Current FRAMEWORK
UPZONING AND THE MARKET ROLE
Upzoning as a solution maintains the idea that even when building high-end high rises and more expensive units, the increased supply will decrease prices, and in addition to city policies like MHA to add affordable units or increase city funding, the affordable housing crisis will be adequately addressed. Upzoning and densification rely heavily on the market.
There is a significant need to support affordable housing right now for all of our neighbors; relying on upzoning is negatively impacting our communities right now. As such, upzoning cannot be the only way to solve this issue.
Upzoning alone can’t solve the housing crisis.
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Myth 1: Upzoning creates more housing.
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Upzoning may mean more supply, but given market demands and supply, they become unaffordable to most. Developers are often not concerned about providing affordability, and upzoning exacerbates these issues as it allows for untethered (free-market) increase in rent and sale prices. Upzoning implies that production of new units will be affordable and available to all. This is not happening. Upzoning, even with MHA and IZ, still enables gentrification to occur.
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Myth 2: Upzoning decreases housing prices.
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Why isn’t increased supply decreasing price? Because it is not actually an increase in housing price, but an increase in land price as a result of increasing the apparent investment value of real estate. In Vancouver, densification “not only created supply that was unaffordable to the people who live here, but also had the perverse effect of raising the cost of all housing throughout the city” (1) as housing and land became investments, rather than existing to house.
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Real estate is priced by the property’s “highest and best use”: thus, the market dictates that the price for land will increase if the value of newly developed higher density > the cost of building it + buying the property.
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Upzoning replaces older, more affordable homes with more expensive luxurious homes that drive out people of lower incomes. Although upzoning may mean more supply, the units quickly become unaffordable. Developers often do not consider affordability and upzoning exacerbates this,as it allows for untethered increases in rent and sale prices. Upzoning implies that production of new units will be affordable and available to all. This is not happening. Upzoning, even with MHA and IZ, enables gentrification to occur.
In the 1950s and 60s, Vancouver became one of the first North American cities to focus on densifying their downtown areas, with high faith in ‘supply and demand’ to solve the housing crisis. Initially it was successful, but only because the housing being built was affordable to the middle-class. Current housing prices have far outpaced income levels, which means building more expensive housing isn’t helping.
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Myth 3: Seattle’s current inclusionary housing policy is enough to create sufficient affordable housing in upzoned areas
Real world examples:
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Chicago
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Upzoning Chicago: Impacts of a Zoning Reform on Property Values and Housing Construction (MIT)
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Examined parcel-level transaction values after 2013 and 2015 upzoning changes
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Impacts:
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Saw increase in property values within 2 years on affected parcels
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Did not produce a supply response within 5 years of upzoning implementations
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Additional Sources
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Weiss (1987): High levels of allowed construction produced property speculation on land in cities like Los Angeles in the early twentieth century.
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Malpezzi and Wachter (2005, p. 160): Property value increases occur because of “lagged supply response”—a signaling of interest from developers buying property but who wait for the optimal moment to invest in new construction, which takes years to move forward.
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Angotti (2016): Upzoning in New York was associated with higher property values, pricing out existing residents.
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Proposed alternatives
Given that most of the City’s housing programs rely on market dynamics, to solve this issue, housing needs to move away from being a commodity. Housing needs to be seen as a basic right that can be provided on the city’s own accords and will. The market alone cannot, and as present conditions demonstrate, will not provide sufficient or equitable housing opportunities. Further, upzoning cannot occur in isolation but must be accompanied by city-initiated efforts to ensure that the housing opportunities enabled by upzoning have equitable and affordable access. The city needs to invest further in independent affordable housing that is not tied to the market - housing built to house, rather than housing built for profit. To adhere to community members and the city of Seattle’s values of strengthening social cohesion, building economic opportunity, fostering environmental stewardship, and achieving racial and social equity, it is necessary to prioritize affordable, high quality, and respectfully designed housing that supports home ownership, in addition to rental opportunities, for all residents of Seattle in all locations.