Cureosities | The Future, Vol. 3: Housing

Much of this series of posts about the future are centered around the evolution of the office and its surrounding impacts, and it’s important to include housing in this discussion. Entry level workers and younger generations are experiencing extreme hardship with housing availability, and that affects the entire conversation around the future of the office. If employees can’t afford to live near their places of work, how is it sustainable for them to go into the office every day? This is an issue that’s been percolating for years, but when employees saw what it was like to work from home, to have that autonomy and flexibility, it opened them up to the possibility of moving somewhere more affordable in order to improve their qualities of life. So in studying the issues around our housing crisis, we address how to help those employees that aren’t yet in their “forever homes”.

I’ll start with a story. In January of 2021, my family decided to enter the housing market to remedy a very cramped remote work/life situation. Two adults and two children working/schooling from home was not part of the equation when we bought our small, 3-bedroom townhome. Unbeknownst to us, many others in similar situations were gearing up to do the same, and we ended up being part of an historic housing price explosion. By stretching ourselves to the limit on 11 different home offers over three months, we collectively pushed prices even higher as other potential homebuyers were able to stretch themselves just a bit further than we could. On offer number twelve, we jumped at a home that had passed its offer review date, submitting an offer sight-unseen that expired in four hours. It was a gamble that worked, in our instance, but it was a huge risk and something people shouldn’t have to do just to secure a home for their family.

The barriers to entry for home-ownership are many in the United States, with many people unable to enter the housing market due to home costs outpacing incomes, and rental markets are in the same boat. Not enough supply, lots of demand, and skyrocketing rents. This housing unaffordability is heavily burdening Seattle’s workers with many paying more than half their income on housing. In addition, despite people often pointing to drug use and mental health disorders causing homelessness, it has now been found that the majority of homeless are actually on the streets due to housing-unaffordability.

Shelter is one of the three basic things humans need to live, the third leg in the triangle with water and food. What is going wrong with this system? What can be done about it?

It wasn’t always like this. For a quick primer on how much less Gen Z money is worth than an early 20’s baby boomer, take a look. (spoiler….86% less). From the same site - “In today’s dollars, Gen Z and Millennials are paying nearly 100% more on average for their homes compared to what baby boomers paid in the 1970’s.” Double after accounting for inflation. Home ownership is generally perceived as the most accessible method to increasing personal wealth, but with obstacles as they are, it is hard for younger generations to enter the market. Millennials have had a difficult trajectory relative to home-ownership milestones. The average Baby Boomer bought their first house at the age of 25 (also a time of great economic volatility, but housing was available to those who could secure funding). Millennials turned 25, on average, during the housing crash in 2008. The Great Recession stunted pay growth, and though many “elder Millennials” have been able to afford a home thanks to low interest rates and persistence, those trying to buy a home in the last few years have hit significant blockades to ownership. It has been and continues to be economically volatile and difficult to save the money needed to buy a house.

Money isn’t going as far, but prices are also increasing due to supply being so tight. I have two kids, 10 and 11, and I currently don’t see a future in which they could live comfortably in Seattle due to the trajectory of housing costs. People are getting priced out of the city, unable to afford to live here, and potential residents are excluded due to housing costs. We need more housing options.

Diagram from missingmiddlehousing.com of housing types, particularly the missing middle housing that doesn’t exist in most neighborhoods.

Single-family zoning has become an appropriate target for land use and zoning experts. Exclusionary, low-density zoning and its effects on low-income and black/brown Americans run deep within the history of social inequities. Originally instituted alongside racial covenants, single-family zoning was developed in 1916 in order to make neighborhoods more expensive and thus more exclusive, and that approach to neighborhood planning took over the country. For context, a full 81% of Seattle land zoned for residential use of any kind is locked up in detached, single-family zoning. The problem with this is that it stifles construction of new supply. The single-family lots that were laid out throughout the 20th century are what we have to work with, and when one of those houses gets replaced, its replaced one for one, keeping supply at the same level.

The state of Washington recently adopted a bill, E2SBH 1110, that mandates Washington cities move toward increased middle home zoning in areas previously dedicated to single-family by the summer of 2025. Middle housing is defined as low-scale, more dense housing that takes many forms - townhomes, duplexes, cottage housing, among others - and is intended to fold into the scale and character of typical residential neighborhoods. It’s often more affordable for those priced out of large lot, single family ownership. Additionally, though not technically under the “middle housing” umbrella, Accessory Dwelling Units (ADUs) assist in the housing mix by creating small housing units in previously underused or open space, most often in the basement or back yard of an existing home, allowing for rental or multi-generational living opportunities.

So will this focus on re-zoning for more housing density work?

We must first push past the tendency toward NIMBYism - the “sure that’s a great idea, but Not In My Back Yard” mindset. Building a backyard ADU won’t be in every single-family homeowner’s immediate interest, but we need to welcome a new approach to density in all of our neighborhoods as a way to preserve our city’s livability for future generations. Seattle as a jurisdiction has made more progress than many cities in improving its approach to housing density, but we are a long way from where we need to be. Personally, I’m not excited about a Seattle that requires you to be a millionaire to be a homeowner or even a citizen. For the future of our city, resisting duplexes or townhomes holds us back from making the necessary progress to ensure we will be livable in the future. It’s interesting to me that the gut, negative response to middle housing in single-family neighborhoods is often that it will lower home values. The goal is to curb out of control home costs, but the idea that the immediate neighbors’ home values will decrease has not been empirically validated, with some low-income developments actually increasing nearby home values.

The benefits to our neighborhoods are extensive, allowing for diverse and affordable living options for people in all life stages - young families buying their first homes as well as older adults looking for smaller, more affordable places to live in their own, familiar communities. The idea of downsizing and moving into a home with less to maintain is really appealing to those in their later years, but in many communities, the only option to do that is moving out of ownership to rental properties or assisted/senior living developments. The benefits of more middle housing for older adults in particular are significant, with the AARP even recently distributing a publication discussing the many advantages of this housing type and its benefits to their membership.

Cureo A+D project in Tacoma, showing potential for infilling opportunities in existing single-family neighborhoods. The newly designed home shown behind the existing home that is being remodeled to include two living units.

Cost of construction and a tight labor market are still barriers for many densification projects, especially in the Pacific Northwest, but there are ways for individuals to enter the market on a smaller scale in order to leverage their own properties in addition to larger, developer-led middle housing projects.

We are working with the city of Tacoma on a 2-Family infill project under their Residential Infill Pilot Program on a unique approach to densification. We are taking an existing 1904 home, renovating it to include a primary home on the main level and an accessory unit on the upper level, and then adding a new single-family home in what was previously the back yard. With this project, we will go from one unit to three on a standard city lot, while maintaining the existing structure and neighborhood character from the sidewalk. The owner gets to live in a home they are excited about and also has two rental units available to support housing availability. There is a unique potential to this approach because unlike new construction developments, it maintains the existing structure and doesn’t require existing homeowners to leave in order to develop density.

New single-family backyard home designed under the Tacoma Residential Infill Pilot Program.

While eliminating single-family zoning is slowly taking form in the US, we actually have a use case for eliminating low-density housing in Aukland, New Zealand. To summarize this enlightening article from Eliza Relman, Business Insider, New Zealand passed a law allowing for “gentle density”, or allowing middle housing in single-family zones, and from 2015 to 2022 tripled their new housing unit permits, from 9,200 to 21,300. As you can see by the graph below, Aukland is making significant progress in building new homes. Homeowners and developers have significantly increased home availability due to there being jurisdictional support, and they have also curbed the out of a control housing costs in both the homebuying and rental markets.

Solving the housing crisis is dependent upon all of us to engage and think beyond our own immediate reactions. Those that have been fortunate enough to live in single-family zoning have been taught over time to suspect, fear and often block changes in the neighborhood fabric, but if we’re able to find and capitalize on housing opportunities that improve housing availability as well as provide additional options for living situation or rental income, everyone is able to benefit from these changes. While I understand the excitement involved in looking at the Redfin estimates for how much your home has increased in value since you bought it, we have to remember that it comes at a significant cost to our city and our future generations that want to continue to call Seattle their home. The more housing costs inflate beyond incomes, the more difficult it is for younger generations to live in our cities. It is critical to right this imbalance in order to keep younger generations entering the workplace in any capacity, let alone in a physical office.