Upzoning with Strings Attached: Evidence from Seattle's Affordable Housing Mandate

56 Pages Posted: 5 Sep 2024

See all articles by Betty Xiao Wang

Betty Xiao Wang

HKU Business School; Furman Center for Real Estate and Housing Policy Research; University of Pennsylvania - The Wharton School

Jacob Krimmel

Board of Governors of the Federal Reserve System; University of Pennsylvania - The Wharton School

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Abstract

This paper examines the impact of Seattle's Mandatory Housing Affordability (MHA) program on new home construction and developer behavior. Implemented in 2017 and 2019 across 33 neighborhoods, Seattle's MHA program relaxed zoning regulations ("upzoning") while requiring developers to either reserve some units of each project as below-market-rate rentals or contribute to a citywide affordable housing fund. Using a difference-in-differences approach, we find that new construction differentially declined in the upzoned, affordability-mandated areas. Our quasi-experimental border design reveals that developers intentionally avoided MHA-zoned areas -- despite their upzoning-- opting instead to build on nearby blocks without affordability requirements.  The differential reduction in new housing permitting between MHA and non-MHA zones could be as large as 70%, with the low-rise multifamily segment driving most of this decline. Our findings underscore the complex trade-offs between increasing density and mandating affordable housing within the same development.

Keywords: land use regulations, zoning, housing affordability

Suggested Citation

Wang, Betty Xiao and Krimmel, Jacob, Upzoning with Strings Attached: Evidence from Seattle's Affordable Housing Mandate. Available at SSRN: https://ssrn.com/abstract=4947798 or http://dx.doi.org/10.2139/ssrn.4947798

Betty Xiao Wang (Contact Author)

HKU Business School ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

HOME PAGE: http://https://www.hkubs.hku.hk/people/xiao-wang/

Furman Center for Real Estate and Housing Policy Research ( email )

New York, NY 10012
United States

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Jacob Krimmel

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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