Washington Bill Would Legalize Low-cost “Co-living” Homes

UPDATES
March 19: Governor Inslee signed HB 1998.
Feb. 22: HB 1998 passed the Senate 44 – 4.
Feb. 7: HB 1998 passed the House 96 – 0.

The remedy for Washington’s dire housing shortage is more homes of all shapes and sizes. Co-living homes—small apartments with shared kitchens—are a low-cost housing option that most communities lack because local zoning laws make them illegal or otherwise impractical to build. A new Washington bill, HB 1998, aims to fix that by setting standards to legalize co-living homes statewide.  

The potential affordability payoff is big. Rents in newly constructed, market-rate co-living homes in the Puget Sound region can be affordable to people earning as low as 50 percent of area median income, without any public subsidy. From 2014 to 2016 in Seattle, co-living accounted for fully 1 in 11 of total new homes built, before the city’s ill-advised raft of new restrictions all but killed off co-living construction. We can learn a lot from that instance—and apply the lessons statewide in a way that’s right for the variety of Washington communities. 

In this article, Sightline lays out:

• What co-living homes are (and aren’t);
• Their benefits of co-living homes for residents, local businesses, affordability, community-building, and the environment;
• Why Washington doesn’t see as many of these homes on the market as it historically enjoyed;
• The current obstacles to building more of this flexible, affordable housing option;
• Examples of the wildly variable restrictions on co-living homes from one city to another;
• A breakdown of legislation introduced for the 2024 session to unlock co-living homes for Washington, plus a comparison with co-living laws passed in Oregon last year;
• A back-of-the-envelope calculation of how many co-living homes the Washington legislation could open up; and
• How we get it passed.

What are co-living homes? 

Co-living homes are a low-cost, multifamily housing option in which each resident has a small, private living and sleeping room and shares with other building residents a common kitchen and other spaces. The housing type is also known as single-room occupancy (SRO), congregate housing, rooming houses, micro-housing, or residential suites.  

Technically, the defining feature of co-living homes is that individual rooms—“sleeping units,” in building code-speak—do not have full kitchens (but often have their own “kitchenette,” with a mini-fridge, double burner, and/or microwave). In co-living homes built within the past couple decades, the sleeping units almost always include their own full bathroom, though historically, shared bathrooms were not uncommon. Modern buildings often also have shared recreational spaces. The private sleeping rooms are typically 150 to 230 square feet. 

Over recent years in Washington, what little new construction of co-living homes that has occurred has been in Seattle, along with a sprinkling in a few nearby cities. The buildings can be large, with up to a few hundred sleeping units, but more commonly fall in the range of 20 to 40, built on small infill lots. Occupancy rates tend to be similar to standard apartments. See examples in Seattle (here and here), Kirkland, Redmond, and Shoreline.  

Co-living homes: Good for people, pocketbooks, and the planet 

Co-living homes are a housing choice that’s desirable for people in a variety of stages of work and life, like:  

• Renters who want a small, low-cost rental, possibly while saving to purchase a home; 
• Residents who wish to trade off square footage for location in a neighborhood they couldn’t otherwise afford; 
• People who like shared community spaces, like courtyards, kitchens, and lounges, that facilitate social connections; 
• Single seniors who want to downsize and appreciate the alternative mobility options often available near co-living homes (AARP, for one, also supports Washington’s co-living bill); and 
• Individuals who want a more private alternative to living with roommates in a traditional rental, which frees up larger rentals for families with children. 

Critically, co-living homes provide unsubsidized workforce housing near jobs to meet the huge deficit most communities face—without the need for publicly funded subsidy. That directly benefits both employees and employers, to say nothing of taxpayers and anyone trying to balance the state’s budget.  

A 2023 real estate survey found that co-living homes in Seattle rent for an average of $1,027 per month. According to HUD’s standards, a single person earning 50 percent of the area median income (AMI) can afford $1,198 per month for rent and utilities. Assuming $150 for utilities, that leaves $1050 for rent, about the same as the average co-living rent in Seattle—and average means some co-living rents are even lower. 

Legalizing co-living homes supports the state’s environmental goals. Allowing more co-living homes will help the state reduce sprawl, improve energy efficiency, and lessen car traffic and pollution. This occurs when we create housing options for people who want to live conveniently and within walking (and rolling) distance to bustling community hubs, with plentiful transit, job opportunities, shops, and schools, rather than in car-dependent areas on the urban fringe. 

Co-living homes: Another casualty of exclusionary zoning  

Co-living homes were once far more common in Washington neighborhoods (and nationally). They provided a healthy inventory of rental homes on the most affordable end of the private housing market. By the 1950s, co-living comprised up to 10 percent of the rental stock in some US cities. Soon after that, however, local governments began adopting restrictive zoning and other exclusionary rules that increasingly banned co-living or made it impractical to build or operate. Its numbers plummeted. 

Modern co-living buildings are not your great-grandfather’s rooming house. Today’s strict building and fire codes ensure that co-living housing meets all the same health and safety measures that apply to any multifamily housing.  

Co-living regulations on the books today are overly restrictive and wildly inconsistent  

Most Washington jurisdictions enforce rules that tightly restrict the construction of co-living homes, but there is extreme variation in how they regulate it. This inconsistency is in itself a strong justification for a bill that establishes statewide standards. The variation between localities makes the statewide context difficult to distill and best illustrated with actual examples of city codes.  

Terminology: “Dwelling unit” vs. “sleeping units” 

Before getting to examples, though, it’s helpful to understand a key concept for the regulation of co-living housing: the distinction between dwelling units and sleeping units. The equivalent of a dwelling unit in co-living buildings is the combination of several sleeping units and their common kitchen. It’s analogous to how a house with multiple bedrooms is a single dwelling unit. A co-living building might include a handful of dwelling units each comprised of a group of sleeping units and their common kitchen. 

For some regulations that apply to co-living homes—off-street parking mandates and density caps in particular—it makes a big difference whether they are based on the number of dwelling units or on the number of sleeping units.  

Parking mandates stymie co-living options 

For typical parking requirements, a single-detached house with four bedrooms counts as one dwelling unit. So a mandate of 2 spaces per dwelling unit means the house needs 2 parking spaces. 

Many local government codes, however, treat each co-living sleeping unit as if it were an entire dwelling unit. So in a building of co-living homes, four sleeping units along with their common kitchen would be required to have a whopping eight parking spaces. More consistent, not to mention fair, would be to hold co-living homes to standards that reflect their unique configuration, where a sleeping unit is only a partial dwelling unit. 

But worse, that amount of parking isn’t just excessive for co-living residents’ needs; it’s also incompatible with typical co-living building designs, most likely rendering construction impossible. And even if all that parking could somehow be designed in, it would make the co-living homes much more expensive—adding costs for builders and for renters. 

Density restrictions also block co-living homes 

A similar line of argument applies to density caps, which can be a severe barrier to co-living homes. Co-living sleeping units are small, and that’s the main reason they can provide relatively inexpensive housing. But that smallness only translates to lower cost if you can put more co-living homes on a site than you can put standard apartments.  

For example, on a 10,000-square-foot lot, a density cap of 40 dwelling units per acre allows for 9 apartments, regardless of their size or number of bedrooms. If that same cap applies to co-living homes, it limits a co-living building to that same 9 units, even though they might be only one-fourth the size of a standard apartment. The project no longer pencils, not to mention that a community forfeits a slew of much-needed homes. 

Solving the dwelling-vs.-sleeping-unit dilemma 

The solution is to treat each sleeping unit as a fraction of a dwelling unit for the purposes of calculating requirements, whether that’s parking spaces, density caps, or other regulations that could create barriers.  

Below are summaries of co-living regulations in 11 of Washington’s larger cities, illustrating the tight restrictions in general, as well as the inconsistency among cities. Critically, most cities treat sleeping units the same as dwelling units in their parking and density rules. 

• Bellevue permits “rooming houses” but only on a strictly limited scale—a maximum of 4 sleeping units per lot—and only on a small fraction of its residential land, and it requires 1 parking space per sleeping unit. 
• Everett permits “micro-housing,” which by its definition is not the same thing as co-living housing, because each unit is independent with its own kitchen. We could find no reference to true co-living in Everett’s code.  
• Federal Way’s municipal code does not include any definitions of co-living housing that we could find. The closest it comes is “group homes” but limits them to buildings with residents under the jurisdiction of the criminal justice system. 
• Kent requires 1 parking space per sleeping unit for “boarding houses” but does not refer to boarding houses anywhere else in its municipal code that we could find. It allows “communal residences” but only up to 3 sleeping units per site.  
• Renton permits “congregate residences” as a conditional use in just one of its multifamily zones, and mandates 1 parking space per sleeping unit. It also conditionally permits forms of group housing limited to supportive and assisted living.  
• Seattle prohibits “congregate residences” in its neighborhood residential, residential small lot, and lowrise multifamily zones, plus in its two lowest-scale mixed-use zones. It permits them in midrise, highrise, higher-scale mixed-use, and commercial zones, but only within designated urban villages and centers. In areas where parking mandates apply, Seattle requires 1 parking space per 4 sleeping units.  
• Shoreline permits “boarding houses” in its residential zones but caps the number of rented rooms at 2 in lower-density areas. It mandates one parking space per rented sleeping unit and requires an extra permit.  
• Spokane permits “single-room occupancy housing” in all of its multifamily zones and does not require any parking. But for its density limits, it treats a sleeping unit as equivalent to 1 dwelling unit.  
• Spokane Valley permits “congregate dwellings” in its multifamily zones. It requires 1 parking space per sleeping unit, and for density limits in multifamily zones, it treats a sleeping unit as equivalent to 1 dwelling unit.   
• Tacoma permits “group housing” in its residential zones but limits the number of unrelated occupants to as low as 6 in lower-density areas, and typically requires at least 1 parking space per sleeping unit. 
• Vancouver permits “micro-housing units” in all but its lowest-density residential zones and requires 1 parking space per 2 sleeping units. For its density limits, it treats a sleeping unit as equivalent to one dwelling unit. 

Washington’s HB 1998 would create statewide standards for co-living homes 

Zoning: Treating co-living homes like any other multifamily homes 

First of all, HB 1998 would require cities and counties to allow co-living homes everywhere within urban growth areas that they allow multifamily housing. In terms of the need for land use regulation, there’s no difference between, say, three people sharing one standard apartment unit and three people residing in separate co-living sleeping units. In other words, there is no legitimate justification for targeted bans on the co-living housing type. 

Parking: Right-sizing requirements to co-living designs 

Other than outright zoning bans, the next biggest barrier to co-living is excessive local mandates for parking. Requiring excessive parking not only makes co-living homes more costly but also can render it impossible to build due to space constraints, especially on smaller lots.  

HB 1998 would prohibit parking mandates for sites within a half-mile of a major transit stop, which includes bus stops with 15-minute service. Otherwise, it would cap parking mandates at 1 space per 4 sleeping units. Another way of saying that: for the purposes of calculating required parking based on the number dwelling units, 4 sleeping units would count as 1 dwelling unit. 

A 2014 survey of parking use in two co-living buildings in Redmond found that residents used the on-site parking at an average rate of 0.3 spaces per sleeping unit. The bill’s proposed cap of 0.25 spaces per sleeping unit ensures that local rules don’t force overbuilding of parking, while still giving builders flexibility to include more parking if they want to. 

Density caps: Counting homes to match the co-living form 

As with parking, treating sleeping units the same as dwelling units to set density limits penalizes co-living housing. To ensure density allowances sufficient to support typical co-living buildings, the bill requires cities to count a sleeping unit in co-living housing as no more than one-quarter of a dwelling unit when applying density limits. 

Habitable space minimums: Health and safety over arbitrary mandates 

A less common but nonetheless serious barrier to co-living is requiring an excessive minimum sleeping unit size. Most cities adopt the state building code, which sets a minimum “habitable space” of 70 square feet for co-living sleeping units. (And this number excludes parts of the unit like bathrooms and closets, so it’s a smaller number than the total square footage that would be used to advertise the unit.) To preclude this barrier, the bill prohibits local governments from requiring more habitable space than the current state standard.  

Other safeguards to open up more co-living homes 

To prevent other potential barriers, the bill also prohibits local governments from: 

• Requiring inclusion of standard apartments or commercial spaces in co-living buildings, 
• Requiring design standards or review processes more stringent than those that apply to other housing types allowed in the same zone, or 
• Counting a sleeping unit as more than one-fourth of a dwelling unit for calculating permitting and utility connection fees. 

Oregon passed a co-living bill in 2023 

To the best of our knowledge, Oregon is the only US state that has passed, or even attempted to pass, co-living housing legislation. The 2023 bill, HB 3395, included a provision legalizing co-living homes on all residential lots in urban areas throughout the state (it uses the term “single room occupancy,” or SRO)

A weakness in Oregon’s bill is that it doesn’t grant an extra density allowance based on sleeping units. But the bill didn’t have to address parking at all because the state already prohibits parking mandates for homes 750 square feet or smaller. 

It’s too early to say how Oregon’s policy will play out, but we look forward to tracking the co-living housing that crops up in cities around that state, and how co-living homes fill a niche for close-in, convenient, economical, community-oriented living. 

How many new homes could co-living provide? 

The lack of precedent and the inconsistency of current co-living regulations makes it difficult to assess the potential amount of new housing statewide that could result from passing HB 1998.  

The best available data are the co-living production numbers from Seattle before the city clamped down starting in 2014 and quashed their construction. In the peak co-living home construction years of 2014, 2015, and 2016, the city had an average of 609 co-living homes become available per year. That’s about 9 percent of the total housing units built on average those years. 

Extrapolating from that experience, plus the figures in HB 1998, here’s a back-of-the-envelope estimate of how many co-living homes this legislation could unlock for Washingtonians:  

• About 6.2 million people (78 percent) live inside Washington state’s urban growth boundaries. 
• Seattle’s population is 13 percent of that total. 
• Scaling up Seattle’s 2014–2016 co-living home production by its share of the population yields 4,800 co-living homes per year statewide.  
• To account for lower demand in places outside Seattle, assume the statewide co-living home construction rate would be half of Seattle’s. That yields 2,400 new co-living homes per year statewide. 

Now let’s put that estimate in perspective: 

• Washington’s Department of Commerce projected the state will need 55,000 new homes per year over the next 20 years. 
• Over recent years the state has been adding about 40,000 homes per year, leaving 15,000 more to meet the state’s need. 
• 2,400 co-living homes per year would cover 16 percent of state’s production gap. 
• And it would provide those homes in the range of affordability to 50 percent AMI, which, for other housing types, almost always requires government subsidy. 

There are big error bars on this estimate, but it’s safe to conclude that legalizing co-living could have a sizable impact on reducing the state’s housing shortage. It would help draw down prices and rents overall and, especially, make homes available near jobs and transit that are on the most affordable end of the spectrum.  

The road to passing the co-living homes bill 

The co-living housing bill—HB 1998 and its identical Senate companion, SB 5901—is off to a good start with bipartisan support, which is a key ingredient for passing zoning reform bills. Its prime sponsors, Representative Mia Gregerson and Senator Jesse Salomon, were each joined by Republican co-sponsors, Representative Andrew Barkis and Senator Chris Gildon. 

It also has a strong list of supporting organizations across the state, representing a healthy variety of constituent groups. So far, the following groups have declared their support for the bill, with more expected: 

• AARP 
• AIA Washington Council
• Association of Washington Business
• American Farmland Trust 
• Build Back Black Alliance of Washington
• Building Industry Association of Washington 
• Coalition for an Accessible and Resilent Edmonds
• Empire Health Foundation
• Futurewise 
• Habitat for Humanity King/Kittitas Counties 
• Homes and Hope Community Land Trust
• Housing Development Consortium 
• Housing Solutions Network
• Indivisible Skagit
• Indivisible Whidbey
• League of Women Voters 
• Master Builders of King and Snohomish Counties 
• Northwest Intentional Communities Association
• Seattle Metropolitan Chamber of Commerce
• Sightline Institute 
• Spokane Low-Income Housing Consortium
• Sustainable Connections 
• Washington Multifamily Housing Association
• Washington Realtors
• Washington Community Action Partnership

For a shorter, shareable breakdown of co-living homes, see Sightline Institute’s FAQ on the issue.