definition, a “housing crisis.”
“…may occur anywhere affordable housing becomes extremely scarce.”
Let’s now look at and define the term “affordable housing.”
Definition: “Affordable Housing”
“Affordability” is a function of income.
Since 1981, housing programs in the United States have considered “affordable housing” to be a maximum of 30% of household income spent on housing costs.
That’s an objective metric, so let’s do some math.
The Whatcom County Median Household Income per the latest published census data, from 2019, was $62,984.
In 2015, it was reported to be $53,145 per household.
So over that timeframe, County-wide median income went up 18.5%.
In that same time, the median home price went from $286K to $400K — an increase of 40%.
(In the last 20 months, median home prices throughout the County have increased an additional 33.5% to $534,500).
So with those numbers in mind, let’s define “Whatcom County Affordable Housing”.
30% of the median Whatcom County household income would be $18,895.20.
Divide that by 12 months, and you have $1574.60 per month to pay:
- Renter’s insurance
- Mortgage principal and interest
- Property taxes
- Hazard/Homeowner’s insurance
Let’s look at the rental affordability first.
If you’re renting a detached single-family house, you’re paying rent plus all utilities including water, sewer, garbage, electric, gas, cable, phone, etc.
Tack on another $200/year for renter’s insurance.
If your household (defined as everyone in the house aged 15 or older who is earning money) is making that median $63K/year, “affordable” to you means that you’ve got between $1100 and $1250/month for the actual rent payment, depending on how frugal you are with your utilities.
When’s the last time you saw a local detached SFR going for $1250/month or less?
I just scrolled through the B’ham Craigslist page, and there were 4 single-family homes listed for rent. The least expensive was $2150/mo.
Let’s look at affordable homeownership.
Again, “affordable” to you, the Whatcom County median-income household, means you have $1574.60 (pre-tax, mind you) to buy and operate a house.
Let’s look at THOSE numbers:
We’re obviously looking in the lower end of the MLS for that affordable house, so let’s go all the way to the starter-end of pricing.
Looking at Bellingham specifically, here are the 5 least expensive homes currently Active as of this writing.
They average out to a nice little 1088 square foot home with a price tag of $411,080.
- Let’s assume property taxes of $2800
- Homeowner’s insurance of $800
- Utilities of $350/month or $4200 for the year
Added up those equate to $650/month, leaving you $924.60 for your mortgage principal and interest.
Let’s say you’ve saved up a 20% down payment, and you can lock in a historically low interest rate of 3% on a 30-year fixed mortgage.
Your monthly housing costs, including the mortgage, taxes, insurance, and utilities would be $2,036.51.
That’s not 30% of your income, it’s about 40%. By definition, not affordable.
You could get it to 30% if you put $200K down rather than 20%. Is that… likely?
Or… we just need to find you a house that you can buy for $274,000 — as long as you have that 20% down payment ($54,800.)
If you happen to have something more like 5% down, we’d just need to find you a house for $231,000.
Is that do-able in Whatcom County?
Well… if we’re talking about actual framed houses that are not zoned “recreational” (so you can live in them year-round), there are currently two Active listings.
Another Issue with “Affordable Housing”
OK… let’s say you scored the affordable house, and your total monthly nut to own and operate it is at or below 30% of your pre-tax household income.
There’s a heavy question on the table: Where is it located?
More specifically, is it anywhere near your place of work?
What about adequate groceries, good schools, health care, entertainment, parks, friends?
Do the house and location promote a healthy physical and healthy mental/emotional lifestyle for both adults and kids?
Does the cost of getting to and from your new house un-do the “affordability” label altogether?
These are important factors.
Imagine you work in Bellingham. Look at the location of the two stick-built fixer-uppers in the MLS that fall within the “affordable” price range:
OK, WHY Is It SO Expensive Here?
It didn’t always used to be this way.
Housing used to be plentiful and affordable. I mean… that was an era before I arrived here in 2003.
The photo below is the Roosevelt Neighborhood. Here’s the source.
There are a number of factors that make an entire market area’s prices rise.
- Climate change
- Increased demand
- Population growth
- Jobs growth
- Zoning changes
- Interest rates
- New infrastructure
- Whole Foods, Trader Joe’s, and Starbucks
I like to sum it up with one simple two-word phrase. What drives appreciation in a given area?
I’ve written a lot about this already. New people moving to Whatcom County and looking for housing… ESPECIALLY those with disproportionate money that they’re ready to spend on a house.
Remember that $63K-ish median income in Whatcom County? In San Francisco, the median income is $123,859. In Seattle, it’s over $102K.
When those people arrive in Bellingham intent on living here, it’s a showstopper for locals — especially the first-time buyers who haven’t yet benefited from the “real estate escalator” (aka “appreciation-over-time”).
Yes, new money puts significant upward pressure on housing prices and leads to that scarcity of ANY AND ALL housing — much less affordable housing — we opened with.
But Whatcom County has other MAJOR factors working against “affordable housing.”
And these realities, which I will touch on in a moment, fall under the broad philosophy spoken by a friend of mine just this morning, as we discussed this issue while practicing the sport of SwimRun around Lake Padden.
That philosophy is: “Everything comes at a cost.”
Keep that in mind as you read on…
We Can’t Sprawl
Sprawl can be such an ugly word, but it’s how many areas grow when they have available land and hospitable topography that allows for it. Think Phoenix, Reno, Omaha.
In Bellingham, we’re bound by saltwater to the west, mountains to the east, and of the 1.6 million acres that make up Whatcom County, over 1 million of them are public lands. Those are not in the development cycle.
Does all that keep it soooo nice here with lots of parks and a healthier environment than it would otherwise be? Do I personally, along with my family and most of my friends, take advantage of it and cherish it on a daily basis, year-round?
ABSOLUTELY. But it runs counter to “affordable housing.”
Land Use / Building Permitting is Renowned For Being Difficult & Expensive
Ever tried to pull a permit for new construction in Whatcom County or the City of Bellingham? It is extremely time-consuming, difficult, frustrating, and expensive.
I say that with a nod of respect to my friends and readers of this blog post who work at either permit office. They know.
I’m talking about multiple tens of thousands of dollars in land feasibility, natural resources assessment, wetlands delineation, building plan review, mechanical plan review, fire marshall review, codes, public works, transportation impact, park impact, school impact… before you ever put a shovel in the ground.
And the TIME you and all the other people involved require to process your permit and plan. Time is money.
I visited the City and County permit offices multiple times with one client of mine (who reads this blog post… Hi Mark!). He is a retired land-use attorney. After our 3rd or 4th visit as we researched land to place his modular home, he turned to me and said, “Brandon, I’ve worked on projects in over 30 states. What you have going on here is nothing short of organized crime.”
Does all that time, expense, vagueness, and the slowww permitting process keep our buildings and environment safer than it would otherwise be?
ABSOLUTELY. But it runs counter to “affordable housing.”
And Lots of Additional Factors
Does a City of Bellingham water main run past your lot… but you’re outside the City Limits?
Sorry… no connection allowed.
Do you own a large lot, even acreage, in the Lake Whatcom watershed, and you’d like to divide it and build several houses?
Sorry… no sub-dividing land in the watershed.
Does your County parcel of 4.8 acres have plenty of space for a second home that another occupant could live in comfortably?
Sorry… no detached accessory dwelling units unless you have a full 5 acres.
Already own a sweet piece of land with a well and septic installed and you want to live in an RV or a tiny house?
Sorry… that would be a “temporary structure” only.
DO ALL THESE THINGS PROTECT THE HEALTH, SAFETY, AND PROPERTY VALUES OF THOSE OF US ALREADY LIVING/OWNING HERE?
ABSOLUTELY. But they all run counter to “affordable housing.”
The question, therefore, is: What are we optimizing for?
Before you read the section below and form an opinion of “that Nelson jerk who writes those short-sighted blog posts”… please know that I FULLY ACKNOWLEDGE that we have a global climate crisis right now as well!
And that absolutely warrants extreme action, too.
And we have a health care crisis.
And an educational system crisis.
And, oh yeah, a Covid crisis.
And a Middle East crisis.
Totally, totally understood. I agree.
Everything comes at a cost.
When the next Greenways Levy renewal hits the ballot, to keep funding the purchase of public lands that won’t be developed, affordable housing takes a hit.
When another 50 feet is added to the required buffer from wetlands or critical areas, affordable housing takes a hit.
When People First passes and rental property owners are forced to maximize rents year over year to fund a “relocation payment” and to avoid being driven into the red when property taxes, hazard insurance, utilities, repairs, and maintenance all increase in cost, affordable housing takes a hit.
When the new energy code requires tighter, warmer, more electricity-reliant homes with better windows, better insulation, and better air-sealing, affordable housing takes a hit.
When residential construction contractors advertise for months on end offering higher-than-ever wages, but still can’t get (anywhere near) the skilled labor they need to handle their would-be clients’ projects, affordable housing takes a hit.
When neighborhoods in the Urban Growth Areas of Bellingham push back against annexation, affordable housing takes a hit.
Everything comes at a cost.