A massive federal housing law went into effect: What it means for WA
How Congress' new housing bill affects Washington
A big piece of legislation regarding housing went into effect last week. The 21st Century ROAD to Housing Act was passed by Congress, a bipartisan effort considered a major step in addressing affordability and supply, especially for first time homebuyers.
SEATTLE - Local experts say the recently enacted 21st Century Road to Housing Act could help with Washington’s overall housing inventory, but the impacts will not be immediate.
The massive federal law, passed by Congress with bipartisan support, officially went into effect last week.
It goes after large institutional investors and cuts red tape to get properties built faster, and also places a cap on future single-family home acquisitions.
What housing bill means for WA
By the numbers:
Moving forward, corporations will be prohibited from purchasing more than 350 single-family homes. The law does not, however, require corporations to sell off their existing housing portfolios.
Stephen Ku, a broker with the McConnell Group in Seattle, noted that in Seattle corporate entities currently own only a small fraction of the nation's single-family housing stock.
Ku says prices are driven more by a high-earning tech workforce, so buyers should not expect the investor caps to lower prices right away.
"The short answer is not in the immediate future," Ku said regarding the rapid price drops. "Specifically for us here in Seattle, we won't see something change overnight. But in the long run, there will be less institutional investors to compete with."
Beyond investor caps, the law is designed to ease the construction of middle housing—such as accessory dwelling units (ADUs), duplexes, and townhomes—by paring back environmental and administrative regulations across the city, state, and country.
Seattle has spent years attempting to incentivize ADUs and smaller residential developments. Ku believes federal support cutting through permitting delays will complement efforts already underway in many cities across Washington.
"I think it is going to be a big deal," Ku said. "Any time that you can speed up the permitting process, that you can speed up the review process, any time that you can minimize the cost to build middle housing—I think that matters greatly when we talk about addressing this clear need that we have in the city."
Beyond the act: unlocking existing inventory
Dig deeper:
While the Road to Housing Act targets new construction and investor activity, experts emphasize that increasing supply also requires freeing up existing homes that are currently stuck off the market.
Ku says many homeowners who want to upgrade or buy a new home are reluctant because they do not want to lose a low interest rate.
"For many people, even if they wanted to sell and buy and move, they feel trapped. They feel handcuffed," Ku explained. He noted that policymakers must explore creative incentives and additional tools to encourage homeowners to list their properties.
Seattle realtor group pushes for portable mortgage
A Seattle real estate group says portable mortgage is something the US. should consider, as it could motivate homeowners who are reluctant to sell because of higher interest rates to put their homes on the market, leading to more inventory.
One solution: the case for portable mortgages
What they're saying:
As another way to get creative and unlock existing inventory, federal policymakers are exploring concepts outside traditional U.S. lending—such as portable mortgages.
Unlike standard American loans, which remain tied strictly to a physical property, portable mortgages follow the buyer. Under a portable model, a seller moving to a new home can transfer their existing low interest rate and loan terms directly to their next property.
"Imagine everyone in Seattle that has a 3% interest rate," Ku said. "If they were able to take that interest rate with them, then many more people would be inclined to sell, and there'd be more inventory on the market."
By allowing current owners to move up into different homes without taking on double the interest rate, portable loans could free up a layer of existing houses for first-time buyers.
Places like the UK and Canada are doing portable mortgages. Critics, however, argue that it would not help first-time homebuyers enough, since they cannot lock in a lower interest rate, so it would not make it more affordable for that subset of buyers.
Ku also acknowledged that implementing such a system presents monumental practical hurdles. Overhauling the American mortgage system would require agreement from major financial institutions and the restructuring of trillions of dollars in existing debt.
"I would welcome all creative solutions to the table because I think we could always use more of them," Ku said. "Do I know if portable mortgages […] actually makes indeed sense if we were to play it out in the long term? That's difficult to say, but I would say anything that gives my clients, people in Seattle, options to be able to make decisions, I think, is always a good thing."
The Trump Administration floated the idea of a portable mortgage last year and federal officials are actively analyzing the policy.
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The Source: Information in this story comes from original reporting by FOX 13 Seattle anchor Hana Kim.