homeowners and developers, estimated that about 10 percent of the approximately 762,000 properties his firm has analyzed in the Seattle area are good candidates for streamlined approval of ADUs. “The goal here is to look at every single home … you have homes that have a big back yard and you can put accessory dwelling units in that,” he said, explaining that CityBldr is in the midst of a pilot initiative in Seattle to streamline the creation of ADUs on a larger scale by using data to quickly identify “single family homeowners with a lot that we can automatically approve … we are looking at parcel shapes, topography, distance to transportation, things like that.” Copley said the initiative, which he has dubbed Add a Unit, rose out of talks with local governments about how to solve the problem of housing

affordability without taxing developers or requiring developers to build a certain amount of affordable units — a policy which often backfires by pushing developers to build elsewhere. “As prices go up and the margins on developable land goes down, we’ve got to create market-based solutions, and I think one of the best market-based solutions are ADUs,” Copley said. “It’s great for the property owner; it’s great for the city because we are creating new homes, and these ADUs are kind of a good bridge to homeownership.” Tachovsky, the Buildfax CEO, said she was part of a housing council in her hometown of Austin, Texas tasked with finding solutions to the affordability crisis there. The council landed on ADUs as one of the best solutions. “In order to keep the soul of our city, we had to figure out how to address

affordability in our city,” she said, acknowledging that ADUS are a fairly “narrow solution to the affordability crisis. … (but) I think it’s the best solution I’ve heard of out of any of them because it’s a market-based solution which is usually better than government- based solutions.” ZONING ROADBLOCKS Copley noted that three of four visitors to the CityBlder website own properties that don’t have zoning for multi-family, limiting the development options for those properties. But ADUs are one option still available for single family zoning. “(Streamlined ADU development) could drastically increase the housing stock in places like Seattle, Portland, LA, the greater Bay Area … all of those are great areas for creating ADUs,” he said. “I could see this as being the next housing revolution.” Matthew Gardner, chief economist with Windermere Real Estate in Seattle, agrees that zoning limitations are a hurdle to more affordable housing inventory in the region. “Without a doubt Seattle has an issue,” said Gardner, noting that 68 percent of the city is zoned as single family. “That might have been appropriate in the 1980s. Is it appropriate now? Absolutely not.” But Gardner doesn’t believe streamlining ADU development — which he noted the city of Seattle is proposing — will significantly solve the housing inventory and affordability problems the area is facing. “If it offers any help at all, it’s going to be de minimis. Every little bit helps but I don’t see it as any form of panacea,” he said, adding that more aggressive zoning changes that allow for much

denser housing development is more likely to make an impact. “You can put five or six single family homes on an acre if you can find it. Or you can put 18 to 22 townhomes. … We’ve got to densify the land.” STACKED DEVELOPMENT IN PORTLAND Justin Grubb, the Portland real estate investor and developer, said market forces have pushed him to denser development. His company started out several years ago with fix- and-flips of existing properties, then moved to new construction, tearing down properties and rebuilding them as luxury homes. But he found the nearly million-dollar price points on those homes were getting too rich for buyers. “When you sit on a million-dollar property for a few months waiting for a buyer, you get a little nervous,” he said, noting that he was building on lots zoned R-1, which allow for as many as 1 unit for every 1,000 square feet. “I’ve got all these great lots, we’re not maximizing density and it really was looking like the market was saying this was too much money.” So Grubb pivoted his strategy and started focusing on building smaller complexes of up to 15 units, depending on the lot size. “I think stacked development makes sense,” he said. “We’re doing three- story, four units on each level. I’m trying to get as large of units as possible … nobody wants to live in IKEA. … The goal is just to make smaller and smaller pieces and make it more affordable. “Put in a little less house and a little more building in there; we could still hit our numbers,” he continued. “You’ve got to be able to pivot.”


Atlanta Detroit Minneapolis-St.Paul Portland Dallas-Fort Worth Phoenix Seattle Riverside-San Bernardino San Francisco


70% 70% 70%

69% 68% 68%

67% 67% 66% 66%

St. Louis Houston Pittsburgh


Los Angeles Philadelphia New York Tampa Washington, D.C. Chicago U.S. Total

63% 62% 61%



57% 55%

Boston Miami



than they are in other areas. Maybe I roll out of a duplex in LA or San Francisco. I have enough money from that rollout that I can buy a new construction multi-unit building that I’m building (in Portland).” Gardner said “classic NIMBYism thinking” is keeping Seattle from a bigger push toward denser housing development. But he warned that thinking could lead to harmful long- term impacts for the region. “At what point do we become too expensive? At what point do companies say I can create my widget in Boise, Idaho, where it is significantly cheaper,” he cautioned. “Both from a demand standpoint as well as from a demographic standpoint, zoning should not be the same as it was 30 to 40 years ago. The world is changing.”

DENSIFY OR DIE? That evolution from fix-and-flipper to full-fledged real estate developer is a common trajectory in recent years, according to Ross Hamilton, CEO with Connected Investors, an online community for real estate investors. “A lot of fix-and-flip real estate investors are going to become builders. …not necessarily because they want to but out of necessity,” Hamilton said. “There is a lot less competition to get a lot and to build on it. And the profits are a lot more predictable.” A bonus to Grubb’s new strategy: investors in higher-priced markets looking to cash out of their investment properties there started contacting him. “We started getting 1031 money contacting us like crazy,” he said. “They are able to buy a lot more here

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