Upzoning is a powerful but often misunderstood tool in urban planning and real estate. In this post, we’ll break down what upzoning is, why it’s becoming more prevalent, and what appraisers need to know about its potential impact on property values.
We’ll also share expert insights from Hansel Dobbs, Chief Appraiser and Head of Valuation at Aloft Appraisal. Dobbs recently sat down with Julie Molendorp Floyd, Instructor at McKissock Learning and Vice President of Regulatory Affairs at RSDS Appraisal Diversity, to discuss the topic of upzoning and what appraisers should look out for when working in areas undergoing zoning changes.
Whether you’re new to the concept of upzoning or looking to expand your expertise and find opportunities to grow your business, get pro tips to help guide your appraisals in an ever-changing landscape.
What Is Upzoning?
Upzoning is the process of modifying zoning laws to allow for higher-density development in areas that previously had stricter land-use regulations. This might include permitting multi-family housing where only single-family homes were allowed, increasing building height limits, or reducing minimum lot sizes. The goal is often to promote more efficient land use and address housing shortages.
Upzoning is becoming more common as cities across the U.S. grapple with limited housing supply and rising costs. By allowing more housing units on the same parcel of land, upzoning can help increase supply, reduce prices, and create more walkable, transit-oriented neighborhoods. It’s also seen as a way to make housing policy more equitable.
Several cities have embraced upzoning in recent years. Minneapolis eliminated single-family zoning citywide in 2019. In California, SB 9 permits homeowners to construct duplexes or split lots in previously single-family zones. Washington State passed significant statewide housing reform bills in 2024.
Examples of other cities where upzoning has occurred include Denver and Austin.
What to Be Aware of as an Appraiser
It’s important for real estate appraisers to stay informed about changes in local zoning laws, as these can significantly affect property valuations. Upzoning, in particular, can alter what is legally permissible on a parcel of land, shifting development potential and land use expectations.
When upzoning occurs, the highest and best use of a property may change—from a single-family home to a multi-family development, for example—requiring appraisers to reassess the property’s value accordingly.
Additionally, upzoning can impact surrounding neighborhoods by increasing density, altering the character of an area, and influencing demand. These shifts can lead to rising property values or, in some cases, local opposition and market uncertainty.
“A word of caution to a residential appraiser out there: Especially if you’ve appraised a property in the past and you’re looking at old data, check it again,” advises Floyd. “Check that zoning. Check it every time. Be sure, if it has been upzoned, you know how to address that.”
Properties that were formerly single-family homes—maybe even homes that you’ve appraised in the past—may now require a Certified General Appraiser if they’ve been converted to more than four units because of upzoning. Make sure you know your state’s regulations.
Keeping Up with Zoning Changes in Your Area
As always, stay on top of what’s happening in your market to ensure you maintain geographic competency, per USPAP.
If you notice signs of upzoning, Dobbs recommends starting with a simple Google search. Type “[City] zoning changes” into the search bar and see what comes up. Read up on any news related to zoning laws. “To take that a step further,” says Dobbs, “you could type in the city’s name plus ‘comprehensive plan.’” You can also look up the city’s municipal code and dig into that, he says.
The comprehensive plan for a city can be a particularly valuable resource for appraisers, as it lays out the long-term plan (often 20 years) for a city’s growth and development. It can provide key insights into future land use, housing growth, and several other factors that influence value and investment potential.
How to Address Upzoning in Your Appraisal Report
If you find that a property has been upzoned, how do you tackle that in your actual appraisal report? “I think the place to start is building permitting,” says Dobbs. “A lot of cities have pretty decent permitting websites. You can go in there and look at what types of permits are being pulled in the area.”
Look for new construction permits, in particular, Dobbs stresses. “You’re looking for evidence that people are starting to buy, tear down homes, and rebuild something else.” Are people starting to convert single-family homes into duplexes, triplexes, and fourplexes? If so, the open market is confirming that, yes, it’s more valuable to tear down a single-family residence (SFR) and replace it with a multi-family unit.
“If there’s none of that happening,” Dobbs continues, “then that’s a good indication that it’s not financially feasible to do that yet.” In this case, after conducting a proper highest and best use analysis, you can potentially proceed with appraising the property as is.
Opportunities for Real Estate Appraisers
While upzoning presents some challenges for appraisers, such as impacting the highest and best use and changing the makeup of a neighborhood, there are opportunities as well.
For example, with all his research on upzoning, Dobbs has come across construction companies that specialize in converting single-family properties into higher-density housing units in areas where upzoning has occurred.
“I feel like there’s an opportunity here for appraisers to really understand all these zoning changes and maybe even help some of these companies,” says Dobbs. “If you get really creative around all the zoning comprehensive plans in your market, then I think there’s a way to turn that into a business.”
“Absolutely,” Floyd agrees. Learning how to deal with upzoning issues and specializing in that area could be a great way to diversify your practice, she stresses. “Become the specialist. Create your market. Create your niche.”
How to Prepare for Future Upzoning
If upzoning hasn’t occurred in your market area just yet, but you think it may be on the horizon, there are some things you can do to prepare.
Hobbs and Floyd recommend being proactive by taking the following actions:
- Look up your city’s comprehensive plan
- Keep an eye out for any zoning changes in the news
- Connect with your city’s planning and zoning committee
- Talk to your peers
Consider Getting Involved
Join your state appraisers’ coalition (e.g., ACOW in Washington State) or other organizations that are active in lobbying and helping to shape new zoning laws. If your state doesn’t have a coalition of some kind, consider creating one, Dobbs advises.
“Get in front of these things,” Floyd urges. “Get us [appraisers] a voice and a seat at the table in the discussions.”
Upgrade Your License
If upzoning becomes more common in your market, it could lead to increased assignments and opportunities for commercial appraisers. If you’re a residential appraiser who can only appraise properties with up to four units, you might miss out on those opportunities.
Upgrade your license to Certified General Appraiser to expand the types of assignments you can accept and grow your income potential.
Become a Certified General Appraiser with QE Courses from McKissock
Stay ahead of upzoning trends in your market. Earn your Certified General Appraiser credential so that you can appraise all types of property, including multi-unit residential properties and apartment complexes.
McKissock has all the qualifying education (QE) courses you need to upgrade your license. Find course packages in your state and get started today!
