Washington Multifamily Update 2/24/2026
Compiled and edited by Aaron Kirk Douglas, Director of Market Intelligence, HFO Investment Real Estate
Washington’s housing policy conversation keeps oscillating between “how do we add supply” and “how do we pay for everything else.”
CoStar notes that Vancouver is an outlier in the Portland metro region. The city experienced heavy deliveries in 2023 and 2024. That plus steady additions in 2025 did not weaken fundamentals. Demand is expected to outrun new additions into 2026, and vacancy has crept toward a four-year low. A recent market report by Patrick Barry shows the county-level divide in a single picture: Clark County ranking stronger than Multnomah on recent population and employment metrics.
Legislatation
On the supply front, one small Washington bill is worth watching because it targets friction, not ideology. SB 5552 would define “kit homes” as homes 800 square feet or smaller made from premanufactured parts assembled on-site, and it would require the Washington Building Code Council to complete rulemaking on applicable building codes no later than March 31 of next year. The bill is the kind of policy that can quietly expand the “menu of options” in infill markets if local governments and builders can standardize the product.
Then there is the fiscal headline. SB 6346, the so-called “millionaires’ tax,” would impose a 9.9% levy on personal income over $1 million a year (household income). If enacted, it would take effect Jan. 1, 2028, with collections starting in 2029, and it is projected to generate $3.4 billion a year when fully running, affecting an estimated 21,000 filers. The bill directs proceeds first to public defense services, the Working Families Tax Credit, and tax breaks for smaller businesses, with remaining funds going into the general fund.
Housing Provider Planning Lawsuit Over Shelter Siting
Now, a Portland operational risk item that belongs in Washington, too. KATU reports that Pearl District Apartments LLC is threatening to sue the City of Portland and the Salvation Army over the NW Northrup Shelter next to the ORO Apartments, citing inverse condemnation, nuisance, and negligence claims. Washington property owners have experienced similar problems: when public shelters or service locations are built near regular market-rate properties, the negative effects can quickly show up in important areas like how fast units are rented, discounts offered, and costs for security and maintenance. Litigation threats also heighten the importance of siting decisions and operating standards, and lenders often take notice of such headlines.
National Housing News
Nationally, the supply cycle is shifting, which will matter for Washington underwriting even if Seattle and Tacoma still have their own micro-cycles. In December, starts for 5-plus unit buildings climbed to a 402,000 annual rate, while units under construction fell to 670,000, down 12.9% year over year. The National Association of Home Builders’ economists also expect starts to cool further in 2026 and 2027, moving closer to pre-pandemic levels.
And finally, a federal policy item with unfortunate implications for housing stability: HUD proposed a rule requiring proof of citizenship or eligible status for every resident in HUD-funded housing. News reports cite estimates of up to 20,000 families and as many as 80,000 people potentially losing assistance and housing, even for citizens who have difficulty obtaining paperwork. Whether the rule advances or not, it is a reminder that policy volatility can become occupancy volatility.
Watch HFO’s latest YouTube interviews and subscribe.