It is no secret: Seattle’s going through some things.
Yes, the region’s housing economy is booming, and the city is one of the fastest-growing in the United States. The question is, however, at what cost?
Just as it is in the middle of a housing boom, Seattle is also experiencing a housing crisis. In an estimate by the City of Seattle, 40 percent of the city’s residents are considered low-income — making less than 80 percent of the area’s median income — in a real estate market where rents have risen by a third in the past 10 years. An economy driven by the region’s higher-salaried technology sector has prodded builders to raise real estate prices to unattainable levels and leaving many residents behind.
If you’ve heard about Seattle’s housing crisis, then you probably know about its homeless crisis. According to the Puget Sound Business Journal, King County’s homeless population has nearly doubled since 2019, the second-fastest rate in America. A report by Challenge Seattle reveals the homeless rate skyrocketed 42 percent annually in King County over the last five years, despite a 21 percent increase in funding for homeless services over that same time span.
“We are at a crossroads,” says Challenge Seattle CEO and former Washington State Governor Christine Gregoire. “We need to get our arms around this problem now and allow people to permanently exit this cycle.”
Affordable housing finds a community ally in local credit unions
In a region desperate for investment in real estate and affordable housing for everyday, hardworking Washingtonians, a collective of forward-thinking and community-focused credit unions banded together to invest $11.1 million in a 686-unit mixed-housing project in nearby Renton, Wash., to address the exacerbating challenge. The participating credit unions — BECU, Salal Credit Union, Sound Credit Union, Verity Credit Union, and Washington State Employees Credit Union (Disclosure, WSECU is primary investor of QCash Financial) — filled the final gap necessary to fund the project.
The first endeavor for the Evergreen Impact Housing Fund (EIHF), the Solera housing development is managed by the Seattle Foundation, a philanthropic community organization that strengthens the health and vitality of the greater Seattle region. Per the EIHF, as of late November Solera is projected to be ready to rent in 2024 for homebuyers averaging $54,000-58,000 per year, or 50 percent of King County’s annual median income.
Not an insignificant point: The investment from the consortium of credit unions will result in below-market returns on their money. But when it comes to people helping people, seeking a return isn’t really the point, is it?
“The amount of interest is expected to be very low and less than the rate of return we could have otherwise made on an investment like this,” says WSECU’s vice president of public relations Ann Flannigan. “Our intent is to incite developers to build affordable housing. Our goal is about community impact, not revenue.”
Flannigan added that the state of the local economy helped WSECU decide to contribute to such a necessary residential project. “The Puget Sound region has been among the hottest housing areas in the nation. But hot for some means unattainable for others. Gaining access to affordable housing in urban areas has been a brutally difficult challenge for many residents. Joining the collaborative fund was a way for WSECU to help address the housing need along with seasoned partners, even if we didn’t have expertise in this area.
“The united effort makes a statement,” Flannigan continues. “Credit unions are showing up and addressing community needs. This is an expression of the value of credit unions as an industry.”
Credit unions’ common cause in helping communities find financial inclusion
This credit union collective coming together for the benefit of their local communities represents a perfect case study for how the credit union movement is an essential cornerstone for communities throughout the nation.
If we have learned anything over nearly two years, it’s how to adjust to new circumstances amid uncertainty. As inconvenient as it is, we know how to pivot and serve members as our communities contend with lost jobs, mental health struggles, civil uncertainty and doubt, lost businesses, and dealing with all of that following the sickness or loss of family and friends.
If there is one benefit, one silver lining, it’s the fact that credit unions have truly lived up to their mantra of “people helping people” by finding new ways to offer the financial inclusion initiatives that help members and greater communities weather this historic storm. Since early March of 2020, it was abundantly obvious that while we were all in that same storm, not every one of us was in the same boat. Most of the consumers who worked on-site jobs — jobs that made many other consumers’ jobs possible — were lower-wage earners, and an inordinate percentage were individuals of color. Many of them put themselves in fundamental danger to earn those paychecks, while many others lost their jobs as restaurants, retail stores, and other public-facing service jobs vanished.
True to form, a report by Callahan & Associates in January 2021 found that credit unions responded quickly to assist members in managing the financial consequences of COVID with loan deferrals, slowing or suspending repossessions, expanded credit card limits, Paycheck Protection Loans (PPP), waived fees, and more.
But it can’t end there. There have been programs offered during the pandemic that will need to be continued, if adjusted, if the pandemic wanes to help those still dealing with the economic fall-out. It’s likely many financially vulnerable members and consumers will continue to face the adversities that made the original programs so critical at the start of the pandemic. While we may believe the pandemic could wind down at some point, inequality will continue to rise. So how can credit unions assist members and consumers in regaining and maintaining financial inclusion, stability, and equality?
There is little doubt the Biden administration recognized the credit union movement’s impact when it awarded 244 Community Development Financial Institution (CDFI) credit unions $401.8 million to invest in the communities they serve to recover from the pandemic. Treasury Secretary Janet Yellen declared “in serving places that the financial sector hasn’t historically served very well, [CDFIs] lift our whole economy up. By one measure, every dollar injected into a CDFI catalyzes eight more dollars in private-sector investment.”
There was a belief during much of the last decade that the time of digital-first member and consumer interaction with their financial institutions was diminishing. The year 2020 only accelerated that potential reality due largely to COVID. A recent survey of financial services executives by Microsoft found that three-quarters claimed that at least half of their customers’ banking activities had changed from in-person to digital.
Maintaining that neighborhood touch while adjusting to an increasingly digital landscape will be a key point-of-difference throughout the credit union industry. Members are becoming increasingly consumer-savvy and comfortable using their financial institution’s digital assets for daily tasks like depositing a check or more personal engagements like retirement planning, reconciling debt, or keeping an eye on their credit.
A “people-helping-people” approach also entails pushing forward on more inclusive designs of your credit union’s digital assets. Whether you’re redesigning your website, considering the progression of your credit union’s phone app, or upgrading a chat functionality to your multi-choice contact options, your members’ concerns for navigating and operating your digital tools needs to be paramount to providing them a successful and productive user experience.
Whether it’s a group of credit unions coming together to build housing for their community or a CDFI creating forward-thinking initiatives to lift up local neighborhoods, we celebrate your efforts to help your members reimagine possibilities, regardless of what the future brings.
