Residential Zoning Changes Come to Washington State. What Does It Mean to Me?

It feels to me that 2023 was the year that elected officials here in the state of Washington started to really take the housing affordability crisis seriously. I say this as it was the year when a significant number of legislative policies were put forward seeking to address this remarkably important issue.

Of course, not all proposals bought up for consideration made it to the Governor’s desk for signature. Notable failures included a bill that looked to legalize lot-splitting[1], another that proposed increasing housing density[2] around nodes of mass transit, and one that established accountability[3] for housing production at the jurisdictional level. All fell to the wayside; however, several significant pieces of legislation were signed into law and none – so far – has been more far reaching than HB 1110[4].

As of July 2023, cities can now approve (subject to certain population thresholds) development of attached housing products – ranging from duplexes to sixplexes, townhomes to cottage housing - on land that had been limited to the development of traditional single-family detached housing.

Unsurprisingly, this forward thinking – and wide ranging – legislation proved remarkably contentious for the simple reason that changes in residential land use policy can immediately polarize a population. On one side, housing advocates cheer any and all efforts to increase the stock of housing (with the goal of improving affordability) while on the other side, homeowners immediately crane their “NIMBYistic” heads!

What I find remarkably ironic is that – in public – homeowners will happily offer a sympathetic ear to those fighting for households who can’t afford a home to rent that’s anywhere near their workplace or who see the dream of homeownership increasingly beyond their reach. However, any law that could negatively impact the value of our own homes – regardless as to how remote that possibility may be – quickly becomes an issue to be fought at every turn.

And because I have seen this scenario play out in multiple markets across the country, it actually led me to coin this phrase:

“Liberalism… ends at the driveway.”

I believe that HB 1110 offers some real opportunities, but will this these changes to policy have the significant impact that housing proponents wish for – and that objectors fear? I fear not.

How Did We Get to This Point?

Western Washington has been facing an affordability crisis for decades. Unfortunately, however, it is only relatively recently that elected officials have started to take the matter seriously.

A plurality of us economists agree that it is imperative that we address the affordability crisis so that the State can remain economically competitive, as well as to accommodate our ever-growing population.  In order to do so, the market needs to produce a lot more housing units, but that is easier said than done.

The biggest – although certainly not the only - impediment to meet housing demand is that land on which to build more housing is in short supply!

Any market is subject to prior decisions, and sometimes the impact of choices made can be felt long after the fact.

For example, up until the early 1920’s, Seattle’s land use code allowed multifamily dwellings and detached houses to be built everywhere framed buildings were allowed. Essentially, the decision as to what to build was left to the homebuilder. (Imagine that!)

However, Seattle’s first zoning ordinance - the 1923 Comprehensive Plan - ruled that single-family structures were the preferred product type, and this policy led to single-family housing being the sole product type on more than 72% of residentially zoned land throughout the entire city!

I am offering this brief history lesson as the echo of 100-year-old policy is being felt today with much of the region now filled with single-family homes, which significantly limits available land on which to build much needed housing.

HB-1110 looked to help address this by allowing builders to redevelop sites already occupied by single-family homes. However, a builders’ ability to buy existing homes, raze them, and then rebuild is, more often than not, a financially unviable proposition.

That said, and regardless of market realities, detractors remain skeptical and require “proof of concept” showing where this type of program has been successful.

Changing Zoning Density Has Been Done Before

Bills such as HB 1110 (and its companion bill, SB 5190) are not unique to Washington State.

In fact, the idea of adding density within traditional single-family neighborhoods had its genesis in Minneapolis, Minnesota where, in 2018, a group known as Neighbors for More Neighbors were at the heart of what became one of the biggest land use stories in recent years with their proposal to legalize duplexes and triplexes wherever single-family housing was allowed.

Following being approved by their legislators, there was somewhat of a “domino effect” with other states not just taking note of Minneapolis’ plan but bringing their own remarkably similar legislation to the table with the goal of building on others perceived success.

In 2019, Governor Brown signed Oregon’s version of the Minneapolis bill, HB 2001[5], and in 2022, California enacted Senate Bill 9 – legislation requiring all California cities to allow for the development of up to four homes on a single lot.

Have these New Laws Been Impactful?

The answer is not really, at least not yet.

In Minneapolis, data shows a total of 350 units have been permitted; however, this includes fourplexes so overstates the real number. Moreover, the data does not delineate permits issued for development on land unaffected by the zoning changes.

In Oregon, it’s still somewhat too early to say what the impact of zoning changes will be – primarily because the legislation was phased-in with zoning changes starting in Oregon’s medium-sized cities in 2021 and within the Portland Metro region and the state’s other largest cities in mid-2022.

Census data shows that Oregon’s large cities have issued permits for 501 duplex and triplex/fourplex unit permits were issued. With the population of Oregon’s large cities measured at more than 2 million, I think that you will agree that this level of permit activity hardly represents a boom!

In California, the impact has also been minimal with some of the state’s largest cities reporting that they have received just a handful of applications for either lot splits or new units, while other cities reported none.

Unsurprisingly, There Was Considerable Pushback

As revised zoning policies were being put in place, lawyers were busy trying to put a stop to them.

Some “innovative” objections included one put forward by Smart Growth Minneapolis, the Audubon Society of Minneapolis, and Minnesota Citizens for the Protection of Migratory Birds who sued to force the city to conduct an environmental review, alleging that “a plan allowing the increase in density would likely pollute natural resources because of the increase in hard surfaces, soil erosion and increased runoff, among other adverse effects.”

In California, the Bay area suburb of Woodside went so far as to declare all its single-family zoned areas as mountain lion sanctuaries! Unsurprisingly, the move was short lived, with the legislature subsequently passing a clean-up bill[6] that closed some of the loopholes that were being used.

The Bottom Line

Data has shown that these supposedly “radical” changes in land use policy have hardly been a panacea, and I can’t say that I am surprised.

For most homeowners, the thought of going through the process themselves to rezone the land their home sits on is daunting and, although developers are unarguably better positioned to purchase several houses to rezone and achieve some economies of scale, it’s an arduous process and likely financially unviable in the current economy.

Although I hear the concerns of those who do not want to see change – certainly not in their own neighborhoods – inaction is simply not an option.

The bottom line is that we need more housing to meet the needs of our burgeoning population, to encourage younger residents who have found it next to impossible to get their foot on the first rung of the housing ladder to achieve the goal of homeownership, and to allow us to be competitive when trying to attract businesses looking to expand within our State.

Legislation such as that enacted in Washington, Oregon, and California should be applauded, not condemned. Although it will certainly not solve the housing issues that are becoming endemic across the country, it is a very good start.

[1] HB 1245

[2] HB 2160

[3] HB 2113

[4] HB 1110

[5] HB 2001

[6] SB 450