A construction crane towers above Capitol Hill in 2018
By Matt Dowell
Seattle’s affordable housing crisis is still here but construction cranes have pretty much disappeared from the Capitol Hill skyline. According to local housing developers, that’s because we aren’t building much these days.
“There is almost no new construction happening in Seattle right now,” said Ben Maritz of Great Expectations, a Seattle-based real estate firm.
Permit application trends on the city’s dashboard support the observations, showing a 47% year-over-year decrease last year in residential units under application. A statement from a spokesperson for the city confirmed that “Design Review and all other land use review permit volumes are down across the entire city.”
This 2024 UW study on the effects of City housing policy noted that a slowdown in permits is a precursor to a slowdown in units entering the market, and it takes a couple of years to feel those effects. The report showed a decline in permit issuance for multifamily housing since 2021.
According to the report, it’s market conditions in the last few years that “have had a chilling effect on housing production in Seattle.” Local developers agree.
Michael Oaksmith from Capitol Hill-based Hunters Capital, behind the recently finished Capitol Hilltop Apartments on 15th and Mercer, told us, “The recent run up of interest rates really makes it hard for a property to pencil. Most developers I know, including us, have slowed their expectations for projects and their appetites for projects have gone down as a result of not being able to pump out an acceptable return.”
“Most experts are looking at pretty flat [interest] rates over the next twelve months which does not bode well for a flurry of activity,” he said. “It’ll be a year or two of “sitting on our hands.”
Hunters is, meanwhile, preparing to redevelop 15th Ave E’s old QFC block with a new six-story, mixed-use apartment building — one of the few Capitol Hill projects to come in front of the East Design Review Board in 2024.
Real estate developers rely on investor money to get projects built, but investors aren’t signing up.
“We have a project now that we can build on the corner of Broadway and Mercer. A great peninsula site. 120 units we’re trying to build. It’s going to be a great project if I can figure out the money to build it,” Morris Groberman of Northwest Commercial Real Estate Investments, “But we’re finding that the financing and the equity is difficult and it may not happen.”
“It’s very risky to build right now. Even renovating old buildings has become difficult.”
Groberman is part of the investors behind another rare member of the 2024 Capitol Hill design review class — this “u-shape” project is slated to someday create around 120 new homes on Broadway’s Bait Shop block.
Community Roots Housing, a regional affordable housing developer, also expects to build fewer units in 2025, though for different reasons.
“What really drives our pipeline is the availability of funds from the public funders. That makes us different from market rate developers. We are a little more immune to some of the market forces,” said Chris Persons at Community Roots. “The city has been spending a lot of money keeping projects that are already in development going forward, so the amount of funds for newer projects is relatively lower.”
Community Roots says additional factors, including lower occupancy rates in their existing properties and the natural end of a development cycle that produced the Broadway Center for Youth, Pride Place, and Africatown Plaza.
Tuesday, officials and community representatives will gather near Broadway and Pine to mark the start of construction on the Broadway Center for Youth, the Constellation Center job training facility and a neighboring eight story building with 84 affordable apartment units.
In sum, developers are saying that any way you cut it, it’s near impossible for a new major project to promise a return on investment right now. Costs are high: construction, permits, taxes, interest rates. And revenue is low: a city-wide post-pandemic construction boom culminated in record numbers of new housing units delivered last year. With the added supply, residential rents have remained somewhat stable across the city lately.
As for design reviews, the city has also moved to streamline the process and eliminate the meetings for projects as it tries to respond to complaints about the cost and uncertain outcomes of the public reviews.
CHS reported here last year on the city’s ongoing efforts to strip back the review program and streamline its design approval process with new reforms that could cap the total number of meetings any project will go through, create a quicker, cheaper process, and let more buildings go without review.
And it is not just the largest mega-developments that are on ice. The city’s development of smaller multifamily housing types was also slowing. In 2021, the city reported a record number of townhome completions, but there were concerns about permitting trends, with townhome completions declining in 2022 and 2023
Capitol Hill developers says it’s not just market forces and changes in policy behind the slowdown on Capitol Hill.
The haul from a recent SPD drug bust in Cal Anderson
“It’s a very risky time for any developer to make an investment in Capitol Hill due to severe neglect and policy errors by the City of Seattle,” said one developer who asked to remain anonymous out of concerns about backlash from the city.
“First, while the existing building owners have recently developed a really strong partnership with the East Precinct, SPD remains without appropriate resources to keep people safe and prevent daily misdemeanor crime.”
“Second,” they say, “actions downtown have caused both homeless and criminal populations to move to Capitol Hill where there are no services to deal with them. Even before this, the drug dealer and retail theft community already knew that ‘anything goes’ on Capitol Hill due to limited law enforcement. Owners are paying a fortune for private security and both landlord and [retail] tenant insurance rates are through the roof.”
Groberman agrees. “People want to be safe and they don’t feel safe in Seattle,” the veteran real estate investor said. “That’s our number one complaint from our renters.”
Developers also say the city’s execution of infrastructure changes including the recent massive RapidRide G overhaul of Madison are also hurting development prospects in the neighborhood.
“All in all, it’s an existential crisis,” the anonymous developer said. “The building owner and tenant community are working tirelessly with various city departments to try turn things around on Capitol Hill as we have no choice but to try to be optimistic, but we fear that any real change may take a very long time. In the meantime, it is not a surprise that new investment is shunning Capitol Hill and that existing investment is leaving.”
“It all boils down to capital and return on investment,” Groberman said. “If you can’t give [investors] a return on their money, they can go anywhere in the world, put it in stocks and bonds. If they can’t give it then we can’t build. You have to get that money.”
Groberman says he sees that happening as development remains active on the Eastside.
The lack of development in Seattle today will lead to higher rent here down the road.
According to the UW report, “There is a concern among developers that rents will increase dramatically in a couple of years once the economy stabilizes, hiring continues to accelerate, but there is limited new housing.”
Oaksmith at Hunters Capital agreed. “If the construction doesn’t keep up with the added renters, that’s where we get into these massive rent spikes.”
One real estate firm estimated Seattleites will see a 2.7% increase in residential rents in 2025.
The UW report is particularly concerned about rents for 2BR+ units, noting that the post-pandemic building boom favored studios and 1BRs.
“Given the substantial addition to the stock of studio apartments in Seattle over the past few years, there appears to be adequate supply for the near term. The question is whether additional emphasis should be placed toward the development of family-sized units in Seattle.”
This comes at a time when the city, recognizing an urgent need for housing, has taken steps to reduce barriers in the development process.
The City hopes to streamline its controversial Design Review process before a state law, HB 1293, goes into effect in June 2025.
In response to another state law, SB 5290, the city plans to streamline its permit review process this year.
And finally there’s the massive effort underway to update Seattle’s Comprehensive Plan, which incorporates state-mandated zoning changes allowing for more dense housing down the road. Those changes will also be finalized by June 2025.
Whatever the reason for the slowdown, whoever is to blame, it’s not hard for a person to see that it’s happening. Just take a walk around the neighborhood.
“I always tell people to look at the cranes,” said Oaksmith. “When you’ve got ten tower cranes on the Hill, rents are going to be flat. When you have none, rents are going up.”
Meanwhile, the East Design Review Board calendar for 2025 is empty.
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That whole ‘fuck the landlords’ and ‘fuck developers’ mindset is finally coming home to roost.
Ah yes the ONLY solution is kissing up to the rich for housing and not demanding social housing.
Kissing up to the rich and not vilifying simply for building housing are not the same thing.
Alternative approach: bypass the rich and have social housing
I’ll bet you $1000 that we don’t have more than 1000 units of “social housing” by 2030 and that 90% of whatever amount that we do have will just be bought from existing housing stock (not net new). Wishing for something doesn’t make it real.
dude…you really need to just forget talking about affordable housing. I am serious. Go ask questions. Ask them here. But don’t sit here and think you are getting over with your fake facts.
You do not have 1k. even if you did? You’d be short 1k on that bet because it’s already in stone. That is going to happen. If not a single project was started we’d get there easily.
so you don’t want to bet then? lol in stone? how? there is funding that passed, but no plans for actually building anything. they’re just going to buy existing places.
“it’s already in stone” — what the hell are you talking about? I know you like you post mostly based on your emotions and as usual aren’t actually offering anything like analysis, but rather stuck on campaign messaging as if that settles the matter.
A line item from the social housing providers most recent board meeting: “Start thinking about hiring staff”. Doesn’t sound set in stone at all
“it’s already in stone” — what the hell are you talking about?”
Meaning the projects are already in the pipe. Even w/o new projects at all. Meaning zero. We’ll still get to 100K before then.
We are building 84 units on Pine and Broadway. That’s 6.4% right there.
get to 100k what? i honestly can’t tell what it is you think you’re talking about? 84 is 6.4% of what? 100k? lol
also that 84 units on pine and broadway is not from the new social housing developer…so what are you describing as social housing?
Do you really think social housing will magically solve our housing crisis? At the end of the day, someone has to fork over the money to build new housing. Social housing would only provide a small percentage of this. If private investors don’t see returns, then a lot less housing will get built. No way around it.
Demand this, demand that. What about collaborating and giving/taking? The whole angry activist schtick is tired and counterproductive.
when it comes to business it’s all take and no give.
Since WHEN do businesses “give back”
it’s called taxes, and yes, businesses pay taxes in Seattle
They say they do on their commercials. The TV, that’s how we know….lol
Social housing will likely not build much of anything, but will mostly gobble up existing privately owned housing stock. And much of that stock will be smaller older housing that already provides some of the lowest rents and largest apartments in our neighborhood. This will tend to restrain rent increases within the purchased properties, but it certainly will not expand housing inventory, which will be necessary to meet increased housing demand.
Then change the rules and annex
One of my favorite things about this blog is the way it reveals the insanity of so many of my neighbors.
I come, first, for the reporting on local developments, and, second, for the inevitable weird views, most of which are colored by/begat of residents who clearly consume far too much right wing propaganda.
My absolute favorite trope? The fact that, regardless of what the post is about, there will inevitably be someone who uses the phrase “failed progressive policies” or something similar.
All of which are, of course, talking points the poster has absorbed from the right wing propaganda they consume.
It’s a fascinating process, worthy of a doctoral dissertation. It would definitely be something that could shed light on the ways our politics are perverted and deformed by right wing propaganda.
So, kudos, “Whichever,” for illustrating why I come here!
What if I told you I consumer zero right-wing media content (it’s abhorent to me, so why waste my time?) but I still agree that Progressive policies have largely failed when it comes to housing affordability? Would you believe that, just with my own eyes and 25 years of residence in central Seattle, I came to that conclusion?
Things are going to change on you (and all of us) quicker than you may think because the sense of rot at the heart of Progressivism is more widespread than simply right-wing media.
amen
conservative policies crashed the worlds economy several times since Reagan.
Been in Seattle 6 decades.
What is your definition of “rot”?
Thank you.
Equally entertaining is the erstwhile Urbanists who try to gaslight the rest of us that businesses have unlimited margins to absorb increases in costs/risks and that these policies have zero impact. If you think housing is slowing now just wait until the legislature passes their rent stabilization bill that will cap rent increases but do nothing about increased costs. Portland is having a tough time after Oregon passed the same version of the policy a couple of years ago.
It’s been nothing but successful there, you’re lying
“Urbanists who try to gaslight the rest of us that businesses have unlimited margins to absorb increases in costs/risks and that these policies have zero impact”
NOBODY say that businesses are a bottomless pot of gold.
Here’s how I judge my interactions (and I fall on both sides)…,
If the first neighbor you interact with is an Ahole, then they are an Ahole.
If every neighbor you interact with is an Ahole, then you are the Ahole.
Raylan Givens….Justified
They KNOW they are not factual. It is aping alt right propaganda. They do not recognise that part of it. It’s more “who ya gonna trust? You neighbors and family? Or…The govt.?” If everyone says it’s true? It is true w/o question. Trump same same.
There’s been studies. They all say the same things.
Education level lower than Dems.
Remember this. 50% of America is dumber than average. 1 in 5 are functionally illiterate. The bulk of those are Red team.
They don’t realise KYNECT is Obamacare in KY for example. Everyone is for the states program and against Obamacare on the alt right. That is fluent throughout the party.
Red states are kept afloat by blue states. A handful of Blue states funds the other 40+ states and territories too etc.
The south are not inventors and innovators. They instead use slave labor to use the Earth as a credit card. Russia is a gas station masquerading as a country. That’s why the south needs to keep people down.
“The comfort of the rich depend upon an abundance of the poor.”
Voltaire.
Harlan county(Harlan County USA is a great documentary). 50% of them are on Medicaid. They voted for Trump by one of the widest margins in ‘mercah.
This is about white grievance and has been since 1968.
so funny to me that everyone seems to think we’re the only one with this problem. have you noticed that practically every major city is experiencing similar problems, regardless of local policies?
Could Seattle’s problems possibly, just possibly be due to systemic issues (drugs, untreated mental illness, but also white collar crime and greed) and national (interest rates, president) or global (pandemic, housing crunch, work shortage) trends?!
No! Must be what the city council did five years ago! Makes perfect sense. All that other stuff is a rounding error compared with Kshama Sawant, even though as we all know from being told over and over, she accomplished nothing. Get a grip!
I am still waiting for Obama to explain what he was doing on 9/11. He dropped the ball there.
Just for the record Obama was not president during 9/11
Exactly!…lmao
That’s the joke.
We are being sarcastic here.
If the old council did nothing why complain about the new? Nobody local can accomplish anything, right?
systemic issues
national trends
global trends
It remains perplexing how online leftists say Seattle literally cannot do anything better. Everything we experience in the city is just some trend that we are downstream of.
Even though there’s a moderate mayor and city council you could blame. Instead it’s just the fact that US society is fucked and we can’t do anything about it.
You guys have completely lost the plot.
U mad that shit is falling apart rapidly but last to admit?
Interest rates was the reason.
These dorks that always come out pleading for business are dogmatic in approach to the point of ignoring a spoken fact out loud, by someone else, in another line of business entirely.
Yall think any of us control interest rates?
Any word on the 15th Ave/John St Safeway redevelopment?
I know the cult that occupies the decrepit corner property sued and lost, but there doesn’t seem to be much movement on the project. I’d be unsurprised if it gets shelved in this environment, ditto the redevelopment of QFC down the block.
And all of this to the detriment of the East 15th Ave neighborhood as a whole. I’ve lived in the neighborhood for years, and the need for some serious work on the strip has been evident for quite some time.
Not in any way holding my breath, however.
If corporate letting the market infrastructure go to seed is a benchmark then consider them on track. Please continue to enjoy the renderings.
I refer you to the current interest rates, which make construction loans unprofitable.
Social housing won’t solve our problems unless we follow the models of Singapore or Vienna. Paying nonprofits to buy and manage existing buildings will be great for the early tenants but won’t do anything to help as our population grows.
Didn’t a group of pretentious architects pass a BIA on 15th?
Creating affordable housing is not a “profitable” endeavor, which is why the private market is not suited to solve this issue and has completely failed thus far.
To be clear, developing housing shouldn’t be a profitable endeavor either…in the same way many the other crucial regulations the government implements on products, processes, or industries for the good of society, irregardless of the ROI.
Whoever thinks this is just landlords not buying or building because they were upset is an idiot with no concept of how money works. Building housing where the rents are low doesn’t make sense for a profit, because it guarantees low profit margins and effort…the bain of any modern business.
Again, like a library or fire brigade, the services offered don’t come with a point of sale because we deem their services that necessary for the function of society. Housing is also one of these necessary services as we can plainly see, and the government is the only party willing to build while ignoring the profit motive. Why else do we pay taxes if not to improve our society for all?
Like that we be like food, power, gas all of which are delivered with a profit motive for investors. The easiest answer to affordable housing is to build it outside of Seattle – lightrail is snaking its way to much more affordable places. Same in any big city.
Not true of Seattle City Light, afaik.
they are 301(c)(3)’s
like a church…tax exempt.
There’s got to be a hidden scam here right?…lol
All housing that exists now is by definition “affordable” to the people living there, with the possible exception of those in between the stopping of paying rent and the actual eviction date. And yes, almost all housing that exists is “for profit” just as almost all food, clothing, etc is.
I see…You are one of those “exceptional learners” my daughter tells me about. She’s a teacher.
so you agree with me?
I do not Boris. And you know it.
Look, I am what I am talking about. So I do know the story personally. I live it daily. I am the RAC anti-hero for Community Roots Housing so, yeah. We alone have projects in the pipeline. One is 64 unites on Pine and Broadway. So we are 8% there already on one project.
Look man…You don’t care about facts. That much is clear. So I am ignoring you from here on out…I don’t feed the trolls.
that is subsidized housing, not from the social housing developer. totally totally totally different things
What’s completely failed is the zoning regime that makes it illegal to build a duplex. Zoning is so tightly controlled that the best developers are the ones who work within the constraints and wasteful process, not the ones that can build housing the best or cheapest. And so few units are allowed or pencil out that they only go to the most profitable and desirable locations.
Austin changed its zoning, lots of building happened, and now rents are cratering.
Most people who have affordable rent live in market rate housing. Almost everyone lives in market rate housing. That will remain to be the case. And if you wanted to make everything social housing, it will be affected by all the same zoning, building codes, etc that make building housing a nightmare.
As of January 2025, rents in Austin were still higher than they were before the pandemic:
https://www.texastribune.org/2025/01/22/austin-texas-rents-falling/
In the last year, rents for one- and two-bedroom apartments in Austin have declined, but rents for studios and three- and four-bedroom apartments have increased.
https://www.zumper.com/rent-research/austin-tx
Queer poc looking for a room to rent on the hill. Willing to pay $1000 for a corner in a loft. Not willing to pay for fridge space tho.
Making fun of queer/low wage workers is a GREAT look Tim, just so inspiring. Satire or not, this is trash.
Being lgbtqia+ is expensive! In any city. Being in an urban neighborhood known for being lgbtqia+ friendly is even more expensive now that people don’t hate us the same. Anyways my point is, deal with it. Seattle is expensive and won’t change anytime soon.
Ever hear of Pride Place?
Those units are like $1500+ it’s marginally below market rent! Soo… yeah… just saying… I do know Seattle is expensive.
The market rate ones are 1500 for a one bedroom.
Mine is a corner 1 bd. apartment. 18 windows total. It’s gorgeous. $1,500.00 a month.
But because I am disabled? I pay $198.00 a month.
Rent is on a sliding scale.
It says the list price. Then you come in with your financials and it gets set at the subsidised rates. Mine is as good as you’ll get because I am as poor as you get. I am easily the poorest person wherever I live it seems.
And you don’t live in a bubble. Other financial mechanisms are picking up the difference of you being the poorest person there.
W/S, building upkeep fees, building insurance, earthquake insurance, property taxes … someone else, we are all, covering your sliding scale. Imagine if CRH has federal and local funding stopped and they can’t pay on current building loans and mortgages.
“Other financial mechanisms”
If you understood how it works? Your comment would be different.
Permitting could be completed in a single day, and we wouldn’t see any more building.It’s the interest rates. There is always a problem between city building officials and contractors/developers. Each has a thousand true stories. But if there is money to be made, developers will jump through hoops of flame.
Given the opportunity, many (not all) developers would use shoddy materials and labor build up to the street line require more water and power than is available,and show the creativity of any 1960’s soviet block construction.
To misquote Churchill, Capitalism is the worst economic system, except for all the others.
Builders are no more honest or altruistic than anyone else. Everyone needs someone checking up on them….except me.
I think someone should mention increased property tax at 10-20% per year. And insurance costs in many case doubling. Also add on Seattle most expensive in country WSG costs. Nothing is going to be affordable. City light also plans to increase power cost by 50% over the next 5 years.
No one is mentioning those numbers because you are pulling them out of thin air. The property tax rate was higher 20 years ago than it is now – people are paying more property tax because the value of their property has doubled, not because the tax rate is higher.
Uhuh…Biden’s economy was the envy of the world. Trump will fix that.
My 4-plex insurance rate doubled in one year. No claims and no inspection. Just economics.
Based on a private companies policies.
The problem is for profit private companies. You are seeing that.
You can move…. /s
“City light also plans to increase power cost by 50% over the next 5 years.”
That’s a lie…where’d that come from?
So nobody can afford to build new buildings and nobody can afford to rent? Wow, we’re doing so well as a city.
“Developers also say the city’s execution of infrastructure changes including the recent massive RapidRide G overhaul of Madison are also hurting development prospects in the neighborhood.”
How exactly? This is a pretty bold statement to make with absolutely zero evidence. No wonder they didn’t have the guts to put their name behind it!
There appear to be quite a few recent and planned new buildings along or near the completed G Line along with lots of permits for building upgrades. What exactly has hurt development prospects about a high frequency transit line and replacing an 120 year old water main?
https://www.seattleinprogress.com/
https://web.seattle.gov/sdci/ShapingSeattle/buildings
Some buildings still coming on First Hill/Yesler Terrace, been plenty of cranes over here.
Lies just came off of two construction sites in downtown and last I checked I’ve started seeing a lot of construction jobs open didn’t we just add 19k construction jobs last month????…
There are at least two multi-lot properties on Capitol Hill where previous buildings have been demolished, and they have sat unused for several years now. One is at the NW corner of Federal and Mercer, and the other is between Republican and Mercer on the east side of 12th.
Does the City allow the owners of these properties to go un-developed indefinitely? If so, why?
One of the main reasons we need the city to buy properties and do social housing
Because it is their property Zach. They paid for it.
Another one sitting undeveloped: NW corner of Federal & Mercer.
There’s a crazy drug problem so even once some of them have housing, they’re still the middle of another crisis and can’t keep it or maintain it. There need to be better programs in place for all of that or they’re just gonna end up back on the streets and the apartments will be thrashed.
that costs money and tax cuts are all we get. austerity
What is Seattle’s budget this year vs 2010 indexed to inflation and population growth? Hint: much bigger
and? what does that matter? We have more things to do.
What have we gotten from much more money? Tents and dying addicts?
I live in a property on Capitol Hill that was purchased for planned redevelopment right before the pandemic and the downturn has kept me in a cheap living situation for about 5 years now that would have otherwise flipped into very expensive (market rate) apartments I could never afford. Any chilling effect on the economy is welcome if it stops rich people from frothing at the mouth.
This thread proves only one thing. We’re all economic idiots, and with a sense of entitlement. And a smidge of libertarian socialism, nay, a communist economic POV.
I don’t think the points of view in this thread are wrong. You just live in the wrong country.
Want some cheese?
Wow, this is some very good journalism. Kudos.