Daily Archives: July 15, 2015

Single-Family Homes and Affordability

The big news in land use wonkdom is one of the recommendations of Seattle’s Housing Affordability and Livability Agenda (HALA) Advisory Committee: that the city consider doing away with single-family zoning in many areas, perhaps entirely. To understand why this is such a big deal, let’s take a closer look at the single-family residence (SFR), both in terms of its economic function and its space in city planning.

The Economics of the SFR

From the perspective of affordability, the SFR is terrific – terrific twice, in fact.

First, SFRs are the cheapest kind of housing to build on a unit area basis. At the margins of the city, where land is cheap and constraints are few, large numbers of SFRs can be built based on a few variations of a few basic design templates, keeping costs even lower. The SFR will pencil out when and where almost no other type of development will. There are cases where it’s profitable to go directly from vacant land to dense apartments at the edge of the city, but that’s often indicative of highly distorted housing markets – in other words, to go directly from vacant land to dense housing at the fringe, something must be artificially raising housing prices or subsidizing development. The ability to provide new housing cheaply through SFR construction helps keep regional housing prices low.

Second, in built-up parts of a city, SFRs are the easiest type of land use to redevelop, excluding vacant land at infill sites. This is for the same reason that SFRs pencil out first at the urban fringe – they are the lowest value use of land. As we explored in the limits to redevelopment, more intense existing land uses require longer to redevelop and have higher opportunity costs, thus requiring higher prices to justify redevelopment. For example, a one-story commercial retail building or a 6-unit apartment will generate more income than an SFR, so they will only redevelop at higher prices. In addition, redevelopment of SFRs is less disruptive to communities and carries less risk of displacement. Thus, SFRs are not only the easiest type of residence to develop, they’re also the easiest type of residence to redevelop.

The Single-Family House and Planning

From the perspective of planning, the cardinal rule of urban development in many cities has been, for decades, that SFRs and SFR neighborhoods must be “preserved” and “protected”. No matter how much SFR owners protest otherwise, they are one of the best-organized and most powerful political forces in land use. Open a general plan or community plan in any growing American city and you will likely find language about “protecting” SFR neighborhoods. In this framework, single-family housing is a bystander in urban land use, a passive actor that is almost invariably degraded by other types of development.

Given the economics of SFRs and development, this is clearly not the case. Policies to prohibit the redevelopment of SFRs, especially in wealthy areas, raise the regional housing price level until it is feasible to redevelop higher-intensity land uses or demand can be forced to flow to other neighborhoods. This results in higher housing prices and the potential for displacement.

The recommendation of the Seattle HALA Advisory Committee may not result in any changes to the city’s SFR zones. However, it is extremely important just that these issues are on the table in a major US city. Cities, regions, and states might decide to retain SFR zoning near the core of metro areas. But they should only do so after an honest accounting of the costs and impacts – and who those costs fall on.