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Seattle dropped key NIMBY rules. Why aren't developers swarming?

Heidi Groover, The Seattle Times on

Published in Home and Consumer News

Say farewell to single-family zoning as you've known it, Seattle.

As of Monday, developers can build up to four homes on city lots that today are dominated by individual houses, the result of a state law meant to add smaller and more affordable homes to the vast majority of land reserved for pricey single-family homes.

But despite the yes in my backyard" ambitions behind the change, don’t expect a flood of development.

The real estate market remains sluggish as builders cope with steep borrowing costs and expensive construction materials. With interest rates stubbornly high, many homebuyers are on the sidelines or leaving the playing field altogether, slowing the pace of sales. On the rental side, an influx of new apartments has kept rents relatively flat in the last year.

The result: Applications to build new housing have plummeted as some projects wait on ice.

The zoning changes arriving in Seattle’s residential neighborhoods won’t be enough to overcome those headwinds, say developers surveying the market today.

“You're not going to see the floodgates open,” said Seattle-area homebuilder Erich Armbruster. “The market's just too crappy right now.”

More housing allowed

Single-family zoning is already a bit of a misnomer in Seattle.

For decades, three-quarters of residential land in the city was indeed restricted to a single detached house per lot, effectively walling off those areas from renters and homebuyers with lower budgets. Like in cities across America, Seattle homeowners fought attempts to allow more types of housing in their neighborhoods.

But in 2019, Seattle began allowing a bit more density.

On lots once limited to only one detached house, developers could build two accessory units — one attached to the larger house and one detached — and sell each unit separately. Sometimes called "three-packs," that type of construction has taken off since, beginning to fill in some neighborhoods.

The latest rule change will make way for an even broader array of homes in Seattle's neighborhood residential zones.

First, the total number of homes allowed on each lot will in most cases rise from three to four. The rules will no longer require a larger house on the lot, and none of the homes will have to be attached to one another. Properties close to major transit stops can see up to six homes, as can sites where a developer includes two affordable units.

Those changes open the door for types of development beyond the houses and ADUs that have become common. Builders can add duplexes, town homes or clusters of four or six smaller detached homes up to three stories tall.

The changes stem from a new state law, created by House Bill 1110, requiring cities across Washington to allow more flexibility in their single-family neighborhoods. Lawmakers took aim at zoning reform in 2023 as state projections estimated Washington will need more than 1 million new homes in the next two decades.

Seattle’s new zoning law is an interim move to comply with HB 1110, while the City Council continues to debate a broader 20-year growth plan and permanent zoning changes.

Efforts like HB 1110 and Seattle's existing three-pack rules prioritize what supporters call "middle housing" or "gentle density — ways of adding more homes without allowing apartment buildings in areas dominated by single-family homes. They can enable more housing, especially for-sale homes, but are unlikely to meet the scale of the broader housing need.

A city-commissioned analysis earlier this year found that middle-housing options like those the new zoning allows are feasible on fewer than 1 in 5 residential lots in Seattle. Redeveloping every feasible residential lot could lead to 69,000 new homes in the next 20 years — far more than allowed by existing rules — but, given recent building trends, only about 36,000 new homes are likely, the report found. Seattle is expected to need 112,000 new homes by 2044, more than half of them for people with low incomes.

Slow market

For now, the zoning boost is also unlikely to be enough to overcome challenges and costs facing the market, according to developers who specialize in the type of small-scale infill development the legislation prioritizes.

Construction costs that spiked early in the pandemic remain elevated. High interest rates make borrowing money for construction more costly. Buyers are struggling to afford the homes on the market, and many would-be sellers are staying put. Add to that uncertainty about tariffs and broader economic conditions. At least some of those factors would need to shift to drive a market rebound.

 

“Things are very expensive for us to build as they're very expensive for our customers to buy,” said Cameron McKinnon, a Seattle builder with Confluence Development. “So in general, no one's very happy.”

The result? New construction has stalled.

Seattle issued permits for 60% fewer housing units in the first quarter of this year compared with the same time in 2020. While permits for accessory units and detached houses climbed, apartment permits fell 80% and permits for town homes fell 60%.

“We're being extremely selective right now on the projects that we take,” said Armbruster, whose firm Ashworth Homes builds detached houses, backyard units and town homes.

While zoning makes more sites viable, other factors mean “you still have a pretty risky proposition,” said Matt Hutchins, an architect and advocate for denser housing.

Larger developments can trigger requirements to improve sidewalks or alleys, said Michael Pollard, a consultant who works with local builders.

As new zoning rules take effect, many developers are “kicking the tires” on possible projects while others “throw up their hands,” Pollard said.

Even so, some builders are scooping up sites where they hope to build under the new rules.

The market may be slow today, but builders hope conditions will turn around eventually if financing costs fall or demand rises. At the same time, local and state lawmakers continue to strip away other regulations and promise to speed up permitting for new housing.

Developer Cameron Willett’s firm made offers on four residential lots, each currently home to a single detached house, where he hopes to build four town homes per site.

“All of a sudden, we have that many more lots that are potential candidates,” Willett said. “That's always the first hurdle you have to clear: the zoning. And now, that zoning is not a hurdle at all anymore.”

Willett expects projects to sprout up in residential areas near low-rise zones where town homes were already allowed in Ballard, Capitol Hill, Wedgwood, Greenwood, Wallingford and Fremont.

Town homes may not be the most common projects. Many developers have moved away from town homes because they are subject to city affordable-housing fees. Instead, they are eyeing cottage-type developments, where detached homes don’t share walls.

With the status quo encouraging a stand-alone house, a detached ADU and an attached ADU, brokers and builders say home shoppers can be frustrated when they find large single-family houses with eye-watering price tags alongside more affordable but smaller backyard homes and fewer options in between.

The changes will allow more midsized homes, McKinnon said, “which your family-sized housing buyers are very much seeking.”

Because of other regulations, novel forms of housing like small four- or six-unit apartment or condo buildings are less likely without broader changes.

All told, new projects are unlikely to feel drastically different from what many Seattleites see in slightly denser areas today, Hutchinson said.

“This is not going to be a rapid transformation of Seattle's urban fabric,” he said. “It's going to be kind of a really similar pace of change as we've seen over the last 15 years.”

And even in the hottest real estate markets, new homes typically take more than a year to design, permit and build, McKinnon noted.

“It just takes a long time for these new units to come to market to a degree in which people notice.”


©2025 The Seattle Times. Visit seattletimes.com. Distributed by Tribune Content Agency, LLC.

 

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