Legislature Helps Spur Small Affordable Condos
New condominium developments get a helping hand from the state legislature. That’s the hope anyway.
To many people Seattle offers an abundance of condominium properties. And, for buyers, that may be the case with a considerable number of listings to choose from right now. No matter what part of the city you’re looking in, there seems to be an endless supply of Seattle condos for sale.
But, that is not necessarily the case entirely. Most of the traditional condominium units have been resale units and are older stock. Except for the downtown Seattle area, there have been very few new condominiums built in Seattle over the past 7-8 years. And, those new condo builds have been limited to luxury high-rise buildings in downtown and First Hill, as well as a couple of pricey buildings along Alki.
Seattle has seen an explosion of townhomes, accessory dwelling units (ADU) and detached accessory dwelling units (DADU), which are technically and legally classified as a “condominium”, so they are included in the Northwest MLS as condos. Though, these are more akin to houses rather than the classic, traditional condo properties that are composed of smaller units in a multiunit building. They are also much larger, more expensive and make up a quarter of Seattle’s condo listings.
Besides townhomes, ADU, DADUs and luxury downtown condo buildings, very few new smaller and less expensive condominiums have been built or converted to condos over the past 10 years. According to Seattle Agent Magazine, since 2010 93% of Seattle’s multifamily units were rentals or not-for-sale properties. This has created a scarcity of affordable homeownership opportunities for the average Seattleite.
There are several reasons contributing to this and they have a common denominator – financial. One of the biggest factors is construction expenses with rising labor and material costs. Condos have higher construction standards and finish levels compared to apartments. Along with that is the limited availability and the cost of condominium construction loans. The downpayment and interest rates are higher than apartments and lenders typically require a large percentage of pre-sales before approval of the construction loan.
Another major factor has been Washington’s notorious condominium act, the liability for, and the exposure and cost of litigation for developers. As a result, except for expensive luxury high-rise, developers have shied away from condos and opted to construct apartments instead. It’s less expensive to build, more easily financed, and has reduced liability for developers.
With few traditional condominiums built over the past decade inventory stock remained stagnant. This “missing middle” of condominiums has resulted in scarcity and higher prices, thus reducing options for affordable homeownership in Seattle.
The state legislature has taken several steps to address this issue. In 2025 they passed HB1403, to help ease the constraint developers faced with the state’s implied warranty liability statute. HB1403 clarified the law’s vague language and created an insurance alternative, an express warranty for smaller scale developments, that reduce liability exposure and litigation.
However, the HB1403 was essentially limited to townhomes, ADUs and DADUs. Specifically, limited to developments with fewer than 12 units and 2-stories, or 3-stories if one level was utilized for parking or commercial use. At that scale, building new affordable condos remained financially unfeasible.
This year the legislature addressed that with HB2304, which was recently signed into law. HB2304 amends HB1403 by expanding the definition of small condo projects qualifying for the express warranty alternative. Now projects up to 4-stories and less than 12-units are included.
Potentially, this provides the opportunity for developers to build smaller, affordable condo buildings rather than focusing on townhomes. The median price for Seattle townhomes was $779,000 last month compared to $475,000 for traditional condo units. That may still seem high but the hope is with the encouragement of new condo development, thus increasing inventory, prices will become more affordable for first-time homebuyers.
Its true impact will most likely be realized in other parts of the state outside Seattle. Though, longer term, with the legislature taking small steps to provide alternatives from the state’s condominium act, that could spur more development within Seattle proper.
