Seattle Zoning Changes: ADUs & DADUs (Backyard Cottages)
Summary:
Nick Ridgeway and I discuss recent Seattle zoning changes (ADUs, DADUs/Backyard Cottages) and touch on many other related topics, including incremental development, urban infill development, smart growth, home prices, sustainability, and historic preservation in Seattle.
Relevant links:
Interview Transcript:
Zach McDonald
Hey, I’m Zach McDonald, your real estate agent with Real Property Associates and I’ve got Nick Ridgeway with me here today and we’re going to talk about the upcoming changes to single family zoning in the city of Seattle coming up. Hey guys. So I got Nick Ridgeway with me here. Quick intro. He pretty much does a little bit of everything.
Nick Ridgeway
I try.
Zach McDonald
Real estate agent, land acquisition agent, investor, builder, developer, house flipper. I mean what can you tell people about what you do? What do you like to call yourself? Superhero?
Nick Ridgeway
My wife always asks me, it really depends on the day. I mean I think there are three main parts to my business. I’m a real estate broker, but I really focused on land, specifically urban, in-city in-field development. We have about 10 homes under construction right now. So definitely, I would consider myself a small scale builder/developer. And then recently have gone to work with a company called Legacy Group Capital and doing some funding for smaller builder developers like myself, helping them just grow their businesses and finance their projects.
Zach McDonald
Awesome. Well, in in my experience, you’re somebody that’s passionate about development in the city, urban development, but also you really like to preserve the character and quality of the neighborhoods. Can you speak to that?
Nick Ridgeway
Most definitely. I mean, I don’t know if you want to jump right in now to-
Zach McDonald
Let’s talk about that.
Nick Ridgeway
Let’s be specific about what we’re addressing because there have been some recent up-zone changes in the city of Seattle and that had to do with HALA in mandatory inclusionary zoning and we’re probably going to just do a separate video on that. What we’re talking about today is specifically affects single family zoning and specifically with accessory dwelling units and detached accessory dwelling units ADUs and DADUs. There was a big hold up.
Nick Ridgeway
This has been in process for over four years and there are people we call, we like to call them NIMBYs in the business standing for not in my backyard. And the fear I think, and maybe some of the misinformation with the zoning really had to do with, “Hey are we going to lose the character of our neighborhoods?” And I’m a big fan of … I love going to neighborhoods like Queen Anne, Wedgewood View Ridge and you get to see just some of this history and the goal is to see that preserved. And I think this code as we dive into it today, maybe we can address some of that, how it’s going to help, it’s going to help increase density, provide more housing options for people, but also preserve some of this cool single-family stock that we have.
Zach McDonald
That’s awesome. Glad to have you here, thanks for coming. Let’s start off with, okay, what are the major zoning changes that the city of Seattle Council just approved?
Nick Ridgeway
Sure.
Zach McDonald
What’s, what’s coming down the pike?
Nick Ridgeway
Okay. Let’s talk about where we were and then where we are now. So the way it was before is you can have a single … you have single family zoning in the city of Seattle and with a single family house you are allowed to do one accessory dwelling unit. It can either be attached or it could be detached and there were limits on square footage size, whether if it was attached it could be a thousand square feet, if it was detached 800 but there are also other limits there. One was a homeowner occupancy covenant, which basically said, Zach, if you are going to build an ADU on your house, you had to live in at least six months out of the year in either the ADU or in the house. And there were other things. I mean the code was pretty long. Certainly put, it’s great if you need, if you’re having trouble sleeping, that’s what you dive into and read the amendments 30, 90 pages long.
Zach McDonald
It’ll put you to bed.
Nick Ridgeway
But there were other parts to it that limited parking and things like that that had requirements. So the changes that happened and the city council voted on it. Now it’s up to the mayor to sign. I believe she’s scheduled, Mayor Durkin’s scheduled to sign it today. which is July 9.
Zach McDonald
July 9.
Nick Ridgeway
And then it’ll go into effect. Whenever she does sign it’ll go into effect about 30 days after she signs it. So a lot of people have questions as far as the timing and then what this really does though is it does a couple of things. It gives people, homeowners, the opportunity to build not just an ADU but also a detached ADU and-
Zach McDonald
So, two units.
Nick Ridgeway
Two units, and there’s no homeowner occupancy covenant and which again gives flexibility to a home owner. If all of a sudden you build an ADU or let’s say you build both and then something happens, you have a life event, which as we both know in the real estate business that happens. That’s what really typically triggers a sale. You’d be stuck in the … with the old code, with the new code, you can say, put a tenant in there, put a tenant in there, maybe only for a year. Let’s say you’re going on a mission trip and you decide, hey, we have an opportunity to go do this. And so it really gives people a lot of flexibility.
Nick Ridgeway
And then as far as size with the detached ADU, now you’re allowed to go to a thousand square feet. There are still really good, what I consider really good limits. So as far as size and the impact on the neighborhood, what I love about this in comparison, say what Oregon, State of Oregon, is doing, which they’re pretty much abolishing single family zoning and they’re allowing duplex, triplex, fourplexes on single family lots. We’re sort of kind of of doing defacto duplex, triplexes with this, but it’s still going to preserve some of that character. When you walk down where we’re sitting right now in the Roosevelt Maple Leaf neighborhood, some really cool old houses, we don’t want to see those disappear. And we certainly don’t want to see those get torn down in a mcmansion built.
Nick Ridgeway
And so with this new code specifically allows a homeowner to do is to expand their main house to a certain extent, build an ADU, let’s say in the basement. They can build a thousand square foot apartment, which around here will rent for a pretty penny and then build a detached ADU as well. Why this is important I think … I think when you look at any sort of change or movement, especially in business, you look at what’s called the triple bottom line, it’s the economic impact, the environmental impact and then the social impact. Economically I think it’s going to be a big factor because right now what we have is we have an affordability issue in the city of Seattle.
Zach McDonald
Certainly.
Nick Ridgeway
And what increasing housing options does is it’s just simply supply and demand. When we have more options for people to either live in and buy or to rent, it creates opportunity to make a lifestyle decision. And then the environmental impact. I’ve always been a big believer of urban infill. We’re using existing infrastructure, we’re using existing systems like fire, police, school, those sorts of things. And then I think the social impact is huge because we’re … I mean you know kind of of some of my history, we wanted to practice what we preach. And so we had a couple of different life events happen to us. We have a family, my wife and I have three kids. We have a family of five. We lived in a 650 square foot ADU, a basement apartment. Very difficult, humbling to do in your 40s but I realized, wow, this is doable and not only is it doable, we lived and we lived with my in-laws and we were able to help them out.
Nick Ridgeway
I saw the benefit that maybe a lot of other cultures do as far as multi-generational housing. And so I think that’s going to be part of this social impact of this code. And I don’t know if it got talked about enough as the two sides were going back and forth, but I think whether it’s multi-generational housing or as you do, you have close friends that are living in your basement apartment.
Zach McDonald
yeah.
Nick Ridgeway
So, one of the other limits, and I don’t know, maybe we’re scheduled to get into this, but is there’s going to be a limit on the size of single family house that you can build. And I think a lot of times people will complain. The big complaint I hear a lot is, “Wow, just tired of seeing these big boxy mcmansions,” but you look at where that’s derived from and it’s really just limits on the code. The code says, “Here’s what you can build and here’s the area that you can build on,” and what do builders do typically, while we want to maximize that, and so that’s what they build and what ends up happening is we just end up, in my opinion, nothing against modern design.
Nick Ridgeway
Some people do it very well, but we ended up getting a lot of big boxy houses and so this part of this new zoning change is going to limit the size of single family housing. I think quite frankly, it probably will affect the price of people that have older, larger homes because those are going to become more and more rare now. Now I think there are some probably some just some wrinkles in the code that will allow people to still big build. Maybe that 3,500, 3,600 square foot single family house, but it’s just going to provide a lot more options and-
Zach McDonald
Yeah. Thanks Nate. Super. You did jump ahead a few of the questions.
Nick Ridgeway
Sorry.
Zach McDonald
Awesome. I love it. So primary reason, why do you think that these zoning changes were made in the city of Seattle?
Nick Ridgeway
Just simply we have an affordability issue and we have, I think it’s responsibility of the city and the people that live in the city. We can’t just become a city of multi-million dollar houses. I think for the long-term economic sustainability of any city, there are people of different backgrounds and maybe at different life stages and we all require various sizes and housing options and I think we are really starting to limit those. We certainly have density and multifamily, but not everybody wants to live in a high rise. When you get into the high rise situation, we get detached from sidewalks, from neighborhoods, from being out on the street. I was reading last night how the healthiest cities people can walk or roll wherever they are, whether it’s … if they’re in a literally in a wheelchair or certainly on a bike. And those end up typically being the healthiest cities and really economically the strongest as well.
Zach McDonald
Yeah. Well you mentioned neighborhoods, that’s part of my own story. We also, my wife and I with two kids, lived in a 500 square foot mother-in-law apartment. Might’ve even been smaller, a little kitchen-
Nick Ridgeway
My goal was to live bigger than you were, but now-
Zach McDonald
He was living-
Nick Ridgeway
- I had 650.
Zach McDonald
I got him beat now. But yeah. But anyways, super big part of our story and it was one of those things where my wife and I both wanted to live in a neighborhood and be with other families and other people in our community and make relationships in a with sidewalks and street. We weren’t in a high rise. That’s not what we wanted. So we moved to the suburbs when we got married and we actually rented a little mother-in-law attached dwelling unit. So that is part of our story too. And that neighborhood part kind of of the helping with affordability, right. Helped us get off to a good start, save for a down payment. It wasn’t cheaper to buy than rent at that point. It was cheaper to rent and get … we got set up for success. So there’s different life stages benefit from this for sure.
Nick Ridgeway
And really Zach, all the way through, because I’ve run into, as you know, we’ll … a lot of times we build detached accessory dwelling units and we’ll sell them separately and in that, I have spoken to countless people that have lived in a neighborhood for a really long time and they want to stay in that neighborhood. It’s where their social circle is. It’s where they feel safe. They’ve grown up there. Maybe they’ve had a couple of generations of family that have lived there, but quite frankly, when you’re on a fixed income, no matter how much money you made in the past, it’s getting difficult. Let’s take Ballard, for instance, the price of a single family home in Ballard has gotten expensive and so what this does is this allows maybe the lady that’s now a widow that’s lived there forever to build an ADU or detached ADU, move into that rent out her main home and still afford to live in the neighborhood.
Nick Ridgeway
Certainly have a stream of income. I mean it’s like building a great little annuity there and then down the road if she wants to sell those separately or if she wants to build say another ADU and essentially have a triplex then and have two rentals on the property that she’s lived in forever. I think that’s just a tremendous option and so I think that’s what really the crux of what we’re talking about here is giving people options. This is market rate, affordable housing, but not city mandated or dictated at how affordable housing. This is the market saying, “Hey, we want to answer back,” and whether it’s a homeowner, or a developer, or an investor, if we create more housing options and we increase that supply, that’s going to help kind of of be a regulator on housing prices, which quite frankly, even as a builder and developer, I think have been out of control. It’s expensive. Some of that’s just driven by the fact that our costs have gone up so much, just raw materials, but a lot of it’s just the price of housing and the limited supply.
Zach McDonald
Well, it’d be interesting to see, these changes over the next few years, 5, 10 years. I mean, my hope is that this’ll be capitalism at its finest. This’ll be an opportunity really for the market to … the market has already spoken and that’s why we’re where we’re at. People have been pushing for this for awhile, but then to see, okay, well let’s see the out-flowing of this, and I guess the transitionary question. Who do you think benefits from this, these zoning changes in the city of Seattle?
Nick Ridgeway
That’s a great question. So if I were selling this or selling this idea, a mentor of mine always said sell the negatives, so let’s talk about-
Zach McDonald
Talk about the negatives.
Nick Ridgeway
What some potential negative impacts could be and then that’ll kind of of lead us into how … who is this going to benefit? Again, we talked about some of the concerns that people have. Just the overall impact in a neighborhood when you increase density in a neighborhood that maybe isn’t used to it. Again, because of the size limits, the setbacks, the overall height, especially even now, a lot of builders don’t like the limits on the single family housing, but it just makes us be a little bit more creative and I think people aren’t going to see that impact. It’s not like all of a sudden you’re going to drive down a street and there won’t be any more single family homes and it’ll just be big boxy fourplexes. It’s these can get interwoven into a neighborhood.
Nick Ridgeway
Another one of the negative feelings is that they’ve eliminated the parking requirement and I think it’s important that they did that because quite frankly there are a lot of sites in Seattle where you just can’t make it fit, where it would be a great site. It’s close to housing. It’s say in the Maple Leaf area, close to the new light rail in Roosevelt-
Zach McDonald
You may not need a car in general.
Nick Ridgeway
You may not need a car, but the fact of the matter is is that as a builder developer, I look at it and I go, “Well, but a lot of the market still likes to have at least-”
Zach McDonald
[crosstalk 00:16:03].Nick Ridgeway
Yeah. Whether it’s a garage or an off street spot. So I think this fear of everything that gets built is going to have no parking and it’s going to crowd the streets. I don’t think it’s really that large.
Zach McDonald
I don’t think the market will allow that.
Nick Ridgeway
No, because people still expect it and they will pay for it. And if it’s done right, yeah, there’s still a value there. So, and I think having the option of both will be important. So as far as who it’s going to benefit, I think. I think in every range, whether you’re a renter or you’re a homeowner, whether you’re looking into getting the ownership market, whether you’ve been a longtime homeowner and maybe are looking at, “Wow, I’m a little fearful of what’s happening in the stock market or in the economy.” Real estate obviously is a great long-term hold, a hedge against inflation. And so I think this is going to give a lot of opportunity for people that may not necessarily want to be a big landlord, but understand and realize the benefit of long-term real estate ownership. So yeah, I think it’s going to have wide range of benefits. There will be obstacles to overcome. There’s still a huge cost to building these. They’re very expensive to build per foot. There’s still a lot of regulatory things that have to be between permitting a sewer impact fees, things like that.
Zach McDonald
Well, you’ve built these already. You’ve been doing a version of this already.
Nick Ridgeway
The price per foot gets up there. And then there’s, if you’re a homeowner, as a builder developer, I can go out and I can go ahead and fund these projects like through groups like Legacy or other groups. But if you’re a homeowner and you have, let’s say, debt on your property, it gets a little more difficult if to get a line of credit, you have to go and get a private money loan, things like that. So I think there’s still work to be done and yeah, but I think we’re on the right track.
Zach McDonald
Okay. The objection that I hear it to that response is that this is really just going to benefit builders and developers. They’re going to buy up these houses, they’re going to fix them up or tear down the existing house. They’re going to build a couple attached detached units, and now they’ve got this, you know, they’re selling three houses and they’re really not providing affordable housing there. They’re still catering to the market and the higher price demographic.
Nick Ridgeway
Yeah. I saw a response to that the other day and it was kind of of a flippant response, but, and I don’t necessarily agree with it, but somebody said, “Great. If they do that, if builders and developers do that, that’s just going to provide more housing,” but as somebody that’s underwritten a lot of these already, it’s not easy with the cost involved, it’s very small scale. It’s incremental development. I like it because I’m a little bit risk averse as a builder and developer, so I like the scale of it. I’m okay with making it-
Zach McDonald
[crosstalk 00:19:01] an investment as a builder developer then tearing down a house.Nick Ridgeway
Definitely, definitely, but again, my passion behind this lies in the fact of, let’s take for instance a project that we have in Sunset Hill right now that one of our builders is doing. We preserved a house, it was almost 100 years old. I know there were other builders that were looking at buying that, tearing it down, and building a big mcmansion. And in order to do that, that’s almost what you have to do to afford the land that’s underneath the existing home. You have to turn around, if you’re going to pay 6, 700,000 for a lot, you have to turn around and sell something that’s pushing two million.
Nick Ridgeway
So what I loved about this is we preserve this old house, it literally is ready for the next 100 years and it’s going to be a great fit for somebody. And then we’re also building and selling separately, in this instance, a detached ADU, so it’s going to be a new construction, two bedroom, one and half bath, some outdoor space, a little bit of yard space off street parking. And it’s going to be in the 500s and to me that’s-
Zach McDonald
[crosstalk 00:20:05].Nick Ridgeway
Yeah. Instead of building and developing something, that would be one six to two million we’re putting on, yeah, we’re putting … We have product on the market at 899 and we’re going to be somewhere in the high fives when the new construction is done. And I like that combination. Now not everybody … I mean that’s still expensive. Let’s be honest. That’s still expensive, but it does provide more options for people.
Zach McDonald
Certainly. So, Nick, another question for you. Challenges. What are some of the challenges to the new zoning in the city of Seattle?
Nick Ridgeway
I think for homeowners, for existing homeowners that are interested in doing this, there’s going to be two big challenges. Well maybe three. One is just the cost to get it done and I think there are a couple of small builders out there that aren’t necessarily developers. They don’t build stuff on spec. They want to build for the homeowner that are great fits, but it’s just getting it financed. Not only is it expensive to do, but getting banks and lenders comfortable with the fact of, okay, how do we analyze this? How do we underwrite it? Is it as a rental property, commercial, residential, it’s … and so I think working through that process.
Zach McDonald
That’d be interesting.
Nick Ridgeway
Yeah, it would be a challenge. And then seeing if we can get some relief on some of the regulatory aspects of it because what we consider in the business are soft costs, but as far as permitting, sewer capacity charts, things like that, some of which gets passed onto the homeowner, like the sewer cap charge. But other things just have to be paid upfront. And, boy, with a scale of let’s say a thousand square foot detached ADU to overlay some of these costs on it really kind of of make it almost prohibitive to actually build. So, and that’s whether you’re a homeowner or whether you’re [crosstalk 00:22:03].
Zach McDonald
Because you’re still going to be subject to all the same regulations as the homeowner with an ADU.
Nick Ridgeway
Very much so.
Zach McDonald
But you will be eating those, a lot of those … even the sewer capacity charts if you’re not selling the home.
Nick Ridgeway
Yeah. Yeah. And then it’s just going to be a timing thing. I think it’s a benefit for say a homeowner that wants to do this because you can start your permit process and then the construction process actually can be very quick on these detached ADUs. We’ve really just seen it, just in the past two years, condensed quite a bit and so, and that’s when you know, all of a sudden you’ve created that … If you’re a homeowner, you’ve created that annuity, it’s going to be paying you back. Now you are going to have some underlying costs to that, but let’s say a new loan or a HELOC or cash that you took out. But most often I think for most homeowners it’s going to be how can I finance this, how can I make it work, and then how’s it going to benefit me in the longterm? So what’s that payback going to be.
Zach McDonald
Long term picture. Okay. How about fears that people have? What are some of the major fears that you’ve heard or experienced and interacted with and then what would you say to those fears or those people?
Nick Ridgeway
You want the rational or irrational?
Zach McDonald
I’m okay with irrational.
Nick Ridgeway
It’s amazing how fearful people can get, I think the fear, the biggest fear is that we’re going to destroy single family neighborhoods and I don’t really know where that comes from. I had actually a gentleman say to me the other day, “Well, the zoning for that is over there. It’s not here.” And I said, “Well what?”
Zach McDonald
Not in my backyard.
Nick Ridgeway
Yeah, literally not in my backyard. I don’t really know where the crux of that came from. I think what he’s saying as well, the multifamily zoning is over there, but the fact of the matter is a huge part of our city is zoned single family. And I think we can keep a lot of that character, which is a lot of people and rightfully so, me included. I don’t want to lose the feel. I love it. It’s you can walk down the street with your kids, you can push a stroll, or you can go biking on the sidewalks. There’s engagement, there’s people out working in their yards. There’s people sitting on their front porch.
Nick Ridgeway
We don’t need to lose that to radically increase the density of our housing. So I think that’s one of the fears that people have. I think that they’ll see everything just get bulldozed immediately and trust me, it’s just in the underwriting of it, it doesn’t make sense. And I just don’t think it makes economic sense to go … I think it makes more sense to keep a lot of what we have and then to re-utilize.
Zach McDonald
It’s expensive to build a whole new house. So if you can preserve the existing structure add value to it. Get it ready for the next person. But then also-
Nick Ridgeway
We’ve seen a lot of fun stuff come out of this too. There are companies out there that are saving, and preserving, and actually deconstructing when an old home needs to come down if it has to come down because it’s just functional obsolescence or most often there’s just some sort of kind of of catastrophic issue with it. There have been some people that have been deconstructed in these old houses and then being able to reuse, and it’s not just the architectural elements that a lot of us are used to, “Oh, we’re reusing some old cool windows or the handrail or the crystal knobs.” But some of the really costly items, like a lot of the dimensional lumber. And I think that’s fun and we’re seeing that get then reused into a new construction into detached ADUs. And so some of that history being preserved even further. So.
Zach McDonald
Super Cool. Super Cool. The overall thoughts, what are your overall thoughts about the zoning changes? How do you feel about it?
Nick Ridgeway
I feel great. I feel really, really good. Again, we have a housing issue in the city of Seattle and quite frankly in a lot of other cities up here in the northwest. So I think what this does, again, it’s just supply and demand and it gives a lot more housing options. Housing is essentially a pretty basic need. And again, as we’ve discussed, that can change as life changes. We go through these different life stages as you call them, those housing needs can change, but at some point we just, we all have that need.
Nick Ridgeway
And so I’m excited to see it and I’m excited to see what … I have my own thoughts and feelings and ideas on this, but just to see what the market comes up with. There are people that aren’t what you or I wouldn’t consider your traditional builder developer. And let’s see. Let’s see the kind of of product that they come up with that I’ve already talked to people about, they’re looking at doing basements on an ADU, they can add a little bit of extra space.
Zach McDonald
That’s interesting.
Nick Ridgeway
Because it’s what’s called free far free floor area.
Zach McDonald
You can build bigger ADU.
Nick Ridgeway
You could.
Zach McDonald
And accommodate maybe a larger group of people.
Nick Ridgeway
You could. Now, I still think what I love is this zoning still regulates because we still have overall high limits. We have set back limits and things like that, so we don’t necessarily … what I don’t want to see as maybe negative impact on a neighbor. But what this does is yeah, it allows for some creativity and okay, how can we build something? And the other thing that I’d like to see innovation wise is how can we get … how can we help out with things like age in place because we have an aging demographic, especially in the city of Seattle.
Nick Ridgeway
We’re certainly getting younger. I think in a lot of the … and if you go in, you looking at condos or things like that, millennials are starting to come into the market. But we have a lot of baby boomers that still live in the city and they’re looking at, “Okay, what’s my next option?” Like we discussed before and, “Can I stay here? Can I do maybe kind of of an act of adult house in a detached ADU that I can age in place,” and not something that, “Hey, I’m looking at being here for the next five to eight years.” But no, “I just retired and I can live in this house safely and be healthy and be functional and active, you know, well into my 80s.”
Zach McDonald
Well, in that situation, they might have their house paid off already.
Nick Ridgeway
Exactly.
Zach McDonald
And have the cash to do the project and now they can make that move and have and rent out the current house. That’s huge.
Nick Ridgeway
Yeah.
Zach McDonald
Another question that I’ve heard and just more of a question of my own is statewide, do you think that the city of Seattle, will set a precedent for other cities or the state as a whole as far as the zoning changes?
Nick Ridgeway
That’s a great question because you know, this was before this state Senate and the House, there was an ADU kind of of, I can’t remember what the bill was, but, and it didn’t end up going through. I think people will start to look at the city of Seattle-
Zach McDonald
Watch it, kind of of see how it goes.
Nick Ridgeway
And watch it and see how it goes. We went from really kind of of behind the times to be honest in Seattle to now as on the forefront as one of the leaders, and I think this is … I think we’ll see over the long term that this is a very creative approach. Maybe not quite as drastic as what the state of Oregon did with, I think it was HB 2001 which essentially their state and the state Senate and legislation voted on and now it’s just up to the governor to sign. Maybe not quite to that level, but in a way still accomplish a lot of the same things, some density.
Nick Ridgeway
So I still think we have a long way to go, but I like, I like that again, that this is … that we’ll see some things that are maybe market driven and yeah, I think we’re going to see other jurisdictions because look, the state of Washington, we’re not going to be expanding our growth management act and we don’t necessarily need to. We’re not allowing anymore of these big huge plan developments. I don’t think we need to expand the GMA. I think what we need to do is look to our urban cores and say, “Okay, this is where a lot of people work. This is where a lot of the economy has driven, unless it’s agriculture. And so how can we service people that live and work in those areas?” And I think that’s going to have a … We live in a beautiful area and … but we only have one shot to preserve.
Nick Ridgeway
I’m sure you’ve seen, I’m a year or two older than you. Am I right?
Zach McDonald
Only a couple.
Nick Ridgeway
So, but I’ve seen Five River Valley that used to be beautiful and no offense to the car dealerships there or whatever, but it’s been paved over and we’re not going to get that back ever again. And so I think this kind of of helps preserve maybe some of that outdoor entertainment and joy that we have and then concentrate that density in more appropriate areas. So, that’s a long way of answering your question. But yes, I think we’re definitely going to see other cities look at this. And it could be an economic benefit. Look at it’s going to help increase the property tax base as well.
Zach McDonald
Well if you own all that and have the restructures on it, all of a sudden the city’s making a bunch of more money off of the properties too. Or even if they were divided up. It’s still going to. Yeah, it’s going to bring a lot more money.
Nick Ridgeway
Now hopefully city of Seattle-
Zach McDonald
If you’re watching this, which you probably will eventually.
Nick Ridgeway
Mayor Durkin, council, hopefully they’re good stewards of that and utilizing the funds that this’ll generate and yeah, put that to good use.
Zach McDonald
Yeah, it’s a beautiful place to live. So it’s fun to see some try to have creative ways to keep that.
Nick Ridgeway
There’s been a lot of negativity lately and a lot of it really does stem from this affordable housing issue or lack of housing options, I like to say. And I think this is really, really going to change that. So a lot of people, I’ve built a lot of townhomes in my lifetime and not at, not necessarily everybody wants attached walls or some people love that. They just turn the key, they close the door, they leave, they don’t have anything to worry about. But there are a lot of people like us that, “Hey, we want to spend some time in the garden or we want to have a little bit of yard space.” And so this kind of of help, this really provides a great mix of product.
Zach McDonald
Yeah, I like to think of myself as a pretty good salesperson, but I don’t think I could sell my wife on a townhouse.
Nick Ridgeway
Yeah.
Zach McDonald
So the last question I had, and this is the one I always talk about the real estate market, I mean people that are watching this are usually watching my market updates and I talk about housing prices and where the market’s going, where it’s been. Where do you think housing prices are going to go as a result of this? So just as a direct result of this, regardless of what the market will do, because the market always goes up and down. There are going to be changes, and corrections, and blips, but overall in the long run, what do you think, how do you think this will impact housing prices?
Nick Ridgeway
I think that’s a great question. I think there are a couple of nuances to this. One, it’ll really be interesting to see, and I don’t know the answer to this, but what’s this impact? What’s the direct impact of the zoning part of the zoning change that said, “Hey, you can no longer … There’s a limit on the size of a single-family home that you can build,” without getting into the weeds, it’s what’s called a 0.5 far. If you have a 5,000 square foot lot, you can build a 2,500 square foot home. Now again, there are certain…
Zach McDonald
You’re not going to have a 3,800 square foot house on a 3000.
Nick Ridgeway
Yeah, there are certain wrinkles in that zone where they don’t count basement square footage and things like that, but in essence, that’s really going to change. And so that’s going to limit a lot of the bigger homes. Is that going to affect the existing housing stock that may be, is that 3 or 4,000 square foot house? Is that going to drive the value up? Maybe? Potentially.
Zach McDonald
Do they even needed that big of a house or are they just buying it because that’s what’s on the market.
Nick Ridgeway
My opinion is no that they don’t. My opinion is on a smaller house you can get so much more creative with how you program the layout with the types of finishes that you have. If you have a 1200 square foot house, you can afford price per foot to do some pretty nice finishes. If you have 4,000, 5,000 now generally maybe if you’re building one that big.
Zach McDonald
It’s going to get spec.
Nick Ridgeway
Yeah, and do you really need … I think we need to look at how do we use our housing? Do I need a room that I do separate room for yoga and a separate room for … Not that I do yoga.
Zach McDonald
You should see him do yoga in a stretchy pants, hot yoga right here.
Nick Ridgeway
It’s a beautiful thing, but do I really need a separate room or can we have multi-functional space that really works? So as far as to back to your question, I think it’s yet to be seen as to what it will do for the larger single family home. I think it’s going to help value of a lot of people maybe that were sitting on a house that maybe needs some work. I think those kind of of houses will become ideal for builders and developers like me that are looking at, “Hey, let’s go ahead and restore that house, potentially build an ADU rental in there and then let’s go ahead and build a detached to ADU.” So yeah, we’ll see. I think what it’s going to do though is I could see if we start to see more and more of this, of these housing options come on the market. I don’t think it’s going to hurt housing pricing at all, but I think what it’s going to do is help regulate it a little bit.
Nick Ridgeway
Because again, when we have more options, when people can say go out and rent a detached ADU and they don’t have to spend the mortgage, or what’s it cost to rent a single family house in Seattle these days that needs work? 3,000? 3,500?
Zach McDonald
More than my mortgage.
Nick Ridgeway
Yeah. And so I think this is going to help provide some options, which again, really if we … when we increase supply that certain, that always helps.
Zach McDonald
When demand is continuing to increase too. So yeah, this is forward thinking. It’s already kind of too late, but hopefully we can make up for some lost ground.
Nick Ridgeway
Yeah. We’re such a strong education and innovation center and within, not just the city of Seattle but Bellevue, Kirkland, the east side. And that’s a benefit to us no matter what people think about some of the larger tech companies or Amazon or Microsoft. That is certainly a benefit to us. And the fact is that because we’re that way, we are going to continue to grow. And so how can we house and provide housing and provide not just housing, but safe kind of vibrant communities for people to live in. And I think this, certainly … this is a start. I certainly don’t think it’s the … I think it’s just the beginning, but …
Zach McDonald
Cool. Thanks man.
Nick Ridgeway
Yeah, appreciate it.
