Abstract
Washington State faces an acute affordable-housing shortfall driven by decades of constrained supply, regulatory friction, and uneven market incentives. This post examines free-market solutions — zoning liberalization, permitting streamlining, tax and fee reforms, and market-friendly capital incentives — that can expand supply quickly and lower costs. A focused section explains how surging home values can raise property-tax burdens, undermining both purchase affordability and long-term home retention. I cite recent (post-2024) Washington reports and coverage documenting policy changes and the scale of the problem.
Why supply matters: the basic market case
Housing affordability is fundamentally a supply problem: when demand outpaces permitted new units, prices rise for both renters and buyers. Washington’s 2025 Affordable Housing Progress Update and national housing profiles show permitting and production have lagged the state’s need, meaning market solutions that unlock more private production are necessary to restore balance. (Washington State Affordable Housing Advisory Board, 2025; National Low Income Housing Coalition, 2025).
Free-market levers that scale housing quickly
First, zoning and land-use reform. Allowing more units per lot (duplexes, triplexes, small multiplexes), reducing or eliminating exclusionary single-family zoning, and enabling gentle density near transit lower per-unit land costs and let developers supply a wider range of price points. Washington’s 2025 legislative activity and state tools — including recent statewide parking and transit-oriented reforms and a new Washington State Zoning Atlas — reflect this shift. (Sightline Institute, 2025; WA Department of Commerce, 2025).
Second, streamline permitting and entitlements. Long approval timelines and unpredictable discretionary reviews inflate carrying costs and financing risk. Executive and legislative actions in 2025 have prioritized permit-timeline accountability, fee transparency, and targeted streamlining that reduce time-to-market for private builders — changes that directly lower the cost of adding supply. (Governor’s Office, 2025; MRSC, 2025).
Third, taxes and fees should be structured to encourage infill and multifamily production. Temporary abatements, targeted relief for development of compact units, and rethinking high impact fees can improve the math for projects that produce naturally affordable units without permanent subsidies. Market actors respond when regulatory and tax signals reward building more homes rather than restricting them (MRSC, 2025).
Fourth, attract capital that expects scale: modular construction, prefab housing, and smaller unit types appeal to institutional investors if rules are predictable and approvals fast. Public-private land conversions and auctions of underused parcels (with minimal, clear conditions) let private capital unlock supply at scale — a pro-market approach that shifts the burden from taxpayer subsidies to market investment.
Surging home values, property taxes, and affordability
Rapidly rising home values can unintentionally worsen affordability through property-tax pressures. As assessed values climb, tax bills can rise even with levy-growth limits and result in larger annual payments for longtime owners and new buyers alike. King County valuation notices and state discussions in 2024–2025 show neighborhoods with strong demand registering notable assessment increases; concurrently, proposals to change Washington’s levy-growth rules have been politically contentious. The net effect: rising market valuations increase carrying costs and may price marginal buyers and fixed-income homeowners out of ownership unless transitional relief or targeted tax tools are adopted. (King County Assessor, 2025; Washington State Standard, 2025; WA Department of Revenue, 2024).
Conclusion
Free-market approaches — upzoning, permitting reform, smarter fees, and pro-investment land policies — won’t replace targeted subsidies for the lowest-income households, but they are the fastest way to increase supply, lower prices systemically, and improve long-term affordability. Pairing market reforms with measured tax protections for vulnerable homeowners (to address assessment shocks) creates a policy mix that lets private capital deliver the volume of housing Washington needs.
References (APA, post-2024 sources)
King County Assessor. (2025, May 22). Residential property values posted modest gains; assessor begins mailing valuation notices. King County. https://kingcounty.gov/en/dept/assessor/about-king-county/about-king-county-assessor/news/may-22-2025-propvalnotices
