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

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