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Washington State lawmakers have been incredibly active in 2023, passing a series of bills aimed at reforming housing regulations and increasing housing supply for renters and homebuyers. These new bills will have a significant impact on housing in the state. Most aim to promote opportunities for building density and to provide more affordable housing options. There are also regulatory bills aimed at guiding and streamlining the permitting process for new developments. Additionally, and more directly related to the real estate industry, two of these bills focus on bringing transparency to broker/client relationships and real estate transactions.
Washington State currently ranks last in the number of housing units per family nationwide. According to census data, the State Department of Commerce estimates that Washington will require 1 million homes by 2040. The following bills aim to create policies that increase housing supply while ensuring affordability. For example, HB 1110 addresses the development of middle housing, an issue that Windermere’s Chief Economist, Matthew Gardner, has been advocating for years. SB 5258 aims to boost the supply and affordability of condos and townhouses, while HB 1042 enables the creation of housing in existing, underutilized buildings. Additionally, HB 1337 aims to simplify the process of building Accessory Dwelling Units (ADUs) in urban growth areas.
To expedite the housing development process, SB 5412, SB 5290, and HB 1293 have been introduced to consolidate and accelerate the permitting process. Specifically, HB 1293 allows developers to apply “clear and objective design review standards” for the exteriors of new developments. Housing units that cater to low-and moderate-income households will receive expedited reviews of their permitting applications.
Two bills of importance address short-term seller rent-backs (SBH 1070 and SSB 5399). In situations where a house is sold, but the seller is not yet ready to move out or the buyer cannot move in immediately, the parties may agree to a written “leaseback.” This bill clarifies that such a sale/leaseback arrangement is exempt from the state’s landlord-tenant act. There are certain limitations, including a maximum period of 90 days for the seller to remain on the property. The goal is to facilitate a smooth transition period for all parties involved.
Two notable bills, SB 5191 and HB 1284, have been introduced to improve real estate brokerage services in response to Washington State’s outdated real estate agency law, which hasn’t been updated since 1997. The most significant change introduced by these bills is the requirement for brokers to enter into a signed Buyer’s Agency Agreement that clearly outlines the terms of representation and compensation. It’s important to note that this requirement doesn’t force buyers to pay compensation, but it ensures transparency regarding how the buyer’s broker is compensated. Starting from January 1, 2024, all real estate brokers will be obligated to engage in a buyer service agreement with the buyers they work with. This change will bring much-needed clarity to the often confusing process that many buyers experience when searching for a home.
And finally, a long overdue bill, HB 1474 will raise document recording fees by $100 to fund a new state program dedicated to providing down payment and closing cost assistance to individuals, or their descendants, impacted by racially restrictive covenants. This program aims to generate $75 million annually to improve housing affordability.
“Today, what we are about to do with this bill is enable the government,” says Patience Malaba, Executive Director of the Housing Development Consortium. “A government that has been responsible for creating a lot of discriminatory policies to actually remedy the wrong.”
As always, my objective is to ensure that my clients are well-informed about the local real estate market. In this particular case, it is crucial to understand the direction our state is taking with the laws pertaining to real estate and housing.
