Infill Housing and the Affordability Illusion - A Real Example

Recently, I sold a rental property I owned inside the Urban Growth Area.

It was a 3-bedroom, 2.5-bath single-family home renting for $3,000 per month. In today’s market, that was a reasonable rate for the area. The parcel was zoned R-7600 — approximately six homes per acre. Because the lot was just over half an acre and contained only one home, it was technically “underdeveloped” relative to the zoning capacity.

A developer purchased my property — along with adjacent parcels — to build additional homes.

From a purely economic perspective, this makes sense.From a growth policy perspective, it aligns with the Growth Management Act (GMA).From a supply standpoint, it increases total dwelling units.

My personal, actual & annectodal example

But from an affordability standpoint, the outcome is more complicated.

What Actually Happens in Infill Redevelopment

The redevelopment pattern is not:

• Single-family residential (SFR) → Multi-family residential (MFR) at lower price points

Instead, it is:

• One moderately sized home on a large lot→ Three larger homes on smaller lots→ Each priced starting in the $900,000 range

The original home — while not “subsidized affordable housing” — was affordable to the tenants who lived there.

The replacement homes will not be.

We gain units.We lose price accessibility.

Those are not the same metric.

Density ≠ Affordability

Washington State policy increasingly pushes densification inside the Urban Growth Area. The theory is straightforward:

Increase supply → Reduce upward price pressure.

In macroeconomic terms, supply does matter.

But at the parcel level, what often occurs is value maximization within zoning constraints — not affordability optimization.

Developers must:

• Purchase land at market value

• Carry financing costs

• Pay impact fees

• Cover permitting, engineering, utilities

• Meet building code and energy standards

• Assume market risk

The argument is often made that impact fees and permitting costs are the core affordability barriers. While they do contribute to total price, they are typically a fractional component of the final sales price — especially when homes sell near $1 million.

The larger driver is land economics and the price point necessary to make the pro forma pencil.

In high-demand markets, new construction rarely enters at the lower end of the price spectrum. It enters at the highest price the market will bear.

A Policy Question Worth Asking

Is the Growth Management framework solving for:

• Total dwelling unit counts?or

• Housing affordability across income bands?

Because those objectives are not inherently aligned.

My former rental was:

• Naturally occurring affordable housing (NOAH)

• Market-rate but attainable

• Stable

It is now being replaced with three market-rate homes that are unattainable to the previous tenants.

This is not an indictment of developers. It is rational market behavior.

It is also not opposition to density. Increased housing supply is necessary.

But we should be honest about what densification accomplishes:

• It increases total units.

• It does not automatically reduce price points.

• It does not necessarily preserve attainable rentals.
  

The Missing Middle Question

My property was not rezoned to allow true multi-family housing.

It remained single-family zoning with greater lot utilization.

If we are serious about affordability, should we be asking:

• Are we incentivizing the right product types?

• Are we preserving naturally occurring affordable housing?

• Are we aligning zoning reform with price-band goals?

• Should GMA updates distinguish between unit growth and price accessibility?

Because SFR-to-SFR densification is not the same as SFR-to-MFR conversion.

The Broader Debate

This experience is anecdotal. It does not negate broader supply economics. But it highlights a reality often lost in policy conversations:

Not all density produces affordability.

As Olympia considers housing reform in current and future legislative sessions, a core question remains:

Are we measuring success by how many homes are built —or by who can afford to live in them?

Until those metrics align, we risk congratulating ourselves on increased density while affordability continues to drift out of reach.