Introduction

Purpose

The purpose of this research is to describe a program of local zoning policies that support and encourage small-scale incremental development as a case study of Bellingham, Washington. This project seeks to expand opportunity and access to entry-level homeownership for low- and middle-income households through product design & policy recommendations, within the framework of existing market mechanisms for “fixer-upper” sweat equity.

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Project

Designing Affordable Homeownership with Infill Development

Looking at the city of Bellingham, Washington as a case study, this research employs a mixed-methods approach incorporating data analysis, policy review, stakeholder interviews, and a community survey to inform policy recommendations that can serve to increase access to entry level home ownership for low- and middle-income populations. This research employs the practice of infill development as a primary mechanism for creating entry-level homeownership opportunities, and policy recommendations are tailed to small-scale development scenarios. The term “infill” refers to a residential real estate development that seeks to increase the number of individual housing units withing an existing neighborhood or urban area. The term infill housing development describes a range of tactics that includes adding additional housing units on existing single-family properties, remodeling an existing home to increase the number of private units, replacing existing single-family homes with townhouses and apartment buildings, and other similar developments that increases the number of housing units per acre in a given neighborhood. Incremental Development is a practice that seeks to place the tools and mechanisms of residential and commercial real estate development into the hands of existing community members and small-scale practitioners. It works on the assumption that the best people to develop a place are the local people who already live and work there. The term “development” refers to any site improvement or building construction on a property that increases economic value and usability. Affordable Infill is a term defined out of the context of this research. It seeks to employ tactics of small-scale, incremental development and economic inclusion to produce entry level homeownership opportunities as an upfront market product.

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Problem

Just because you’re building “middle housing” architectural forms, doesn’t mean middle-income households can afford to live in them.

This research focused on increasing opportunities for affordable home ownership rather than affordable rental units. Homeownership is only one piece of a complete housing ecosystem, which also includes tenant protections, market-rate rental units, the acquisition and preservation of naturally occurring affordable housing, as well as permanent supported housing and emergency housing. This research is built upon a core underlying premise that: expanding access to affordable homeownership requires the inclusion of a greater variety of ownership models, such as co-ownership as tenants-in-common, co-ownership as a privately formed limited equity co-operative, small-lot subdivisions, condominium ownership, and greatly increasing the portion of residential land and housing inventory that is owned in public trust (Haberle & House, 2021). Homeownership is still the primary mechanism for building generational wealth in United States financial and economic systems. But if we look beyond homeownership as a wealth-building model and see it primarily as a vehicle for establishing long-term housing stability, then we can begin to see beyond the extreme binary of property ownership verses rental tenancy, to consider a greater variety of viable homeownership models. This consideration of expanded models of ownership is described in greater detail within this report, in the Literature Review section titled “Best Practices for Affordable Homeownership”.

The Limitations of Supply-Side Only Tactics

Home builders and rental markets are both struggling to produce a housing product that is affordable to households earning less than area median income. At the same time, affordable housing developers and housing support services struggle to produce enough subsidized units to supply the total number of low-income households that qualify for housing support services. In recent years, housing development markets have produced an oversupply of large apartment buildings and rental units as well as high-end single-family homes, on top of an existing oversupply of large single-family homes. While some of the units in large apartment buildings may be affordable to middle-income households, all of the single-family homes being produced are out of reach for low- and middle-income households. States and governments are rushing to reform zoning and land use codes to allow the construction of so-called “middle-housing” typologies, but the middle housing building types being constructed are still more expensive than middle-income households can afford.

In the research paper titled “Land-use reforms and housing costs: Does allowing for increased density lead to greater affordability?” by Christina Stacy et al., the authors summarize their findings on the impact of land-use reforms on housing supply and affordability. The key findings indicate that reforms which loosen restrictions are associated with a statistically significant 0.8% increase in housing supply within three to nine years of reform passage, marginally reducing rent prices at the high-end range of price distribution (Stacy et al., 2023). Stacy et al. found no statistically significant evidence that such reforms lead to increased availability or reduced cost at the low-income range of rent price distribution.

Simply increasing the supply of market-rate housing does not produce affordability for low- and middle-income households in any meaningful way. Stacy et al. propose that measures designed to increase housing supply should be combined with policies for producing housing units that are specifically affordable to the regional workforce. Such tactics, targeted towards affordability for regional workforce and localized wage-rates, may be more effective when combined with affordability and subsidy tactics, such as the preservation of naturally occurring affordable housing, tenant protections, the expansion of land trust housing inventory, and expanded funding for the production subsidized housing units. Further, it is not enough to simply produce the architectural forms of middle-housing, it is necessary to produce desirable homeownership opportunities that are affordable to low- and middle-income households.

Supply-side housing development strategies that rely solely on the increase of market-rate housing supply to free up so-called “Naturally Occurring Affordable Housing” (NOAH) fail to address the real housing affordability crisis (Vale et al., 2014; World Economic Forum Insight Report, 2019). An approach that focuses solely on increasing market-rate supply hinges on several problematic assumptions that warrant scrutiny. First, the supply-side approach assumes that the price of existing rental housing units will go down over time as deterioration of the building makes it less desirable, and that these naturally affordable units become steadily available to low- and middle-income households as higher income wage earners move into new market-rate units (BB Housing Online, 2023). But relying on buildings that are in a state of disrepair to create housing opportunities for low- and middle-income wage earners constitutes a vast public health liability and perpetuates substandard living conditions for vulnerable populations (Jones-Rounds et al., 2014; Poortinga et al., 2017; Sokolowsky et al., 2017; Villalobos, 2019).

“Naturally Occurring Affordable Housing” is Often Unsafe, Unhealthy, and Targeted for Redevelopment

The term naturally occurring affordable housing (NOAH) describes housing that is not subsidized by public funding, but that is affordable to low- and middle-income populations due to “naturally occurring” market conditions. NOAH buildings are often older and in a state of disrepair, with deferred maintenance, neglect, and out-of-date appliances: conditions which their value on rental markets. The same conditions that make the buildings affordable to lower income households also render them increasingly vulnerable to resale and redevelopment, meaning that, while the rent may be affordable, NOAH occupants are often at increasing risk of housing displacement.

It is unjust and unsustainable to expect low-income households to bear the cost of occupying deteriorating housing stock, while investors wait for the price to be right for redevelopment(Vale et al., 2014). Beyond moral and ethical considerations, cost savings on rent experienced by the occupants of NOAH are often cancelled out by high heating bills, healthcare costs associated with poor indoor air quality and other health hazards, and loss of labor opportunity due to ongoing illness and health issues caused by living in buildings that are in poor repair (Hazekamp et al., 2020; Jones-Rounds et al., 2014; Poortinga et al., 2017; Sokolowsky et al., 2017; Tieskens et al., 2021). These costs to individual occupants also represent an immense cost to public resources in the realms of public health, excess consumption of public resources due to high heating loads, and a general malaise of public well-being.

“Naturally Occurring Affordable Housing” (NOAH) refers to residential rental properties that are affordable but are unsubsidized by any federal program. Their rents are relatively low compared to the regional housing market. NOAH properties are typically Class B and Class C* rental buildings or complexes built between 1940 and 1990. Rents are lower-ranging, generally between $550 and $1,200 per month, affordable to low- and moderate-income households (What Is NOAH?, 2016).
* “Class B and Class C” refers to commercial real estate classification of building condition/market value.

from the NOAH Impact Fund and the National Low Income Housing Coalition

The National Low Income Housing Coalition also highlights the public resource value of naturally occurring affordable housing. These properties do provide essential and needed housing to low- and middle-income households and can often be found located near essential amenities such as transit, schools, and jobs (NLIHC, 2016). The demand for NOAH remains strong in housing markets with record-low vacancy rates, but ongoing threats of conversion to market-rate units loom large for occupants of NOAH units, more so as buildings fall further into disrepair (What Is NOAH?, 2016). Sometimes whole communities are displaced when these conversions occur (Villalobos, 2019).

To suggest that simply adding more market-rate units will free up naturally occurring affordable housing overlooks the reality that NOAH properties are a public health and public resource liability. At the same time, it is essential to recognize that this building class is actively in use, and already occupied by low- and middle-income people (NLIHC, 2016). Long-term occupants often develop deep community and relational connections that themselves represent a form of wealth (Vale et al., 2014).  The acquisition, repair, and rehabilitation of existing NOAH properties presents an opportunity for high return on investment with public funds (Haberle & House, 2021; What Is NOAH?, 2016). Addressing the housing affordability crisis requires a multifaceted strategy and innovative financing structures that address the housing needs of all economic sectors upfront. A full-spectrum affordable housing strategy would include programs to preserve and rehabilitate existing NOAH properties, as well as producing new housing units that are affordable to all income levels.

Summary

The problem analysis above underscores challenges in creating affordable housing for low- and middle-income households, highlighting the ineffectiveness of market-based tactics for producing affordable housing units. It reveals that despite reforms in zoning and land use, and the construction of “middle-housing” typologies, housing remains unaffordable for the target demographic. The research by Christina Stacy et al. further substantiates this, showing that while land-use reforms increase overall housing supply, they fail to significantly reduce the costs or increase the availability of lower-cost rentals. Stacy et al. critiques the reliance on Naturally Occurring Affordable Housing (NOAH), which, while affordable for some, often compromises public health due to deferred maintenance and building deterioration. Many of the academic and industry sources reviewed advocate for a multifaceted approach, combining the preservation and rehabilitation of NOAH properties with the development of new, affordable housing units, emphasizing the need for strategies that cater to the needs of all income levels (Haberle & House, 2021; NLIHC, 2016; Vale et al., 2014; What Is NOAH?, 2016; World Economic Forum Insight Report, 2019). This researcher acknowledges the need for a broad spectrum, yes/and approach to affordable housing, but the focus of this field study looks specifically at developing tactics for adding new housing units to existing single family residential zones by making it easier to remodel existing single-family homes for adaptive re-use and to add housing units to existing single-family properties.

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History & Context

12 Years After the Subprime Mortgage Crisis

Between 2000 and 2015 the US population grew by 19%, but housing stock only grew by 14%  – this straightforward, quantifiable data shows that there is not enough housing stock available for our current population (Karlinsky et al., 2020). The subprime mortgage crisis occurred circa 2009 and was the first wave of housing market volatility that has continued into the current crisis. The prevailing assumption immediately after the subprime mortgage crisis was that it had been caused by a combination of predatory lending practices and surplus housing stock, leading to market inflation. In the following years, construction of new homes was scaled back in an effort to stabilize market prices (François, 2021; Retlin, 2018). This national trend is reflected in Bellingham’s housing development data, as shown in Figure 1, as well as the Global Real House Price Index, as shown in Figure 2, and US median sales prices from 1965-2020, shown in Figure 3. The long-term impact of the sub-prime crisis continues to shape the United States housing market in 2021 – the work of Camille François reveals that over a decade after the subprime crisis, foreclosed individuals have not recovered their wealth equity (François, 2021). The United States has never really recovered from the sub-prime mortgage crisis. Even though the market commodity tactics of restricting the supply of the housing units did successfully stabilize prices in housing markets, this happened at the expense of low- and middle-income populations, who have experienced greater and greater housing cost burdens. This ongoing trend of cost inflation in the US housing market was further intensified by the economic disruptions of the COVID-19 pandemic and looming waves of renter evictions (Burch, 2021).

Context of a National & Global Crisis

              An alarming trend has been unfolding on both national and global scales in recent years – a crisis marked by rising wage stagnation and income inequality. As housing-related expenses outpace wage increases in urban centers worldwide, the dream of homeownership becomes increasingly elusive. This crisis has been exacerbated by several trends, including: accelerated (re)urbanization of capital and people, the widespread availability of cheap credit, and a growing chasm of social inequality (Wetzstein, 2017). These economic pressures strain the social and economic fabric of communities, pushing more and more households into financial hardship and further stretching the gap between wages and living costs.

The article “Global Urban Housing Affordability Crisis” by Steffen Wetzstein highlights that housing affordability is an under-recognized and under-researched global concern. Ethnographic research from across Western countries reveals that housing-related expenses are skyrocketing everywhere, compared to income growth (Wetzstein, 2017). This disparity in the affordability of housing is not only a financial challenge but also carries severe social and spatial implications.

According to Wetzstein, income inequality within urban centers has been a key driver of this crisis. The gap is widening between the availability of housing support, often only available to households with income below the federal poverty rates, and the income required to participate in real estate markets. As a result, a substantial portion of the population finds itself excluded from the possibility of owning a home, particularly in urban areas where housing costs have soared.

In the “Making Affordable Housing a Reality in Cities” report, the World Economic Forum emphasizes the complexity of the issue. The report argues that affordability is not solely about purchasing or renting a house but also being able to afford to live in it (World Economic Forum Insight Report, 2019). Beyond covering the costs of maintenance and utilities, affordability extends to factors like transportation, infrastructure, and public services. Thus, even a seemingly affordable house may not truly be so if it is located far from essential amenities and livelihood opportunities.

Growing disparities between housing affordability and income levels fuel this global crisis. This issue is shaped by overall income inequality, and an over-reliance on supply-and-demand market strategies. To tackle this crisis, we need holistic approaches that address both sides of the housing market and increased investment in the maintenance of existing housing stock, and creative economic approaches to increasing opportunities for owner occupancy (Wetzstein, 2017; World Economic Forum Insight Report, 2019).

Real Estate Prices & Labor Economy are De-Coupled

Real estate markets are drastically decoupled from labor markets. Throughout the United States and the world, issues of housing affordability are making it difficult for more and more people to afford a safe and stable place to live. The housing affordability crisis occurs within the backdrop of rising income inequality: real wages for many United States citizens have stagnated, even as the income for the top 5% has nearly doubled. Comparing rising home prices to the stagnation in wages reveals the growing portion of the population who cannot afford market rate home prices (Pendall et al., 2016). Rental tenants find themselves at the whim of property owners, often facing eviction for the sake of property sales and redevelopment (Villalobos, 2019). Figure 3 above shows Median Sales Price of Houses Sold in the United States from 1965 to 2020 (FRED – St Louis FED, 2023). Figure 4 shows a similar time period, from 1967 to 2009, with Average income for US populations separated into quintiles (Pendall et al., 2016). With the population broken up into quintiles, Figure 4 reveals that income for the highest fifth quintile in tracks a similar increase as Median Home Sale prices (shown in Figure 3), but income gains for all other quintiles do not, and have seen minimal increase. Figure 5 shows the same data over a shorter timeline, between 1983 to 2016, in three income categories of low, middle, and high income (Horowitz et al., 2020).

These widening inequalities in the housing market are not just a matter of individual hardship; they have far-reaching consequences for economic growth and societal well-being. When a significant portion of the population is burdened by the high cost of housing, their ability to invest in education, start businesses, or save for the future is severely constrained. This not only hampers their individual prospects but also restricts the overall potential for economic advancement within a society (Vale et al., 2014). When housing becomes less affordable, there is a corresponding rise of residential segregation, limited social mobility and perpetuating cycles of poverty.  

The Number of People Experiencing Housing Cost Burden is Steadily Increasing

While public housing performs an essential role in serving low-income housing needs, it does not provide a pathway for residents to build long-term wealth equity or promote community control of development (Haberle & House, 2021). Current income restrictions for public housing subsidies end well below the scale of market costs and fall short of serving the number of people that do qualify for housing support services (Haberle & House, 2021). The United States Department of Housing and Urban Development defines “affordable housing” as costing no more than 30% of an individual or a household’s total income, and this 1/3 rule is commonly accepted in affordable housing research throughout the world (Defining Housing Affordability | HUD USER, 2017; World Economic Forum Insight Report, 2019). Research from the United Way describes a growing demographic of people in the United States who are Asset Limited, Income Constrained, and Employed (ALICE); people who are above the poverty line and working, but still struggling to afford housing costs (Washington | UnitedForALICE, 2022).

The United Way’s ALICE Report of Washington State indicates that 10% of the general population lives below the poverty line while an additional 23% of the population is spending more than 30% of their income on housing costs. That means that fully 1/3 of the population of Washington is struggling with housing security (Washington | UnitedForALICE, 2022). In Whatcom County, ALICE households make up 39% of the total population (“ALICE In Whatcom County 2020 Update,” 2020).

Figure 6, titled “Households by Income, Washington, 2007-2018,” shows total households by income within the ALICE definition, and under the Poverty line, over time from 2007 to 2018. While the total number of households under the poverty line remains relatively constant, the total number of households in the ALICE range is steadily increasing. This rise in housing cost burden for workforce populations is an alarming trend. Figure 7 above, titled “Occupations by Wage and Type, Washington, 2018,” illustrates the distribution of wage and job types across the state of Washington’s labor economy, showing that jobs that pay less than $20 per hour represent a vast portion of the labor market, and preform essential roles in caretaking and infrastructure maintenance. These are not entry level and “unskilled labor” jobs. These are healthcare, education, emergency response and public safety jobs. These are also the jobs of restaurant workers, yoga instructors, massage therapists, musicians, artists, performers, small sole-prop entrepreneurs, landscapers, the neighborhood handyman, nannies, and house cleaners. These are placemaking jobs. No matter how many high-income remote workers move into the community, ALICE workers are needed to make and maintain local infrastructure and culture.

Looking at Occupancy and Tenure as Primary Metrics of Community Resiliency

              Occupancy and tenure stand as pivotal metrics when assessing community resiliency. In areas where owner-occupancy rates are high and renter tenure is long-term, communities tend to have a more stable socioeconomic foundation, fostering deeper interpersonal connections and a stronger sense of belonging (Graziani, 2021; Kamel, 2012; Vale et al., 2014). Long-standing residents often have an intimate understanding of their community’s strengths and vulnerabilities, enabling them to better navigate and respond to the challenges of their specific community. Greater community engagement also means higher levels of participation in disaster response teams and community organizations, and quicker recovery times after major disruption events such as floods or pandemics. Conversely, regions with high renter turnover and low owner-occupancy may struggle to build the communal bonds vital for resilience during times of adversity. Hence, when analyzing the robustness of a community or planning for sustainable futures, it’s crucial to track length of renter tenancy and owner occupancy as indicators of wellbeing and resiliency (Bird et al., 2018; Goldstein, 2018; Hazekamp et al., 2020). 

              When owner occupancy drops and renters must move frequently due to rising rent costs, local economies can suffer profound repercussions. Low owner occupancy rates can lead to neighborhood disinvestment over time, as the inherent conflict between a renters’ lack of equity and the landlords’ ability to continue extracting rent regardless of building deterioration results in ongoing failure to perform caretaking and maintenance (Goldstein, 2018). Over time, this neglect may result in declining property values and ongoing disinvestment in the surrounding neighborhood, both of which can be directly correlated with negative impacts on occupant health and wellbeing (Goldstein, 2018; Jones-Rounds et al., 2014; Poortinga et al., 2017; Tieskens et al., 2021). Additionally, communities that have a high turnover of rental occupancy often miss out on the benefits of local entrepreneurship and innovation, as individuals are less likely to invest time and resources in areas where they don’t see a future (Holland & Squires, 2022). Problems in occupancy and tenure not only erode the social fabric of a community but also undermine its economic vitality (Graziani, 2021; Villalobos, 2019).

Finding Affordability in a High-Cost Property Market

In a depressed real estate market, land trusts can more frequently partner with local governments to acquire undervalued properties (Graziani, 2021). But in regions with a hot real estate market, local governments may have minimal land holdings and the cost of acquiring new properties becomes a major barrier to CLT growth. To meet the requirement to “plan housing for all economic sectors” laid out by Washington State House Bill 1220, passed in 2022, new strategies are needed for the acquisition of developable land and re-developable properties in regions with high land values and existing urban density (HB 1220 Update with Projections, 2023) (Haberle & House, 2021). No one tactic will produce the number of affordable housing units needed; a comprehensive and long-range strategy for land purchasing and affordable housing development is needed. Planners must be ready to deploy all available tactics for increasing access to affordable home ownership as part of comprehensive regional strategies.

When market commodity values are allowed to dictate the cost and supply of goods that are essential to basic survival (in this case homes), profit comes at the cost of social welfare and governments struggle to pick up the bill (Pattillo, 2013).  Investing in a supply of non-market housing requires a shift from the paradigm of housing as a private financial investment towards housing as collective investment in public health infrastructure (Vale et al., 2014). Vale et al. goes beyond the idea of housing as a right, towards housing as an essential feature of a resilient city – a public benefit for all. Their research proposes four specific criteria for what affordable housing should accomplish.

What affordable housing should accomplish:

1. Support the community social structure and economic livelihoods of residents.
2. Reduce the vulnerability of residents to environmental risks and stresses.
3. Enhance the personal security of residents in the face of violence or threats of displacement.
4. Empower communities through enhanced capacities to share in their own governance.

(Vale et al., 2014).

A comprehensive and long-range strategy for acquiring land, and developing affordable housing on that land, is essential. Shifting the perspective on housing from a private financial investment to a collective investment in public health infrastructure is crucial to addressing the housing crisis effectively. This perspective aligns affordable housing with broader goals of creating resilient and equitable cities. Developing affordable housing in a high-cost property market such as the one in Bellingham, Washington necessitates an innovative, multifaceted approach that prioritizes social welfare, community well-being, and collective investment in public infrastructure.

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Study Area: Housing Needs in Bellingham, Washington

The study area focuses on the City of Bellingham, Washington, including designated urban growth areas and unincorporated Whatcom County properties with a “Bellingham” address. Nestled halfway between Seattle and Vancouver BC, the city Bellingham is poised for rapid urbanization and growth – and yet, with a population just above 90,000 it is still holding a “small town” identity. According to US Census data, Whatcom County and the greater Pacific Northwest Region are experiencing some of the highest rates of population growth in the nation (Figure 8) (US Population by Year, Race, Age, Ethnicity, & More | USAFacts, n.d.).

Bellingham hosts a robust network of interconnected non-profits and community organizations already forming coalitions and councils to address critical issues facing our community – including affordable housing, labor rights, tenant protections, economic development, racial equity, and climate change. Bellingham is also on the front lines of a national and global housing crisis, with some of the highest rates of income inequality and housing cost burdens in the nation (Logani, 2021). As shown in Figure 9, home values are rising sharply in Bellingham, while household incomes have seem minimal increase similar to national and global trends shown above (Bellingham Housing Statistics Story Map, 2022). Bellingham and the surrounding region are a microcosm of all the most critical issues facing planners today.

How do we build equity, and reform land use policies rooted in a historical context of exclusionary policies?

How do we build equity within a hot housing market with skyrocketing property values?

How do we balance short-term needs for new housing stock with our long-term needs for sustainability and ecological well-being?

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Existing Housing Support In Bellingham, WA

From City of Bellingham Storymaps & Published Reports:
The City of Bellingham has already committed considerable planning and resources to addressing housing affordability, with a total 2021 budget of approximately $15 million dedicated to housing support services, affordable housing development, and repair/maintenance of existing low-income homes. Of that $15 million budget, nearly half is locally funded through the voter approved Affordable Housing Sales Tax and the Housing Levy. Federal funding makes up less than $3mil of that budget, with the remaining $5mil coming from one-time COVID relief emergency funds (Housing & Human Services Story Map, n.d.). According to the COB Housing & Human Services storymap, there are 1,400 subsidized rental units in the city, including both income-restricted rentals and transitional housing. The City of Bellingham already partners with Kulshan Community Land Trust and the WA State Housing Finance Commission to fund down payment and closing costs for individual home purchases (Housing & Human Services Story Map, n.d.). A search of tax parcels in the City of Bellingham shows a total of 132 individual properties owned by Kulshan Community Land Trust, scattered in neighborhoods throughout the city (CityIQ Online Map Viewer, 2022).  While some of those units are still under construction, that number positions KCLT as having a relatively large portfolio compared to other community land trusts across North America. Even with this comparably high percentage of land trust properties, Bellingham housing prices are rising fast, and Kulshan CLT faces all the classic barriers to expansion described above.

Operating under the Growth Management Act, enacted into law in 1990, Washington State has put strict limits on the land area expansion of urban and suburban development (Growth Management Planning for Housing, n.d.). The Growth Management act is guided by strong values of environmental protection and agricultural resource management that relate directly to human health and well-being. At the same time, Washington State is among the most expensive property markets in the country, one of the most acute crises of housing access in the nation, and ongoing regional in-migration.

Bellingham City Council passed an ADU ordinances in 2016 to allow accessory dwelling units along with adoption of the Infill Toolkit. By design, the Infill Toolkit and ADU ordinance allows limited infill development while still restricting density. The City of Bellingham has also invested considerable ongoing work in the preservation of existing mobile home parks (Housing Solutions, n.d.). Even with this considerable investment in affordable housing development and preservation, the number of Bellingham households struggling to afford housing costs continues to increase at a steady rate. Existing housing support services are targed almost exclusively to households earning well below poverty level income.

City of Bellingham 2018-2022 Consolidated Plan, 2018). From 2000 to 2016 the median household income rose 46%, while median rent rose 59% and median home value rose 137% (Bellingham Comprehensive Plan, 2016). Single family homes make up almost half of the total housing stock in Bellingham. Bellingham residents experience housing cost burden at a higher rate than both Washington State and the National Average – 43% of all households spend more than 30% of their income on housing costs (City of Bellingham 2018-2022 Consolidated Plan, 2018). While more affordable housing is needed, the existing infrastructure for the production and maintenance of affordable housing is already operating at maximum capacity. Increasing affordable housing production to a rate and scale that would meet the housing needs of Bellingham and Whatcom County low- and middle-income households, will require an aggressive long-range strategy for expanding operational production capacity, and increased funding.

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“It would be difficult to overstate the severe need for housing in Whatcom County. In Bellingham alone (Whatcom County’s largest city and home to about half of the population), planners have estimated that there is a need for an additional 11,000 affordable housing units.”

From A Home for Everyone: A Strategic Plan to End Homelessness in Whatcom County 2019

“Rental housing units, primarily apartments, are being added to the housing market in much greater quantity than ownership units; 80% of new residential units permitted in the past 5 years were multi-family housing. Because of restrictive condominium liability laws, there has been a dramatic decrease in the number of multi-family units being built for condo ownership.”

From the City of Bellingham Draft Consolidated Plan 3/6/23

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A New State-Wide Mandate to Produce Affordable Housing

Washington state has just passed an historic package of bills aimed at addressing the housing affordability crisis at a state-wide level – most notably HB 1110, which broadly upzones existing urban areas and HB 1337, which loosens restrictions on building accessory dwelling units (Bertolet, 2023). But this state-wide upzone primarily implements market-driven, supply side solutions. Supply side tactics rely on two primary mechanisms to increase housing supply at the bottom end of the market – one, elders aging out of their individual homes and returning a “fixer-upper” house with “good bones” but decades of deferred maintenance to the market and second, the construction of new market rate homes that higher income populations will move into, leaving newly vacated older rentals available for low income populations (World Economic Forum Insight Report, 2019).

At the current moment, homes that were once a fixer-upper opportunity for first time home buyers are now an opportunity for commercial developers. Those commercial developers also face increasing restrictions on suburban expansion from the Growth Management Act and are looking for new market opportunities to maintain their business models (Lyon, 2022). While the newly passed state laws will surely result in a rapid increase in new home production, renters and first-time home buyers in Bellingham are pinched three ways between an oversupply of large single-family homes, a decade of overall underproduction in housing units, and the recent state-wide upzone. Bellingham faces an urgent need for innovative solutions to housing access that respond to short-term community needs while also investing in long-term economic stabilization. More specifically, Bellingham housing markets need entry level homeownership opportunities and housing units that are affordable to low- and middle-income wage earners.

Passed in 2022, HB 1220 does implement new requirements for cities to plan for and accommodate “Housing for All Income Levels”. As part of the implementation of this bill, the Washington State Department of Commerce published detailed guidance for cities and counties to match housing inventory to actual household populations, according to income levels. These new planning requirements have set twenty-year housing production goals, alongside twenty-year population growth projections, which do seek to meet the housing needs of all income levels. The housing production goals set by HB 1220 are ambitious and show that the supply of housing that if affordable to lover income levels is wildly inadequate. The goals set by HB 1220 cannot be met by only producing new market-rate housing units and then waiting for occupants to re-shuffle themselves between newer and older buildings.