What Seattle’s empty “affordable” units reveal about a broken narrative

By Jerrid Anderson | Simon | Anderson Team, Kidder Mathews

Seattle has an affordability problem. You’ve heard it a thousand times. From the mayor, the city council, the housing advocates, the op-ed writers. The story never changes: apartments are too expensive, housing providers are greedy, and the city needs more affordable housing.

There’s just one problem. We have affordable housing. And it’s sitting empty.

I’m a multifamily broker in Seattle. My clients develop and own the buildings. I watch the market up close every day. And what I can tell you, from the ground, not from a campaign slogan, is that the affordability narrative is wrong.

Here’s what’s actually happening.

 

The Statistic No One Talks About

Seattle’s Multifamily Tax Exemption program (MFTE) has been on the books since 1998. The deal is simple: developers agree to rent 20-25% of their units at income-restricted rates in exchange for a 12-year property tax exemption. These units are reserved for households earning between 40% and 85% of Area Median Income (AMI). The program has produced more than 7,000 affordable units citywide and is widely described as the city’s most successful affordable housing vehicle.

Sounds like a win. Except for one thing.

The current vacancy rate on “MFTE units citywide is 11%, with 38 buildings sitting above 20% vacancy.”

That’s not a rounding error. That’s a market signal. MFTE has worked, it’s housed thousands of hard-working individuals and families, but it can’t fix “Free-attle’s” homelessness issue.

 

A Building. A Number. A Problem.

I’ll give you a specific example because abstractions are painting a prettier picture than reality.

We work with an owner of a 60-unit building in the University District. Average market-rate rents in the U-District run around $2,088 per month and the building’s market-rate units are leased. The MFTE units, the ones the city subsidizes, the ones designated for working people who “can’t afford Seattle”, have been sitting at 50% vacancy for six months. The owner dropped rents well below the city prescribed AMI limits. Ran outreach. Waited.

Nobody qualified.

Not because the rents are too high, but because the renter program was built for people with jobs.

 

What’s Actually Left

Here’s the part no one in the city government will say out loud.

The renters who remain unhoused in Seattle are not people who need a discount on a market-rate apartment. They are people who need free housing, mental health services, addiction treatment, and job training. That’s not an insult. That’s a diagnosis. And it’s a completely different problem requiring a completely different set of solutions. The private sector can provide housing but cannot build the social infrastructure that a chronically homeless or behaviorally challenged population requires. Pretending otherwise isn’t compassion. It’s misdirection.

 

Housing Providers Are Doing Their Part

Seattle’s housing providers aren’t freeloaders. They’re one of the city’s largest tax contributors. Based on last year’s average sale price of $294,000 per unit across 134,668 apartments citywide, Seattle’s multifamily stock represents roughly $39.6 billion in taxable real estate, generating an estimated $392 million in annual property tax revenue at the current millage rate 9.91. That’s nearly $400 million a year flowing from apartment owners into a city budget that is supposed to be solving the homelessness and housing crisis. Before the city asks the private sector to do more, it should answer one question: where is that money going, and why isn’t it funding the mental health, addiction, and job infrastructure that actually moves people off the street?

 

What Should Change – Look South

Houston reduced its homeless population by 64% over the past dozen years. It didn’t build more income-restricted apartments or mandate that private owners reduce rental rates. Instead, Houston looked at the system and overhauled it:

  1. Ended the silo system. Before 2012, dozens of nonprofits operated independently, duplicating efforts and leaving service gaps. Houston unified every agency: government, nonprofit, VA, public housing, private sector. In Seattle, non-profits and service providers COMPETE with each other for dollars to go spend on housing.
  2. Built a single front door. Every homeless individual goes through one standardized assessment that evaluates housing history, disability, and criminal background then routes them to the right intervention.
  3. Made private landlords the solution, not the problem. Houston actively recruits private apartment owners to participate, offering direct rental subsidies, landlord incentive fees, and dedicated case management support for every tenant placed. Owners reduce vacancy, eliminate marketing costs, and receive guaranteed payment. Residents pay 30% of their income toward rent. The city covers the rest directly to the landlord.
  4. Paired housing with real services. Case management, mental health counseling, legal aid, and income stabilization are delivered after placement, with the explicit goal of self-sufficiency, not permanent dependency.
  5. Moved people fast. Average time from street to housed: 35 to 45 days.

 

This is the model Seattle is missing. Private owners provide the housing. The city provides the subsidy and the services. Nobody is asked to take a below-market rent, then get stuck with a non-payer that never leaves.

The math works: “A recent study followed the progress of the Downtown Emergency Service Center (DESC) in Seattle, WA. All the residents at this Housing First-styled residence had severe alcohol problems and varying medical and mental health conditions. When taking into account all costs – including housing costs – the participants in the 1811 Eastlake program cost $2,449 less per person per month than those who were in conventional city shelters.”

Seattle’s apartment owners generate an estimated $392 million in annual property taxes. Houston built its entire program on existing federal funding and private landlord partnerships, without spending a single additional dollar of city money. The money isn’t the obstacle. The willingness to call the problem what it actually is, that’s the obstacle.

 

Jerrid Anderson is a multifamily broker and partner at the Simon | Anderson Team, Kidder Mathews, specializing in apartment investment sales in the Seattle market.

 

Additional Resources

Portland Parallel

Houston / The Way Home

Image Credit: Seattle skyline with space needle and modern buildings by Akshay Madivanan