New Law Could Mean Good Things for Condos
In the recent past and present, developers in Seattle have elected to build apartments instead of condos due to the higher return on investment and lower risk associated with apartment projects. While the current law was set up with good intention, it has also incentivized condominium association board members to sue builders, and thus developers have longed believed that building a condo project will likely lead to extravagant settlement costs. Now, a new proposed bill in Washington aims to change everything for condo developers. The new bill, SB 5334, will reign in the qualifications of a “defect” for condos and decrease the number of frivolous cases. The bill will also improve the process for condo builders while still maintaining high standards of construction.
In the past, builders have completely avoided building condos simply because the rules were so strict. Even nonprofit, affordable condo builders were being sued for what equated to the cost of one and a half of the building’s condos.
This is an issue of growing concern, because Seattle needs condos to help solve the affordable housing problem. Condos improve affordability because they help allow people to “enjoy the advantages of home ownership” when they can’t afford to buy a single-family home.
In Seattle, the average condo is worth half as much as the average house, and when a city lacks condos, it decreases the positive effects that downsizing homeowners can have on the economy. According to the Fourth Quarter Market Report recently released by Realogics Sotheby’s International Realty, the average sales price for a condo in Seattle is $478,000 compared to $781,000 for a single-family home. Tax rules have made apartments more attractive to developers, which has led to a sort of drought in the condo world. Only 19% of the homes for sale in Seattle are condos. Compare that to the 52% in New York City and 37% in San Francisco.
There have been attempts in the past to make condos more affordable and more realistic for developers, such as an amendment in 2005 that standardized insurance, but this tactic was not successful because private insurance companies did not meet the new guidelines.
Another attempt at a proposed bill was made in early 2018, but that failed in committee. This time around, the proposed bill intends to minimize frivolous lawsuits. With a reduction in incentives for filing lawsuits, the new bill removes the liability from condo association board members if they fail to identify defects. The bill also refines the definition of a “defect,” broadening the term and removing unnecessary applications of laws.
If passed, this bill would greatly improve the affordable housing crisis in Seattle, therefore improving the economy and well-being of the middle-class population.