Big developers don’t like broad upzoning

Why don’t big developers and real estate investors lobby hard for broad upzoning? They may advocate for specific areas, but not broad upzoning—that would saturate the market! Seattle’s developers are motivated by profit. They’ll build fewer homes if it means more profit (Upzoning with strings attached: Evidence from Seattle’s Affordable Housing Mandate, Cityscape). Construction slows to avoid decreasing profit (Developers sit on empty lots after historic apartment boom, WSJ). It’s difficult to prove that zoning laws are manipulated for anti-competitive behavior (Antitrust challenges to local zoning and other land use controls, Chicago-Kent Law Review). Nevertheless, pay attention to any seasoned real estate agent, investor, or developer and they’ll prove to be at least keenly sensitive to the consequence of zoning laws on their bottom line. Consider the situation critically:

1. Zoning artificially constrains the supply of housing (The REAL reason you can’t afford a house, More Perfect Union).
2. It creates monopoly-like conditions. Landlords, big and small, in Seattle have been able to push rent prices above the fair market value— (“Mom-and-Pop” landlords and regulatory backlash: A Seattle case study, Socius).
3. Market power (manipulation of supply v. demand) means higher profit margins for lower-quality housing, such as apartments in old buildings (New housing slows rent growth most for older, more affordable units, Pew). In other words: zoning restrictions inflate prices, regardless of its quality, when options are limited.
4. Big developers are sensitive to “overbuilding”—creating too much supply (Overbuilding in multifamily today means a lack of new units tomorrow, Commercial Observer).

Upzoning helps because:

1. Small developers, such as homeowners, however, will construct additional housing for reasons aside from profit, such as housing friends and family (Transforming homeowners into landlords, UCLA). This can lead to overbuilding.
2. Overbuilding is good for the average resident because more supply slows rent inflation, if not decreasing it by 5-7% (Supply skepticism revisited, Housing Policy Debate).

Despite Seattle covering more land area than Paris, Seattle houses less than a third of Paris’s population due to zoning restrictions (What would our cities look like if we took our climate change values seriously?, Siteline Institute). Seattle has both the physical space and market demand, the bottleneck is zoning. In residential parts of Fremont & Ballard, many homes are owned by their occupants and not big real estate corporations. Upzoning bestows greater freedom to homeowners to develop their property. Check out your zone here: SDCI Property Information map, Seattle.gov. Find the fair market value for your zipcode here: US Dept of Housing and Urban Development (HUD).