why backyard cottages?
seattle's housing affordability crisis
Seattle’s explosive population growth has coupled with limited new housing supply to result in ballooning home prices and rents, displacement, an increasing homeless population and gentrification. The city’s population growth is significantly exceeding planning estimates: while the City’s Housing Affordability and Livability Agenda estimates that Seattle will need 50,000 units of housing, 21,000 people moved to Seattle between mid-2015 and mid-2016 alone, and Washington State estimates that Seattle’s population grew by 117,000 between 2010 and 2017. In short, Seattle’s actual population increase has greatly outpaced official estimates, and few mechanisms have been implemented to date to address this gap.
Moreover, overall population growth only tells part of the story. To date, new housing supply has been overwhelmingly concentrated in specific areas of the city zoned for multifamily housing. Meanwhile, over 50% of available land in the city is zoned for low-density single family housing. These areas have grown in population by roughly 3% since 1990. In these single family zones, the only way to increase housing density under current development restrictions is through backyard cottages and attached Accessory Dwelling Units (ADUs, often referred to as “mother-in-law units”).
backyard cottages as one solution
Given the preponderance of single family zoning in Seattle, detached homes will remain a key feature of our neighborhoods for the foreseeable future. Backyard cottages and ADUs represent options to accommodate a portion of Seattle’s population growth while retaining the single family neighborhood character.
Additionally, backyard cottages and ADUs can help:
- create a path for more equitable housing access and ownership
- increase the variety and sizes of housing types
- help slow displacement by providing homeowners with rental income to cover rising property taxes and home maintenance costs
- build wealth for homeowners
- create spaces for aging-in-place and multigenerational housing
Many lots across seattle can host a backyard cottage: tens of thousands of lots, in fact. under current zoning rules, a conservative estimate shows roughly 46,000 lots would be eligible to host a backyard cottage.
However, relatively few backyard cottages and ADUs have been permitted: Seattle’s neighbors, Portland and Vancouver BC, have seen rapid expansions in backyard cottages (or “laneway homes” as they’re known north of the border). Seattle’s growth, in comparison, has been limited. Why?
Regulatory: zoning code dramatically limits the sites that can host a backyard cottage. minimum lot requirements (size, depth and width), owner occupancy requirements, off-street parking requirements, and the requirement that only one backyard cottage OR ADU is allowed on a site together limit the development feasibility of tens of thousands of lots.
Cost: Backyard cottages can be expensive. While there are examples of inexpensive DIY cottages, most new construction backyard cottages cost between $200K-500K. Permit fees and wastewater impact fees add to the already daunting cost of construction in an urban environment like Seattle.
Financing: While financing is technically available, those on a low or fixed income or with insufficient equity can have a hard time financing a backyard cottage. And so long as backyard cottages are rare in Seattle neighborhoods, finding comparable properties for real estate valuation purposes is a challenge.
Process: The design, permitting, financing and construction processes can be confusing and difficult to navigate. It requires a homeowner to become a de facto one-time developer, and the learning curve is steep. Additionally, becoming a landlord entails a series of managerial tasks that can be daunting for some homeowners.
Regulatory: changes to the backyard cottage code requirements could make thousands more sites eligible to host a backyard cottage and reduce some of the challenges projects face. the city just released a report evaluating the impact of proposed backyard cottage regulation changes (Draft Environmental Impact Statement). you can review and comment on the draft eis here.
Cost: standardizing designs, streamlining construction techniques, and reducing operations and maintenance costs all help make backyard cottages more affordable. See our page about the Ten Penny Backyard Cottage for information on how we’re working to reduce design and construction costs. The City’s Draft Environmental Impact Statement also proposes potential permitting fee reductions and permit expediting as ways to incrementally reduce costs. And the King County Wastewater Treatment Division is currently evaluating modifications to its sewer connection fees (currently around $13,000 per backyard cottage hookup). See King County’s website for more information. (https://www.kingcounty.gov/services/environment/wastewater/capacity-charge/review-studies.aspx)
Financing: a variety of options are emerging to help homeowners unable to access traditional financial vehicles (home equity loans/lines of credit, construction loans) to design and build a backyard cottage. Existing alternative routes include creative ownership models (typically a tenants-in-common arrangement) where an additional party--often the future backyard cottage occupant--purchases an interest in the property and financing the property development costs. (See CoBuy for an example of a firm with expertise in guiding clients through the legal process of setting up such arrangements.) Also in developmental stages is a loan product based on rental income potential.