The Key To Beating Housing Inflation Isn’t Gimmicks, But More Housing

The recent headline in the Seattle Times, “WA House passes bill banning single-family zoning,” was misleading. The bill in question, House Bill 1110 currently being considered by the state senate, doesn’t ban single-family zoning but sets up a series of “ifs” that could allow a liberalization of zoning rules in exchange for meeting onerous “affordability” requirements. The intention behind the legislation is a good one – more housing supply means more options for people who need it and lower prices – but the requirements won’t result in the end of single-family zoning or more affordable housing.

The proposed legislation would allow larger cities like Seattle that engage in comprehensive planning under the state’s Growth Management Act, to plan and permit as many as six houses on a lot and would also reduce costly parking requirements. The bill also exempts some plans and projects from appeals under the State Environmental Policy Act (SEPA), a process that adds time and cost to housing projects when angry neighbors oppose new housing. The new standards would be expansive, allowing more density near transit stops which, in Seattle, in almost every neighborhood.

So far so good, but a closer read reveals that while the new standards require that at least two of the units of the six have to be “affordable” to people who earn 80% of Area Median Income (AMI) or $76,250 or less for a family of two. Monthly, based on the Department of Housing and Urban Development (HUD) standards of affordability, that household could afford a housing payment of about $2,000 a month. But the median house in Seattle according to Realtor.com sells for about $794,000. A mortgage for a house at that price, with a 10% down payment at 7% interest, would be over $5,000 per month.

If a builder wanted to take advantage of changes to the land use code in Seattle, if they were made by the Seattle City Council without any additional requirements, they would either have to absorb a substantial loss on two of the six units or, more likely, would have to increase the price of the other four units. With current interest rates rising and economic uncertainty increasing, it’s unlikely any builder would build anything under the proposed changes. Even in the best of times, such a discount, applied for 50 years, would not encourage more building.

And as for multifamily rental housing, already, the City of Seattle has imposed a fee on all new multifamily housing development under the city’s Mandatory Housing Affordability (MHA) program. The intention of that program was to generate money for new subsidized buildings built by nonprofits. The problem is that the fee has been depressing production of housing that the new proposal intends to encourage. According to the Master Builders Association, MHA fees have “severely limiting new townhomes—a lower-cost, family-sized homeownership option. Post-MHA, townhome permit intake has dropped by nearly 70%.”

And the problem is that MHA has produced, according to the last report from the City, a paltry 712 units since the program passed in 2019 at a cost of more than $58,000,000 in fees. The City had promised to produce tens of thousands of units by 2025 using MHA, and even allowing for production slowdowns caused by Covid, the program is not yielding much housing.

The hyperbole raised by HB1110 isn’t warranted on either side of the housing debate. Single-family preservationists don’t have to worry about bulldozers appearing anytime soon, even if the bill passes. And boosters of ending single-family zoning will have to try again. The legislature’s half measure will create more headlines and heartburn than housing.

What is needed in Washington, and all across the country, is an end to zoning all together. Zoning does nothing but add more rules and limits to housing production. Mandates for fees limit production too and so do affordability mandates in HB1110. Universal building codes are demanding enough, providing fire protection and other safety requirements. Simply allowing more production of all kinds of housing everywhere for people of all levels of income will lower prices across the whole market, a true help to people who need an affordable place to live.