Housing FAQs

The City of Bellingham’s goal is to include a full range of housing choices appropriate for all income levels that meets the diverse and growing needs of our community, while ensuring Bellingham remains a desirable place to live. The information below addresses common questions about housing issues in Bellingham, including what the City is doing now and will be doing next.

  1. There was a lag between population growth and home construction. Housing prices are driven by the regional as well as the local economy. Up and down the I-5 corridor, home values have increased as the region attracted high-paying jobs and subsequent population growth. Rents soon followed suit. Bellingham’s growth has been no exception – nor is it unique. Between 2000 and 2020 the population for both Bellingham and Washington State grew by more than 30%.

    This growth continued throughout the Great Recession of 2006 to 2013 when Bellingham’s population increased by over 6,500 residents. During this same seven-year period housing construction slowed by more than 70% and the City issued building permits for just 1,889 housing units. As housing production fell behind population growth, increasing demand drove prices further upward.
  2. There is a gap between average incomes and housing prices. The inventory that is affordable to middle-income households is shrinking. Demand is increasing, but wages have not kept pace with housing costs. From 2000 to 2020, the median family income in Bellingham increased by 20% while the median home value increased by nearly 80% (adjusted for inflation). The homes that are being built on the private market continue to serve the needs of higher-income households, but as some buyers are willing to pay more, there are fewer and fewer units available within a price range that is affordable to a median-income family. Our zoning historically offered only limited areas where more affordable types of homeowner housing (duplexes, condos, and townhomes) were allowed to be built. Recent efforts such as the changes to the Residential Multi (RM) codes, Infill Toolkit, and updated Accessory Dwelling Unit regulations have started to address this growing concern.
  3. This is a nice place to live. Bellingham residents are extremely positive about the quality of life in Bellingham. More than 90% of respondents in the recent Bellingham Residential Survey rated our city’s quality of life as either excellent or good. Our high quality of life – including natural beauty, public services and amenities, and good schools – will keep home and land values high and continue to attract new residents. That is a success!

The cost of building a new unit is influenced by many factors. A local government does not have control over factors such as natural population increases, mortgage interest rates, regional economic growth, or the price of building materials, supplies, and labor. These comprise the majority of the costs associated with creating new housing.

The following are the tools that a city does have at its disposal, which can directly or indirectly affect the price of housing:

  • Zoning (density) – adding more density increases land values, but can also reduce the cost of land per housing unit
  • Taxes and fees – make up a percentage of the cost of new housing which are needed to fund services provided by the City
  • Incentives – tax breaks or density bonuses, for example, can help spur the private market to build in desired areas
  • Land supply (through annexations) – land is needed to build housing, but must be done in accordance with the Growth Management Act
  • Permitting processes and timeline – time equals money, and faster processing of permits can help save money
  • Housing levies – voter-approved taxes that support the construction of homes affordable for low-income and vulnerable populations

Federal and State law limits the options available to any city. Some of the strategies that are not within a municipality’s legal options include:

  • Enacting rent controls
  • Limiting the number of people who choose to move to Bellingham
  • Gifting of public land or credit to individuals or organizations that are not low-income
  • Requiring private property owners to sell their land, or use it for a specific purpose (such as more housing)
  • Addressing the current Condominium liability regulations

Although not limited by law, some other commonly suggested strategies have significant shortfalls:

  • Constantly expanding boundaries in search of cheap land is a false economy. The cost of providing services to new development at the outskirts of a city is 2.5 times more expensive than closer in. New residential development on the “fringe” is typically of a density that does not fully cover the cost of services. This cost deficit falls on existing residents and businesses.
  • Reducing fees does not guarantee lower home prices or that these savings will be passed on to residents; the market plays a more substantial role in determining housing cost.

Experts agree that increasing supply of all housing types is important and will affect affordability. But, housing affordability is a complex, pervasive issue evolving from decades of land use practices, persistently slow wage growth, and other systemic issues. Solving the problem will require broad and significant change in land use, employment, financing, and other related arenas.

A healthy housing market is one piece of the affordability puzzle. There are many metrics for success, some of which include:

  • The number of units produced should keep up with population growth, meaning there are enough units on the market available for rent and for sale.
  • A healthy residential vacancy rate would keep rents from rising too quickly. A healthy vacancy rate is 5-7% for rentals and around 2% for homeowners. Bellingham’s rate is currently around 3% for rentals and around 1% for homeowners.
  • A balanced proportion of homes are affordable for homeowners earning the area’s median family income. It is estimated that less than 30% of Whatcom County housing is affordable to a household earning median family income. A more balanced proportion is around 50%.
  • An adequate supply of publicly subsidized housing. Those earning below 50% of the median income cannot afford housing in today’s private housing market. The community needs to have a supply of permanent supportive, transitional, and emergency shelter housing and related support services to help low-income individuals and families remain in housing.

Between 2013 and 2016 Bellingham’s composite (owner and renter) vacancy rate dropped from about 3% to about 1.7%. Since 2016 it has been slowly recovering and is at about 2% now. The vacancy rate only goes up when housing production out-paces population growth. The City’s adopted 2016-2036 population forecast assumes growth of about 1,350 people per year. Over the past five years Bellingham has grown by an average of about 1,440 people per year. Over the past 10 years Bellingham has issued building permits for about 6,800 housing units or an average of 680 per year. About a quarter of these units were single-family homes and three-quarters were multi-family units. There were 1,286 new units permitted in 2021, which is almost 2x Bellingham’s ten-year annual average. Most of these will be built in the next 1-2 years.

If population growth and household size remain steady Bellingham would need to build about 210 single-family units and 650 multi-family units (860 total units) each year for the next five to six years to return to a 2% homeowner vacancy rate and a 5% rental vacancy rate. This represents a production increase of about 25% or 40 single-family homes and 135 multi-family units per year compared to the average of the past 10 years.

Returning to a healthy vacancy rate can help to stabilize prices, but it will not lower housing costs. Strong demand will continue to mean that home values will appreciate, and low-income residents will require subsidized housing to continue to live in Bellingham.

Urban Villages – A housing unit built near pre-existing infrastructure is less expensive for everyone. To that end, Bellingham has adopted six urban village plans and is working on a seventh. These dense, mixed-use developments leverage decades of public investment in infrastructure and provide opportunities for diverse resilient communities where people live close to jobs, transit, schools, services, and other amenities. The City has established incentives to make development in urban villages economically feasible and the 2006 and 2016 Comprehensive Plans allocated about a third of future growth to these areas. Since 2006 about 2,800 housing units have been built in urban villages or 40% of all housing built in Bellingham. These areas have also accommodated about 700,000 square feet of new commercial and industrial space.

Infill Toolkit – Adopted in 2009 and updated in 2021, Bellingham’s Infill Toolkit encourages the creative use of smaller vacant lots or underused land, to reduce sprawl, encourage sustainability, and provide a variety of smaller housing forms (townhomes, cottages, etc.). Under these development tools more than 600 housing units have been completed or approved, and an additional 150 are currently in the application phase.

Accessory Dwelling Units (ADUs) – In 2018 Bellingham adopted the ADU development code and since then more than 200 have been permitted in the City. These small units provide a relatively affordable option for people to enjoy the advantages of living in an established neighborhood with convenient access to services, transportation, schools, parks, and trails. The City is amending the ADU regulations in 2022 to improve development standards, streamline the permitting process, and ensure consistency with new state legislation.

Multi-family Code Update – In 2021 Bellingham adopted revised multi-family zoning regulations that are simpler to understand and administer and include minimum density thresholds to ensure development goals are met.

Land Supply – Since 2006 Bellingham has approved 11 annexations adding more than 1,700 acres of land to the City. Additional annexations are under review.

Preserving Existing Affordable Housing – Sometimes low-income homeowners face housing instability if they can’t afford basic repairs on their home, such as fixing a roof or updating their plumbing. Since 1977, the City’s Home Rehabilitation Program has helped over 1,000 homeowners stay in their homes by offering low-interest loans for essential repairs. The average loan amount is $14,360.

In 2022 Bellingham adopted a Manufactured Home Park Overlay Zone that provides a level of protection for owners of the 850 unsubsidized affordable homes in the City’s ten manufactured home parks.

Over the past six years, the City has provided funding to the Opportunity Council for their Manufactured Home Repair Program to assist owners with essential home repairs (approx. $125,000/year).

The City also assists existing owners of affordable multifamily housing and shelters in repairing or rehabilitating facilities through the emergency repair program or annual competitive funding program.

Building Affordable Housing – The City directs about $9 million dollars each year to fund local housing programs. These funds come from our community through the local Affordable Housing Sales Tax, and Bellingham Housing Levy; and from federal Housing and Urban Development (HUD) Community Development Block Grant and HOME funds. Additional one-time emergency federal and state funds may supplement the typical annual spending.

About $5 million of these dollars are directed annually to the production of affordable rental housing. The City partners with non-profit developers and leverages local funds with other funding sources at more than a 1:8 ratio. To date, these programs have built or maintained over 1,400 housing units and include both income-restricted rentals and supportive housing which includes case management services.

Rental and Homebuyer Assistance – The City provides about $3 million dollars annually in rental assistance and supportive services to assist low-income tenants to remain in their housing and support other human services. And Bellingham partners with Kulshan Community Land Trust and the WA State Housing Finance Commission to help low-income home buyers with down payment assistance and to help cover closing costs. To date, the City has helped 128 low-income families purchase homes in Bellingham. The average down payment assistance provided has been $26,000.

Inclusionary Zoning Study – In 2023 the City will conduct a market and feasibility study to see if inclusionary zoning could work in Bellingham. Inclusionary zoning is a regulatory tool that typically requires each new residential development to provide a percentage of housing units affordable to targeted incomes. These programs often allow incentives like a “density bonus” to make them more economically viable.

Consolidated Plan Update – An update to the City’s 5-year Consolidated Plan is underway, with the Assessment of Fair Housing providing the foundation for this work. The Consolidated Plan is the framework within which the City’s spending on services and housing that benefit low-income household’s takes place. It lays out the needs, gaps, and priorities, with implementation beginning on July 1, 2023.

Infill Toolkit – The City will also be evaluating opportunities to create greater housing availability and choice by revisiting areas that the Infill Toolkit is allowed.

Comprehensive Plan Update – Work on the 2025 Comprehensive Plan update will begin in 2023. This effort will include community-wide discussions of how Bellingham can improve housing supply, choice, and affordability for households in all income levels.

Process Improvements – Evaluate options for further process improvements to help streamline the City’s land use and permitting timelines.