Seattle leaders are exploring various options to address housing availability and affordability issues. One of the proposals entails taxation of non-resident homebuyers. Under the policy, foreign buyers would pay high taxes to acquire houses in the area (Beekman, Brunner & Rosenberg, 2017). The other approach involves the imposition of taxes on empty investment properties. Thus, developers would have to pay taxes on vacant homes. Leaders advocating for these changes believe that enacting the tax policies would help tame rising home prices. However, the City Attorney’s Office has termed the laws as illegal (Beekman et al., 2017). The declaration compels the mayoral finalist behind the idea to turn to Seattle council members for help in pushing forth the policy. Although city lawyers and the King County assessor denied the proposal, the plan has its advantages and disadvantages.

Taxing overseas buyers and unoccupied homes will generate revenue for the Seattle government. Implementing the policies will create more revenue for the local government. The targeted group of buyers is made up of wealthy individuals who operate behind shell corporations. These companies facilitate transactions and the acquisition of luxury homes for non-resident buyers (Beekman et al., 2017). Thus, changing local laws to introduce taxes on residents could have a significant impact on revenue. Similarly, targeting investors who develop high-end properties and let them remain vacant will impact revenue collection. By parking their empty houses, they hope to acquire better deals as the properties increase in value over time. Taxing these two groups will result in an increase in government proceeds for Seattle.

Implementing the proposed policies will gradually result in the availability of some houses for average buyers. Imposing levies on nonresident buyers will discourage homeownership in the region by foreigners. The taxes will make acquisition costs on the already pricey luxurious homes even higher (Beekman et al., 2017). When potential buyers conduct research and compare pricing, they will likely opt to avoid incurring extra expenses. A decline in purchases by foreigners can influence developers to consider investing in affordable housing strategies. Besides, taxation of unoccupied properties will impose an additional cost on developers. Thus, it may motivate them to avoid sitting on empty homes. Allowing potential buyers to access the buildings may free up them for occupancy. Therefore, implementing the policies may address housing availability.

A critical concern of amending local laws to include the proposals is that it could set a precedent that could lead to racial discrimination. According to the King County assessor,  majority of the buyers in the luxury-home market are people from China (Beekman et al., 2017). Hence, he views the new policy as discriminatory. By targeting a group of buyers that is predominantly Asian, Seattle could create an impression that it supports anti-Asian attitudes. Besides, the request for the collection of identities of buyers is a cause for alarm. It could result in the creation of a racially stratified list and perpetuation of an ideology that foreigner, mainly, Chinese, are taking away homes from the local people (Beekman et al., 2017). Thus, such a policy could encourage xenophobic feelings among the local community.

Adopting policies that increase the cost of doing business in Seattle is not a good strategy. Although the taxes may discourage non-residents from acquiring homes in the area, it will impact decision making among developers and investors. Extra charges on vacant premises could also have a similar influence on financiers. The policy will reduce sales as developers cannot sell their properties to foreigners due to inflated costs. It will also compel others to place vacant properties on the market or pay taxes (Beekman et al., 2017). The outcomes in both measures are unfavorable to investors. While they may result in slightly reduced prices, they will not contribute to availability. Ease of use may not increase since the policy discourages investors from pursuing their preferred choice of development. Thus, investment in real estate development may decline as financiers may opt for more favorable business environments.

Targeting a group of buyers by altering local laws will not solve the affordability crisis. The basis of the policy is that focus on the development of luxury homes has inflated prices in the Seattle housing market. However, the assessor does not attribute the affordability crisis to the luxury home market. Instead, pricing varies depending on supply and demand. A review of the situation in Vancouver indicates that enactment of taxes on foreign buyers and owners of vacant premises has not addressed affordability issues. The policy generated $81 million in revenue and caused a drop of ownership from 16% to 6% (Beekman et al., 2017). While the prices reduced upon enactment of the law, they continued to soar. Therefore, the policy is ineffective in dealing with affordable housing in the long-term.

In conclusion, the lack of affordable housing is a primary concern in Seattle. The number of available and reasonably priced houses is inadequate to meet the area’s demand. There is a need for the region’s leaders to formulate an innovative and unique policy that will combat unavailability. The debate on the impact of modifying local laws is an attempt to address the issue. The suggested strategy entails imposing of taxes on non-resident buyers and owners of vacant properties. Its merits include generation of income for the government and discouraging investment in high-end projects. Its demerits include driving away real estate investors as well as promoting racial stigmatization. Thus, the policy is inefficient in solving housing affordability issues.

References

Beekman, D., Brunner, J., & Rosenberg, M. (2017). Proposed Seattle taxes targeting foreign buyers, investment properties take fire. Retrieved from https://www.seattletimes.com/seattle-news/politics/proposed-seattle-taxes-targeting-foreign-buyers-investment-properties-take-fire/

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