The Puget Sound, which encompasses Seattle and its suburbs, is one of the nation’s fastest growing metropolitan areas. The region’s population is expanding faster than its housing supply, resulting in higher home prices and a greater number of renters who are cost burdened. The slowdown in construction now occurring because of high interest rates could worsen matters. The Puget Sound must identify strategies to increase housing construction to provide relief to current residents and future households.

This presentation previews a forthcoming Urban Institute brief detailing housing conditions in the region and potential approaches to increase building. We show that current strategies are insufficient to accommodate the region’s housing needs, particularly for families with low incomes. We estimate that there is a 140,000-unit gap between likely housing construction over the next two decades and what the state estimates is needed to accommodate the growing population. 

Washington State House Bill 1110, passed in 2023, legalizes small-scale apartment buildings in most single-family neighborhoods. But it is likely to make only a dent in addressing the region’s overall housing needs, because the projects it enables are less likely to meet market demand. In addition, the bill is unlikely to generate much new subsidized housing, as those projects require the cost efficiency inherent in large building forms to “pencil out” from a financial perspective. 

We argue that a combination of high-density upzoning and substantial new affordable housing subsidies is needed in the Puget Sound. High-density upzoning can help meet market demand by enabling more of the construction types currently most feasible to finance. Even so, those units are unlikely to generate housing affordable to people with low and moderate incomes. To build more affordable units, additional public subsidies are needed. The federal government can play an important role here, but so can the state. We estimate that a $1 billion annual contribution from the state Housing Trust Fund could support the construction of about 67,000 new affordable units over the next two decades, helping to house a large share of the Puget Sound’s low- and moderate-income population.