Washington’s 10% Rent Cap; Spokane Continues Weighing Costly Mandate [7/21/26]
July 21, 2026
Aaron Kirk Douglas

Washington’s 10% Rent Cap; Spokane Continues Weighing Costly Mandate [7/21/26]

Washington Sets the 2027 Rent Cap at 10%

The Washington State Department of Commerce announced July 15 that landlords may raise rents by up to 10% in 2027, the maximum allowed under the 2025 law limiting increases to 7% plus inflation. The 2026 cap is 9.7%. Seattle-area inflation reached 4.5% in June. The limits exempt rentals built in the past 12 years, subsidized affordable housing, and certain properties where the owner lives on-site, and they do not apply between tenancies. Manufactured housing rent increases are capped at 5% regardless of inflation. Renters must first request a written correction from the landlord before filing a complaint with the attorney general. The state collected no penalties in the law’s first year, though the attorney general settled some cases. (The Seattle Times)1

Why it matters: The 12-year new construction exemption remains the single most valuable feature for developers.

Spokane Cooling Mandate Carries a $124 Million to $360 Million Price Tag

Estimates put the cost of Spokane’s proposed cooling requirement at between $124 million and $360 million across 23,000 to 40,000 rental units. The council first advanced the requirement in April with enforcement beginning in 2031, and a July 15 draft agenda replaced an 80-degree indoor threshold with language tied to risks to tenant health. A Rental Housing Association of Washington regent and former council member wrote that more than 60% of Spokane rentals predate 1980, with electrical panels never sized for that cooling load, putting compliance at $9,000 to $15,000 per unit. The council has cited the 19 deaths linked to the 2021 Northwest heat dome as the reason for the ordinance. (The Center Square)2. There is no future date set for discussion. The City Council plans to continue gathering community input as it resolves disagreements between residents and housing providers.

Why it matters: A per-unit cost of $9,000 to $15,000 exceeds a year of gross rent on much of Spokane’s older stock. With the state rent cap limiting cost recovery, some owners would defer other capital work or exit rather than retrofit.

Spokane Officials Push Middle Housing Through Permitting Reform

Panelists at a Greater Spokane Inc. discussion July 14 said the region needs a regulatory framework that permits middle housing by right rather than through special processes. Spokane County’s median home price in June was $436,250, according to Spokane Realtors, down slightly from a year earlier, against about $170,000 in 2017. Spokane Valley’s community and economic development director said infill now holds the greatest opportunity and that businesses cannot grow if workers have nowhere to live. The county planning director pointed to competition from Kootenai County, Idaho, where builders face a less restrictive set of regulations. (The Spokesman-Review)³

Why it matters: Spokane is trying to make small-scale infill routine at the same time it weighs a cooling mandate on existing stock. Which of those two moves lands first will tell owners a great deal about the direction of the market.

Seattle Moves to Limit Land Use Appeals

The Seattle City Council’s land use committee took up a proposal from Councilmember Eddie Lin on July 15 to eliminate hearing examiner appeals of land use legislation filed under the State Environmental Policy Act. Opponents would instead appeal to the state Growth Management Hearings Board or King County Superior Court, allowing legislation to take effect while review proceeds. Lin said a small group of activists and attorneys files most appeals. Council President Joy Hollingsworth proposed adding a 30-day public comment period to decisions exempted by the bill. The comprehensive plan update is stalled until next year at the earliest. Separately, the council unanimously approved expanding Utility Discount Program eligibility to 60% of Seattle median income next year, with increases to 70% in 2027 and 80% in 2028 requiring further legislation. About 36% of eligible residents currently participate. (PubliCola)4

Why it matters: SEPA appeals have been the main tool for delaying upzones in Seattle, and removing the local layer would speed comprehensive plan implementation. The utility discount expansion also shifts some collection risk off owners of naturally affordable units.

Five of Nine Top Western Retirement Spots Are in Washington

Investopedia’s ranking of the best places to retire in the Western United States placed five Washington communities in the top nine: Omak, Pasco, Pomeroy, Spokane, and Vancouver. The list weighed cost, healthcare access, and lifestyle across 11 Western states, including Oregon. Washington’s lack of a state income tax and a 0.75% effective property tax rate were cited as advantages, and the state’s capital gains tax does not apply to pensions, 401(k)s, or IRAs. The report noted that smaller listed communities offer limited specialty healthcare and fewer cultural amenities. (Investopedia)⁵

Why it matters: Retiree in-migration is a durable demand source that does not depend on local job growth. For owners in Spokane and Vancouver, it supports the case for age-targeted amenities and longer average tenancies.

National and Federal Signals

Multifamily Starts Jump 76% in June

Overall housing starts rose 19% in June to a seasonally adjusted annual rate of 1.43 million units, according to HUD and the U.S. Census Bureau. Multifamily starts climbed 76.2% to an annualized 532,000 pace, up 17.2% from June 2025, while single-family starts slipped 0.2% to 895,000 and are down 3.2% year over year. Overall permits fell 3% to a 1.37 million annualized rate, with multifamily permits down 4.2% to 496,000 and down 5.7% from a year ago. Combined starts were 4.4% lower in the West on a year-to-date basis, the only region in decline. Apartments under construction totaled 682,000 units. (Floor Covering Weekly, citing NAHB) 6

Why it matters: Starts jumped while permits fell, which means June reflects projects already in the queue rather than fresh capital commitments. The West was the only region down year-to-date, supporting the thinner Pacific Northwest pipeline that owners are counting on.

Commercial Real Estate Sentiment Settles Into Neutral

The Commercial Real Estate Finance Council’s second-quarter Board of Governors survey found that 68% of respondents were neutral on the year ahead, the highest neutral reading since at least 2022, with 24% optimistic and 8% negative. Pessimism stood at 22% in the first quarter. About 52% expect occupancy, rents, and net operating income to hold steady, and 11% expect deterioration, the lowest negative reading since mid-2024. Expectations for stronger debt demand fell to 45% from 71% in March and 97% at the end of 2025. JLL reported $113 billion in first-quarter U.S. deals, up 25% year over year, while MSCI counted $42 billion in May with $6.8 billion from mergers and acquisitions. Only 13% expect artificial intelligence to materially reduce office demand within a year. (CRE Daily, citing CREFC) 7

Why it matters: Neutral is a functional market. Sellers waiting on a rate cut to reprice now face buyers who have accepted higher-for-longer, which should narrow bid-ask spreads through the back half of 2026.

Sources:

1. The Seattle Times, “WA announces cap on rent hikes for 2027,” July 15, 2026 (link not publicly available)

2. The Center Square, “Washington landlords could face up to $360 million under Spokane cooling mandate,” July 20, 2026 (link not publicly available)

3. The Spokesman-Review, “Spokane area officials focus on streamlining permitting to allow more middle housing,” July 14, 2026

4. PubliCola, “Seattle May Actually Limit Anti-Housing Land Use Appeals; More People Will be Eligible for Utility Discounts,” July 14, 2026

5. Investopedia, “9 Best Places to Retire in the Western U.S. for Affordability, Healthcare, and Quality of Life,” July 18, 2026 (link not publicly available)

6. Floor Covering Weekly, “Multifamily Gains Lift Overall Starts,” July 17, 2026

7. CRE Daily, “CRE Investor Sentiment Stabilizes Amid Higher-for-Longer Rates,” July 2026 (link not publicly available)

#MultifamilyMarketwatch®  #WashingtonMultifamily  #SeattleRealEstate  #SpokaneHousing  #HousingPolicy

Follow HFO for weekly multifamily market intelligence across Oregon and Washington. #MultifamilyMarketwatch®

About HFO

HFO Investment Real Estate is Oregon’s and SW Washington’s leading multifamily investment brokerage by transaction volume. We specialize in apartment investment sales. Looking for someone to sell your apartment building? Call us at (503) 241-5541.

Washington’s 10% Rent Cap; Spokane Continues Weighing Costly Mandate [7/21/26]

Back to Insights & Updates