Abstract
Washington State’s housing shortage is partly driven by regulatory barriers introduced or reinforced since 2012: restrictive zoning, lengthy environmental review, impact fees, and parking mandates all raise the cost and slow the delivery of new housing. This post summarizes those regulatory burdens, cites evidence on how supply constraints harm local economies, and proposes pragmatic, free-market reforms—streamlined permitting, elimination of parking minimums, ADU-friendly rules, impact-fee reform, and by-right upzoning near transit—that can expand supply and reduce prices while preserving local choice and fiscal prudence.
Washington’s affordability squeeze is not just a demand story — it’s a supply problem made worse by regulation. Economists find that tight housing regulation is a major driver of higher prices and misallocated labor and capital across cities (Hsieh & Moretti, 2019). When local rules make building slow, uncertain, or expensive, fewer homes get built and the ones that are built cost more. (Hsieh & Moretti, 2019).
Key regulatory pain points in Washington
• Accessory dwelling rules. Seattle and the state have moved recently to encourage ADUs, but historically restrictive limits (owner-occupancy, low lot yields, small size caps) curtailed production; reforms in 2019 and subsequent state guidance have increased permits, but many municipalities still have implementation frictions. (City of Seattle, 2022; WA Department of Commerce, 2025).
• Environmental review and permitting. The State Environmental Policy Act (SEPA) and multilayered local reviews add time and uncertainty to many projects, and requirements to mitigate off-site impacts can trigger costly off-site construction or added exactions. These processes help protect the environment and community values, but they also increase pre-development risk and carrying costs. (WA Dept. of Ecology, 2018).
• Impact fees and frontage/utility requirements. Local governments levy impact fees and require on-site or frontage improvements that can add tens of thousands to the cost of each new unit in Washington, a measurable upward pressure on final prices. (BIAW/NAHB analyses; MRSC, 2024).
• Parking mandates. Minimum parking requirements have historically made small, low-cost housing legally infeasible in many areas. Recent reforms to reduce or lift mandates near transit have helped, but many jurisdictions still impose parking that increases construction costs and uses scarce land. (Parking Reform Network; Transportation Dept. analysis, 2024).
Free-market, pro-supply solutions (practical & politically plausible)
- Streamline and cap review timelines. Convert low-impact housing projects (duplexes, triplexes, ADUs, small multi-family) to ministerial/no-public-hearing approval with clear checklist standards. Shorter, predictable timelines lower carrying costs and risk without eliminating environmental protections for larger or sensitive projects. (See SEPA thresholding practices). (WA Dept. of Ecology, 2018).
- Expand ADUs and allow two ADUs per lot by right. ADUs are low-cost incremental supply that fit into existing neighborhoods; state and city reforms show permit spikes when rules are relaxed. Municipalities should remove owner-occupancy rules, lower lot-size limits, and adopt simple, objective permit checklists. (City of Seattle, 2022; WA Dept. of Commerce, 2025).
- Eliminate parking minimums near transit and introduce parking maximums elsewhere. Removing mandated spaces cuts building costs and frees land for housing; evidence shows parking reform enables more compact, lower-cost housing. Allow developers to provide parking voluntarily where markets demand it. (Transportation Dept.; Parking Reform Network, 2024).
- Reform impact fees and frontage requirements. Replace blunt per-unit fees with location-sensitive, pro-growth calibrations and offer phased or waived fees for smaller/affordable units. Allow fee credits for infill and redevelopments that replace underused uses (surface parking, single-story commercial). (MRSC; BIAW analysis).
- By-right upzoning near high-opportunity transit corridors. Allow duplexes, triplexes, and small four-plexes in single-family zones close to transit and jobs — an approach that increases supply where demand and infrastructure already exist while minimizing sprawl.
Conclusion
Washington’s affordability challenge requires scaling housing supply quickly and affordably. Many successful reforms are modest: clear by-right rules, faster permitting, smarter impact fees, ADU expansion, and parking reform. These free-market-oriented changes reduce red tape, lower costs, and let entrepreneurial builders and homeowners respond to demand — while preserving targeted environmental and community protections for larger or sensitive projects.
References (APA)
City of Seattle. (2022). Accessory Dwelling Units 2022 annual report. Seattle Office of Planning & Community Development. https://www.seattle.gov/documents/Departments/OPCD/OngoingInitiatives/EncouragingBackyardCottages/OPCD-ADUAnnualReport2022.pdf
Hsieh, C.-T., & Moretti, E. (2019). Housing constraints and spatial misallocation. American Economic Journal: Macroeconomics, 11(2), 1–39. https://doi.org/10.1257/mac.20170388
Washington State Department of Commerce. (2025). Accessory Dwelling Units (ADUs). https://www.commerce.wa.gov/growth-management/housing-planning/adus/
Washington State Department of Ecology. (2018). SEPA handbook (update). https://ecology.wa.gov/getattachment/4c9fec2b-5e6f-44b5-bf13-b253e72a4ea1/2-2018-SEPA-Handbook-Update.pdf
Building Industry Association of Washington / NAHB. (2025). Impact fees in Washington State for 2024 (report). https://housingstudies.biaw.com/reports/impact-fees-in-washington-state-for-2024
