A new model may enhance home ownership options

By Ann McCreary, originally published by Methow Valley News, August 24, 2023

Methow Housing Trust explores permanent ‘housing easements’

Home ownership is out of reach for most of the Methow Valley’s working class — local residents whose jobs are located in the valley — and rental housing is scarce and expensive.

The valley’s housing market is increasingly driven by a limited supply of homes and high demand from high-income earners, many of them part-time residents or people who live here but work remotely. Many local wage earners simply can’t compete.

“Said most simply, we have a local housing supply issue,” said Simon Windell, chief operating officer of the Methow Housing Trust.

“High demand from high earners compounds an already overall constrained supply of housing, leaving negligible supply of market housing for local folks,” Windell said.

To address the housing dilemma faced by local residents, the Methow Housing Trust is exploring a new model of home ownership, called local housing easements, aimed at creating and preserving housing for people who live and work in the valley. The idea is to establish permanent easements on properties that would require occupants of housing on those properties to be full-time residents of the Methow Valley.

“We’re very early in this process,” said Windell, who has been researching the idea for the Methow Housing Trust. “We are interested in this as a tool to conserve housing for locals and there are a lot of details still to be determined.”

The Housing Trust’s interest in addressing the local housing issue got a vote of confidence recently with the award of a “Game Changer” grant from the Community Foundation of North Central Washington. The grants are intended to help nonprofit organizations “improve the quality of life in the Methow Valley.”

With the $9,500 grant, the Methow Housing Trust has hired and begun working with a land use attorney to explore the idea of developing a local housing easement program.

“We are aware … that housing is at the center of community health,” Windell said. “Methow Valley’s working class is increasingly having to choose between sub-standard housing … living in cost-burdened poverty, or leaving.”

Widening chasm

The high demand for housing in the Methow Valley by high earners leaves a “negligible supply of housing for local folks,” Windell said.

“With our median home price at $640,000, requiring three times the Okanogan County median income to buy, it’s clear that our housing market is driven by high demand from outside the valley,” said Windell. And trends indicate the situation isn’t getting any better.

“Given this external demand and capacity, as new market-rate developments are proposed, it is not likely that this increase in supply will introduce any supply of local housing, since local wages can’t compete, and demand is high,” Windell said. “Even when we add units, external competition will suck those up and you’re not solving the problem.”

Recognizing the external pressures on the housing market isn’t meant to “villainize” any segment of the valley’s population, Windell said. “We can both embrace and love our part-time neighbors or remote workers and have a desire to conserve housing for locals. There is room for both, but right now we need to focus on conserving and creating housing for locals, as the market is not delivering.”

There are two programs in the Methow Valley that provide housing assistance to local residents who can’t compete in the open market, he said. The Housing Authority of Okanogan County provides rentals for people who earn 60% or less of the area median income ($40,000 for a household of two), and the Methow Housing Trust provides home ownership opportunities for people who earn up to 150% of area median income ($100,000 for a household of two).

Both organizations have made meaningful progress in providing affordable housing for the people who qualify for their programs, but “there is a widening chasm between these people served, and what’s available on the open market,” Windell said.

Based on 2020 census data, about 35% of the population of the Methow makes between 120%-300% of the area median income — with 300% area median income the approximate requirement to afford the median priced home, Windell said. “This means that up to 35% of the current population is unserved by any market, subsidized or otherwise, for home ownership opportunities,” Windell said.

People who fit into this demographic — for instance households of two teachers, or a biologist and a baker — may be discouraged from ever moving to the Methow Valley because they have no hope of owning a home here, Windell said. And that means that employers, even those offering career positions, have difficulty filling jobs and retaining employees, he said.

“Employers like the Forest Service have had a hard time filling positions earning $80,000 or more because people (job applicants) couldn’t afford a home here. I’ve got a couple of friends thinking of buying a house in Wenatchee because they can afford one there, but they would have to leave their jobs here,” Windell said.

Fertile ground

“It’s clear that our community needs a tool that towns and developers can utilize to ensure that, when housing supply is added, it has a positive effect on supply of housing for local folks, permanently,” Windell said.

That’s why the Housing Trust is exploring the concept of local housing easements. The idea is comparable to conservation easements managed by the Methow Conservancy that provide permanent protection for open space, farmlands and wildlife habitat, Windell said.

“We’re looking similarly at the housing stock in the valley. In order to preserve the character of the valley we need to make sure some portion of the housing stock is protected permanently,” he said.

Local housing easement programs are being used in a number of recreation-based communities with housing pressures similar to those of the Methow Valley, where local wage earners are priced out of the market. The Colorado ski towns of Vail, Crested Butte, Aspen and Breckenridge have all implemented versions of local housing easements to protect housing for local residents.

“I’ve talked to the housing or development directors in each of those towns. Each one of them has somewhere around 1,000 units under what they call deed restrictions,” Windell said.

While deed restriction programs “are a matter of course for a number of recreation-based communities,” the approach has been discussed but not implemented in any Washington communities, Windell said. The Methow Valley would be the first in the state to try it.

“The beauty of the Methow is we are fertile ground,” he said. “We have an opportunity to show the art of the possible.” 

Legal tool

In its most simple form, a local housing easement program would utilize deed restrictions as a legal tool to require that the owner of a dwelling be a full-time resident of the Methow Valley. In effect, it “changes a portion of the housing market from a national market to a local market,” Windell said.

Windell said adopting a local housing easement approach would put in place a program of management to protect housing for local residents. The program is built around a restriction on the deed to the property “such that it runs with the land,” binding subsequent as well as present owners, Windell said.

“It creates a program of management, very similar to the way the Housing Trust manages the community land trust homes,” he said. The Methow Housing Trust retains ownership of the underlying land on which it builds homes, and enforces the residency, income, and resale restrictions on its homes.

Under the local housing easement approach, ownership of land and structures would transfer to new owners when the property is sold, but the underlying legal restrictions that require occupants to be local residents would stay with the property, ensuring permanent housing for the local population.

The program would mesh well with the work already being done by the Methow Housing Trust, Windell said. “It enables us to expand our reach and impact, without having to fundraise every dollar and swing every hammer.”

Easements would be completely voluntary, and could be placed on properties through different ways, Windell said. For instance, developers “with community intent” could voluntarily dedicate a portion of new construction for the program. In fact, the idea has already generated interest, he said.

“We have a handshake deal with one local developer who said he is going to put an easement on one or two units,” Windell said.

The towns of Winthrop and Twisp, which are both working on housing action plans, could create incentives for local housing easements by allowing higher densities or annexation of new developments that set aside some portion for easements.

In some communities with established local housing easement programs, local nonprofit organizations and/or municipalities have developed programs to pay property owners a percentage of the property’s market value to place an easement on the property.

And local lenders could also provide incentives for local housing easements in exchange for a lower interest rate on housing construction that includes easements, Windell said.

To get the program off the ground here, the Methow Housing Trust is “contemplating seeding the market with a couple of homes” that carry the easements, he said.

Windell said the Methow Housing Trust will continue working with the land use attorney it has hired to develop a proposal for a local housing easement program, including the legal framework, paperwork, and plans for enforcement.

“With this legal framework in hand, the Methow Housing Trust can determine what a program of management may look like, and we can go to the towns and developers and share more specifics … it’s exciting,” he said.