So your big house is feeling just a little too big? And those hip urban villages seem just a little too edgy? Where to go? How about a nice bit of “middle housing”? If all goes well over the next 18 months, the region should see a surge in construction of attractive new homes aimed at neglected segments of the market.
In its last session, the Washington Legislature passed the most significant housing legislation in a generation. House Bill 1110 requires that at least 77 cities in Washington, including all cities in the Seattle urbanized area, change their zoning codes to allow significant increases in densities in single family areas. In addition, House Bill 1337 mandates that all cities in the state, as well as unincorporated areas inside urban growth lines, allow at least two accessory units on a single family lot.
What is middle housing?
Middle housing fills the gap between the two primary types of housing we have: single-family homes, and large multi-family complexes. HB 1110 specifies nine types of middle housing, at least six of which must be allowed: duplex, triplex, fourplex, fiveplex, sixplex, townhouse, stacked flat, courtyard apartments, cottages. This is a bit of an apples/oranges list, since the “-plexes” can be configured as townhouses, stacked flats, or courtyard apartments. But the idea is clear: a lot of proximity and common walls.
The size of the city determines how much more density it will be required to allow, with small and medium sized cities having to allow two units where one is allowed now and large cities having to allow four units on a single lot. Midsized and large cities must also allow bonus units if some units are kept affordable or the project is near a transit station.
The bill tries to head off loopholes cities might try to exploit. Parking requirements and development regulations are hemmed in and only administrative design review is allowed. Current restrictions by homeowners’ associations are grandfathered in, but new restrictions are not allowed. New codes in the Puget Sound area must be in place by June 30, 2025, or the state will impose its own code language.
Within the housing market, middle housing offers the chance to live in a quiet neighborhood setting without the large investment in a traditional single family house. New housing being built in the region consists overwhelmingly of large multi-family complexes in busy urban settings, and not everyone is attracted to that lifestyle.
Middle housing has the potential to free up single family homes and get them into the hands of young families. In the Seattle metro area, 63 percent of households over age 65 live in detached housing that they own, and one quarter of all homeowners over age 65 live alone. Middle housing offers those older homeowners a chance to downsize to a smaller, newer, ground-related home while staying in their neighborhood.
The really big deal
The truly radical part of the bill is the provision that cities must allow existing single family lots to be legally subdivided so that cottages and attached homes can be sold as fee-simple properties (stacked flats can be sold as condos). This constitutes a huge theoretical expansion of buildable land for ownership housing.
There is ample evidence that lot size is just not that important to homebuyers, and suburban lots have been shrinking for years. Through the 1980s, 10,000 square foot (roughly quarter acre) lots were common, and single family parcels rarely fell below 7,200 square feet. Since the advent of growth management, 4,000 square foot lots have become common for detached homes, and attached homes come with even smaller parcels.
So splitting an old 10,000-square-foot lot presents few marketing difficulties, and putting a duplex on a split 7,200-square-foot lot seems quite feasible. Cottages in clusters have always had small footprints, but now can be sold on individual lots rather than as condos.
The ability to create new lots offers the potential to greatly expand ownership opportunities for ground-related homes for those who have been frozen out of the market by high prices. This provision also allows land-rich-cash-poor households to turn a large backyard into instant cash.
How, exactly, the economics of land prices plays out is unknown, since we don’t know how many property owners will be eager to sell off parts of their property and how many properties will come on the market for full redevelopment. We also don’t know how aggressively builders will be seeking those opportunities. But it would be reasonable to assume that the abundance of potential new lots will have at least some depressing effect on lot prices.
A long way to go
To get from this promising legislation to large scale construction of new middle housing a lot of things have to go right. Local codes must be written so that builders find attractive opportunities and can work profitably at a small scale. The kinds of small local builders who got washed out 15 years ago need to be lured back. And these small projects will need new, creative-financing tools. A subsequent article at Post Alley will flesh out these and other challenges that lie ahead for local governments and the housing industry.