Realogics Sotheby’s International Realty (RSIR) signed an executive licensing agreement with Realtie, a software startup utilizing artificial intelligence (AI) to identify potential sites for redevelopment into “missing middle housing.”
Defined as multi-unit housing within residential areas, middle housing is at the center of House Bill (HB) 1110, which aims to increase options like duplexes, triplexes, townhomes and small apartment buildings across Washington. Municipal governments, including Seattle’s, are expected to comply by July 1.
The Seattle area is particularly short on middle housing, especially at an affordable price. According to the Puget Sound Regional Council, over 80% of the region is zoned for single-family housing, with over 46,000 housing units needed immediately.
Mayor Bruce Harrell’s One Seattle plan was finalized in January — the update to Seattle’s Comprehensive Plan would add more than 100,000 homes to the area over the next two decades by “upzoning” single-family zoned-land for multifamily use. However, no formal legislation implementing any zoning changes has been submitted to the Seattle City Council.
The council will likely cast final votes on the One Seattle plan this spring or summer. In the meantime, developers wait — and prepare — for what could equate to over $756 billion in new housing potential when upzoning legislation is executed.
Realtie software uses AI to identify new development opportunities, including those that will arise as a result of HB 1110. Realtie and RSIR project that over 1.2 million homes in the state will fall under the bill’s A or B tiers, meaning they’ll be zoned for two to six homes per lot and allow two accessory dwelling units (ADUs).
Even if just 5% of those homes were redeveloped into middle housing each year, that amount could potentially be worth $37.8 billion annually. Furthermore, unlike high-rise condo buildings, smaller multifamily builders can be permitted, developed and occupied within about 18 months, meaning developments can be profitable faster.
“This is the most consequential land use upzone in the history of Washington state and it presents a real estate brokerage opportunity like no other,” Tadashi Shiga, co-founder of Realtie and executive director of RSIR’s land division, said in a press release.
Through their new partnership, RSIR brokers will follow Realtie’s seller leads for land listings and assist in seller relocation.
“We are elated to partner with Realtie on this first-to-market solution, which will be implemented immediately upon municipal governments publishing their response to the HB 1110 mandate,” said Dean Jones, president and CEO of RSIR. “Our platform provides a win-win-win scenario for the existing owners of land, the ecosystem of partners within the redevelopment process, and the consumer seeking attainable housing options.”
Outside of Washington, Realtie plans to partner with Sotheby’s International Realty (SIR) brokerages around the country, including Atlanta Fine Homes SIR in Atlanta and Russ Lyon SIR in Arizona.