This post originally appeared on Orphan Road.

Upzone.

One of the arguments that comes up when debating Seattle’s zoning laws is that we’re in a recession, and nobody’s going to build no matter what we do right now.  I’d argue the opposite: if we upzone we can get people to build right now despite the fact that we’re in a recession.

Housing prices have dropped in Seattle recently (as with everywhere else), but they’re still well above surrounding areas and dwarf suburban prices.  Why hasn’t development in Seattle continued if there’s such a market?  Because of zoning.  There’s some profit in tearing down a one story business and building a 3-on-1 mixed use structure (to take a common example), but that’s offset by the loss in value of tearing down that one story business that the developer has just bought.  You get the new value of 3 stories of new homes, but you had to pay the construction price of 4 stories plus land.  Unless housing values are very high, a developer won’t make money on this deal.

Now consider an upzone.  If we raise the legal height for that parcel to 6 stories, then you have the value of 5 stories of new homes for the construction cost of 6 stories plus land value.  That’s two extra stories worth of profit and will push many projects from being losers to being winners.

Another benefit of upzoning in a weak market is that change happens more slowly.  The clear winning projects will be done right away, and the less profitable projects will become more profitable as the market recovers.  This will tend to make neighborhoods change slowly, which is more comfortable for neighbors.

There are a whole lot of unemployed architects, engineers, and contractors out there right now.  Upzoning can make a large dent in those numbers almost immediately.

2 Replies to “How to boost employment in Seattle in 2 years”

  1. Nice. You still have the problem of excess inventory, but that doesn’t seem to be stopping many other projects from getting off the ground these days.

  2. Excess inventory will be out in the suburbs and exurbs. That is a problem, but one we’ll have to deal with some day anyway.

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