Anacortes is making steps, but the need still exceeds grasp
Anacortes is narrowing the gap between affordable-housing availability and need. But the effort hasn’t always worked out as intended.
The developer of the 25-unit Fidalgo Flats apartments near Island Hospital took advantage of a building height bonus in updated city regulations that allowed him to build five stories, rather than three, in exchange for 25% of the apartments being 600 square feet or less — 14 apartments meet that criteria — the idea being smaller apartments would command lower rents.
Fidalgo Flats was completed in 2022. The lowest rent is $1,750, according to listings on Trulia. That’s within reach of a couple — but not an individual — earning the median household income for the area.
The city council placed a temporary moratorium on any further such development in that area after neighbors expressed shock at the building’s size relative to the neighborhood’s one- and two-story single-family homes.
The city’s updated regulations also encourage the development of smaller cottage-style homes, the idea being more houses on the market will temper listing prices. But the first cottages built under those updated regulations — The Crossings, near Copper Pond Road — are listed for $739,000. A monthly mortgage payment would be $4,904, according to a mortgage calculator on Bankrate.com. That’s double the payment considered to be within reach of a household earning the area median income.
Outpacing income
Most mortgage lenders say a monthly rent or mortgage payment shouldn’t exceed 30% of household income; anything above that puts other family expenses — as well as the rent or mortgage payment — at risk.
When housing costs outpace the area median income, the need for programs that make housing affordable — such as sweat equity, incentives for builders and low or subsidized rents — grows. Affordable housing programs are generally available to households earning up to 80% of the area median income.
The median individual income in Anacortes was $49,833 in 2022, according to the U.S. Census and the City of Anacortes. According to the above metrics, an individual earning 80% of the median income, $32,856, should be able to afford a rent or mortgage payment of $912.66 a month.
The median household income in 2024 was $102,800, according to the Census. A household earning 80%, $82,240, should be able to afford a rent or mortgage payment of $2,311.77.
With its many amenities and low vacancy rates, Anacortes can fill higher-priced housing. It’s creating places for lower-income people, including workers whose earnings aren’t keeping up with skyrocketing home prices, that poses a particular challenge.
“I think an economist will tell you that adding supply is going to be helpful, no matter where it is,” said city council member Ryan Walters, a lawyer and former planning director for Skagit County and Samish Indian Nation.
“We have a real problem with availability of anything on the market. We have a really low vacancy rate, and where you have a low vacancy rate, people can’t trade to get the housing that is most appropriate for them. For example, a couple might want to downsize as they get older, but if there’s nothing available to downsize to, they can’t do that. So the availability of housing is really important.”
Building with partnerships
Still, affordable housing is being built thanks to public and private partnerships — and thanks to voters, who in 2020 approved a 1/10th of 1% sales tax to help fund affordable housing. City council member Carolyn Moulton, who chairs the council’s Housing Affordability and Community Services Committee, said the sales tax is generating $600,000 per year.
So far, the tax helped fund construction of 21 apartments and a first-floor early learning center built by the Anacortes Family Center, and five townhouses built by the Anacortes Housing Authority, and will help fund the restoration and remodel of the Olson Building in Old Town into 18 apartments with first-floor commercial spaces.
Habitat for Humanity of Skagit County is building four two-story duplexes — a total of eight townhomes — on Commercial Avenue and 29th Street, across from Storvik Park. The townhomes will be available to homebuyers earning no more than 80% of the area median income. Skagit Habitat for Humanity Executive Director Tina Tate said the homes will be priced at $350,000. Habitat will own the land to keep home prices low; homeowners will own their homes and will lease the land for 99 years renewable.
On the private side, The Islands Inn at 3401 Commercial Avenue was converted from a hotel to apartments earlier this year and is now Parallel 49. Rents range from $1,000 for a 286-square-foot one-bedroom, one-bath apartment to $3,000 for an 878-square-foot one-bedroom, one-bath with second bedroom or office.
“The price per square foot is not low, but they cost less than a single-family house,” Walters said. “Even though it’s more expensive on a price-per-square-foot basis, your total cost is lower and you don’t have to mess with a yard and maintenance. So a lot of our efforts are about providing choices to people that just didn’t exist in the marketplace before. And then overall, we expect that that will help constrain the cost of all housing by adding more supply.”
Another company, Irwin Development LLC, proposes building 120 apartments on five acres of city-owned land near Sharpe’s Corner. Thirty of those apartments would be available to people earning 60% of the area median income, according to the city website. The developer also proposes building 16,000 square feet of commercial and retail space on an adjacent city-owned parcel on Old Brook Lane.
The Samish Indian Nation built a neighborhood of 14 cottages and a community center on 34th Street. The homes are available for low rent to Samish citizens.
All told, there are 361 affordable apartments and townhomes in Anacortes. Anacortes Housing Authority Chairwoman Susan Rooks said there’s a long way to go to meet the need.
“We have 195 apartments and homes throughout town, with a total of 373 residents, but we have a waiting list of several hundred,” she said of the housing authority’s properties.
The city estimated in October 2020 it will need 971 new affordable units through 2036 to meet its affordable-housing needs. Housing built since then by the housing authority, the family center and Samish Nation whittled that need to 925. After completion of the Olson Building, Habitat for Humanity’s townhouses and Irwin Development’s proposed apartments, the city would still need 848 new affordable units over the next 12 years.
Short supply, higher prices
Demand exceeds supply, and that’s helping to drive prices up. The apartment vacancy rate is often as low as 1% in Skagit County, according to the Washington Center for Real Estate Research at the University of Washington. Supply of homes for sale is slim as well. At the current rate of sales, it would take two and a half months to sell every home listed on the Northwest Multiple Listing Service, according to the Northwest MLS. The median selling price of a home in Anacortes in November was $870,000, up from $580,000 in November 2023, according to the Northwest MLS.
“It is important to keep in mind that if all of our housing stock is tilted toward the high end, then what you end up with is people that can afford those high-end houses and not people who can’t afford those,” Walters said. “It’s all the people who work at the hospital, sometimes including the doctors. It’s the people who work at the restaurants, people who work at Dakota Creek or the refineries. “I don’t have hard data on this, but I talked to one of the refinery’s representatives and they think that maybe 25% of their employees live in Anacortes. That’s not how it used to be,” Walters said. “It used to be everybody who worked at the refinery lived in Anacortes. And now, even when you’re making a pretty good wage at the refineries, you can’t afford it.
“It’s really important that we have a mix of sufficient housing to support the industry and economy in Anacortes, to enable people who work here to be able to live here.”
City council member Anthony Young said the housing mix should include a “stair step” of small homes, modular homes and homes that offer a lease with option to buy.
“We have a housing shortage crisis,” Young said. “Ideally, we’d have a targeted place where we’re building starter homes that enable people to save some money and then obtain a reasonable mortgage. Then, after 5 or 10 years, they earn enough equity that they can look at buying up to meet their growing needs.”
Benefits of ownership
Tate explained how communities benefit from home ownership.
“People who work in the hospital and the schools are having to commute because of the unavailability and unaffordability of homes,” she said. “They have to commute which puts more vehicles on our roads and puts pressure on the housing availability in other communities, causing those costs to go up.
“It’s so important to be able to offer enough housing in the communities where people work. I mean, if you’ve got people commuting 30 minutes to get to and from work — you know, an hour a day — that’s a lot of gas and expense, and that adds to unlivable wages. So it’s really super important for people to be able to work and live in the same place.”
Home ownership also contributes to stable neighborhoods and families, Tate said. “The first thing is they’re paying property tax, so now they’re contributing to the community. Fire and police services and all the different infrastructure that the city has, they’re contributing to that.
“The other thing is the stability of not having to worry about increases in rent. One statistic I heard recently — this isn’t specific to Anacortes — is that in the past two years, where people’s rents have in the past gone up once a year by $50 or so, they’ve now gone up three times by hundreds of dollars. And so that leads to the uncertainty of, ‘Can I afford my rent?’”
Tate said Skagit Habitat for Humanity is picking up the pace in order to help meet the area’s affordable housing needs. The Skagit affiliate has, in the past, built an average of 1.5 homes per year. “We built four in the last 18 months and we plan to build 11 more by the end of 2025,” she said. “When I was hired three years ago, the board had put in place a goal of 15 homes a year. They wanted to start that in 2027 and it looks like we’re gonna hit it.”
— By Richard Arlin Walker
Read more about affordable housing in Skagit, San Juan and Whatcom counties, in Salish Current:
“Limited equity co-op model moves Lopez Island affordable housing forward,” May 30, 2024
“Meeting the housing need: four suggestions for comprehensive planning,” May 21, 2024
“New funding to build farmworker housing in the Pacific Northwest, nationwide,” May 1, 2024
“Affordable housing opens for occupancy on Bellingham’s waterfront,” April 10, 2024
“City seeks balance: housing needs and forest benefits,” May 5, 2023
“Home Trust selected to build San Juan affordable housing,” April 21, 2023