The Seattle City Council just unanimously passed a new set of regulations that would allow up to three dwelling units on residential lots in the city.
So who are the winners and who are the losers in this decision?
As with everything in Seattle Politics, the real answer is “it depends.” One camp is furious and one camp is champing at the bit with wrecking balls at the ready.
Before we jump in to a deeper analysis, it should be pointed out that this vote was shoehorned into the end of a lame duck council calendar where nearly every sitting member is slated to be replaced. Typically, when politicians make a move under those conditions, they vote closer to their actual conscious knowing that any political fallout is rendered moot. The other possibility is there is one last big favor owed to a special interest. That interest calls in their chit before it’s too late. Most likely there was a mix of motivations among the 8 yes votes; Council President Bruce Harrell *cough* abstained.
What does this new rule do?
Now, to some of the nuts and bolts. Will this change in rules accomplish the stated goal of increasing housing stock and increasing affordable housing units? My gut reaction is, “Um, heck no.” But I hope I’m wrong on this point.
In terms of increased inventory, according to the Seattle Times, “The city’s most recent environmental analysis estimated the new rules would result in 4,430 accessory units built and 1,580 houses torn down over 10 years.”
In other words, an additional 443 dwelling units per year. To put that number in context, the U.S. Census Bureau counted 17,500 new Seattleites from July 1, 2016, to July 1, 2017. Yep, this rule change, if everything works perfectly, will be a 2.5% bump in housing stock per year. Maybe that’s a success, but seems like a wash to me.
In terms of affordability, let’s think about this for a minute. You own a single family house in a Seattle neighborhood. You have the means and drive to either build an DADU (detached accessory dwelling unit) in your backyard and/or create an additional dwelling unit in your basement per the new rule change allowing up to three. You are looking at tens of thousands of dollars in permits and fees before the first nail is struck.
Because of Seattle’s constricted and utterly Byzantine permitting process, actually building a 1000 square foot cottage on your property is at least a $250,000 project. That’s if you can find a contractor and workers to actually do the building.
But let’s say, for the sake of argument, that you are that person that’s been waiting for this and you have the $500,000 to turn your single family home into three dwelling units. You are swinging for the fences and want to build in the back and add an apartment in the daylight basement.
When the project is all done in 2022, what will you charge for this brand new dwelling smack dab in a great neighborhood? Is it going to be anywhere near “affordable housing?” This DADU in Queen Anne or Capitol Hill or Fremont or Ballard would rent north of $2000 a month easy. Probably closer to $3000 in prime locations. If you’re in really great location, you might just Airbnb the thing and make even more income – especially in the summer months.
So in terms of adding affordable housing stock in the city, I don’t anticipate home owners who have all of the financial exposure to then turn around and offer that housing below market rate to a low income or homeless person. That’s a pipe dream.
What about developers?
Now, let’s talk developers. If there is a clear cut winner from this decision, it’s developers that ready, willing, and able to come into neighborhood and buy older houses with the express intention of tearing them down and building three units that maximize every loophole in the law. I’m quite positive their lawyers and permit and zoning experts are tearing apart this language as we speak to maximize profits for developers. And why not? That’s their business… and now it’s legal to do so.
The fact that they don’t have to add any off street parking is like hitting the lotto to a developer. So if you are in the camp that wants to preserve the “charm” of existing neighborhoods, you’re in for a rude awakening. Get ready for your neighborhood to change pretty radically.
A Dozen New Neighbors Per Lot?
A few more observations about this new rule change.
There can now be up to 12 unrelated people living on one residential lot. TWELVE. As in one dozen unrelated people LIVING ON ONE RESIDENTIAL LOT. Do I really need to spend any additional time pointing out that number seems a little high? Also, I try to be as progressive as the next guy, but now we’re supposed to say “Parent-in-law apartment” instead of “Mother-in-law?” Um, no thank you. 😉
The removal of the parking requirements will have the biggest unintended consequences in my opinion. People have cars, and they need to park them. Street parking is already tough, and about to get ridiculous as these new units come to market.
So where do we go from here?
Well, I’m typically a “glass half full” kind of person. If you’re a homeowner, and you can afford it – go for it. Build that cottage and get the most money you can out of it. Build equity in your property in a hot market. Seattle is a special place with a booming economy. Far be it from me to discourage property owners from maximizing the potential of their house.
If you’re a builder, do your thing and build. If you’re any good, your meal ticket just got punched for the foreseeable future.
If you’re nostalgic for the charming neighborhoods of Seattle’s past, I’m sorry, but I think you’re out of luck. Things are going to continue to accelerate and change. It will quickly become unrecognizable to many Seattle old-timers.
Make no mistake, this is a very big deal. Lawsuits are going to fly and neighborhoods are going to change. Get prepared for a dozen brogrammers to move in next door if you’re within earshot of South Lake Union. That should be entertaining to watch.
For some the sky is falling, for others, opportunity is knocking.
Ron Upshaw is a licensed real estate broker with Windermere Midtown and a member of the National Association of Realtors.
If you are buying or selling your home – or find yourself in need of an agent, you can reach him at email@example.com