The biggest problem facing the housing market is the terrible job banks and brokers are doing pricing foreclosed or short sale properties. If the banks really cared about these assets, they would pay attention to the way homes are (or, are not more precisely) being prepared for a sale and how the brokers mismanage the marketing of these homes.
Seattle offers a number of lucrative incentives, including no required off-street parking, Incentive Zoning, and the Multi-family Tax Exempt program. Most new construction qualifies for one or more city incentives. The incentives must be lucrative to attract builders from places like Japan and Australia.