What B.C. cities can learn from Seattle’s successful housing outcomes

Seattle’s changes to density zoning, development incentives and consultation processes have resulted in more supply and moderating home prices, says global housing expert

Glacier Media Real Estate
February 21, 2019

Seattle and Vancouver

Metro Vancouver, Victoria and other B.C. cities have a lot to learn from the recent turnaround in the Seattle housing market, according to an expert in global housing analysis.

Speaking to a sold-out Urban Development Institute lunch event February 21, Dr. Jonathan Woetzel, senior partner at McKinsey and Company and director of its economic research arm McKinsey Global Institute, pointed to Seattle as having similar housing issues to B.C.’s major cities.

“The cities up and down the West Coast have seen some common challenges,” said Dr. Woetzel. “And recently in Seattle, we’ve seen some interesting outcomes, including the flattening of home price growth and an explosion on the construction side. So how did that happen, and what were some of the things that were done differently?”

Dr. Woetzel said the transformation started about five years ago with then-Seattle Mayor Ed Murray making significant changes to the development system. He described the changes in Seattle as falling into three categories:

Changing the rules – including rezoning for high density around transit hubs to create urban centres, reducing parking requirements on new development, and restricting short-term rental operations in housing-focused zones;

Lowering the cost – including fast-tracking accessory dwelling units (such as laneway homes) through pre-approved designs, incentivizing inclusion of affordable housing through tax incentives and subsidies, and raising affordable housing funds through the Housing Levy, paid annually by Seattle homeowners; and

Engaging the people – by changing from Neighbourhood District Councils to a city-wide Community Involvement Commission, and creating a Middle-Income Housing Advisory Council.

“The mayor struck what he called the ‘grand bargain’ around development, saying that the city had to do something, and created these urban centres [around Seattle],” said Dr. Woetzel. “By 2017, 88 per cent of the new housing came from 15 per cent of the land, all in these new urban centres. So you need to start out by saying, some areas are special, some are more ripe for development, and make it easier to do that.”

However, he added, “There’s still a big debate about what to do with the other 85 per cent of the land [in Seattle] that isn’t part of an urban centre.”

Dr. Woetzel said that onerous development fees and levies can have a restrictive effect on supply and can push up home prices. He pointed to the City of Vancouver as a prime example, where such charges typically make up 26 per cent of a new condo's total price.

He also compared Vancouver’s maximum floor-area-ratio in new developments to other global cities, and found that new Vancouver homes are much more generous in size, which may be adding to high prices.

However, Dr. Woetzel said that cities like Vancouver are far from alone in struggling with housing affordability. “Affordable housing is a global issue, in both developing and developed countries,” he said.

“By 2025, one-third of the 1.6 billion people living in cities will face an affordability challenge,” he predicted.

Dr. Woetzel, who is based in Asia, has spoken all over the world on the issues of housing affordability and supply challenges.

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