Housing: Can Seattle get supply and demand right?

Fresh from its minimum wage decision, the City Council wants to find a way to keep Seattle affordable.
Four of these houses in Laurelhurst were all for sale in 2009 but property costs and rents are rising in Seattle now.

Four of these houses in Laurelhurst were all for sale in 2009 but property costs and rents are rising in Seattle now. A McLin/Flickr

Seattle has an affordable housing problem, and the city’s attempts to fix it aren’t working. On this point, everyone from housing activists to real-estate developers can agree.

With the minimum wage fight behind it (for now), the Seattle City Council is turning to an equally complicated issue: how to prevent Seattle from achieving full-on economic segregation. The city hosts some of the fastest rising rents in America, and unlike New York City and San Francisco, there’s no rent control to keep things slightly in check. Individuals and families are being priced out of their longtime neighborhoods, often into the city’s outskirts.

To address this, the council is aiming to enact new housing legislation by the end of summer. A 2013 ordinance, which vowed to update Seattle’s affordable housing program and policies, paved the way for an epic, eight-hour public forum this past February. More than 200 people attended, weighing in with their opinions and listening to presentations from national housing experts, Silicon Valley developers, D.C. think tankers, gentrification opponents and others.

Since that meeting, the council has awaited the results of three commissioned studies, which will guide their next steps. Those studies began arriving Friday, when their authors met with council members in an all-day workshop to start hammering out formal policy recommendations. These are due to be unveiled in a July 14 public meeting.   

The Seattle process has a way of taking its time, with a seemingly bottomless appetite for information gathering over move making. But it has also produced some of America’s most forward-thinking civic policies. As new residents flood into the city, there’s real urgency to transform Seattle’s approach to housing creation.And elected officials express a degree of confidence that the city can get it right, where cities like San Francisco have not.

Anytime affordable housing is re-examined, the term “incentive zoning” must rear its dull-sounding head.Meant to be a central tool in creating new affordable units, the city's program hasn’t yielded many dividends in the city, and will inevitably be a focus of the upcoming reforms.

The term is fairly descriptive. Housing developers can often expect to make more money on taller buildings, given the added amount of units. The city therefore offers the possibility of zoning modifications to incentivize developers into making some units “affordable” — currently targeted at those making 80 percent or less of the area’s median income (AMI). In lieu of actually building units priced within the AMI guidelines, developers can pay into a fund that helps build that housing elsewhere in the city.

The last time Seattle tinkered with this mechanism was early 2013, when developers sought to build taller buildings around South Lake Union to accommodate the tech sector’s rapid growth there. Before that point, property owners opting not to create affordable housing on-site paid a fee of about $19 per square foot for units above the site’s applicable height limits.The council ended up increasing the fee to $21.68 per square foot, in an attempt to extract more public benefit from South Lake Union's increasing density.

Councilmember Nick Licata called this a “step in the right direction,” though he had sought an escalation of the fee to $96 per square foot. In reality, it seems to have been less a step than a kick — of the can down the road.   

The SLU debate pitted affordability advocates against property owners like Vulcan, and neither side was happy with the outcome. Simply put, incentive zoning is meant to create neighborhoods where Amazon managers live on the same block as the people serving them happy hour. No one believes the current approach is achieving that goal.

As it stands, the burden of creating affordable housing in Seattle falls mainly to the public, in the form of the housing levy, repeatedly approved by voters. Using city data, the Downtown Seattle Association points out that levy funding has created more than 3,700 units in the last 12 years, while incentive zoning has only created 616.


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Comments:

Posted Mon, Jun 9, 8:14 a.m. Inappropriate

You could always follow the Detroit model, where you make the city so heavily reliant on taxpayers to support those who live off of tax dollars that you drive the taxpayers outside the city limits. That makes housing really affordable.

talisker

Posted Mon, Jun 9, 12:49 p.m. Inappropriate

You'll need to toss in extreme segregation with a slew of other race issues and then add riots to achieve what Detroit has in affordable housing though.

NickW

Posted Tue, Jun 10, 6:57 a.m. Inappropriate

That comes later, after you drive those with money out of the city by insisting that they pay for the city's pet social engineering projects.

talisker

Posted Tue, Jun 10, 7:48 p.m. Inappropriate

The mass exodus of businesses leaving Seattle has slowed just a tad because Bertha got stuck. This gives Seattle about one year to stop with the social engineering projects.

Yet we all know that won't happen. Seattle -- what used to be great is gone. And yes, I'm talking lifestyle and personal values. The Seattle of today, you can keep it.

Posted Mon, Jun 9, 8:53 a.m. Inappropriate

I think the city is going in the right direction to require developers to provide subsidized housing in one form or another.

Rent control has huge downfalls - forces a tenant to stay put because his rent will jump if he moves; owners can't get enough income to maintain their property.

Free market causes to much income segregation, meaning the poorer people get shoved out to less desirable places which tend to become even less desirable as an effect of that.

On the other hand, having developers pay a fund so that the city can build subsidized housing sounds an awful lot like "projects". Generally these fail for the same reason as "free market" - too many poorer people get shoved into the same place.

The best, I think, is to get developers to include subsidized units along with market rate units. Obviously subsidized units aren't going to be penthouses but just getting them in the building here and there blends everyone together once outside the building.

Two examples.

One. On a very small scale, my house. I have a mother in law apartment. Because I care more about who the tenant is rather than the income, I'm well below market rate. I keep my house up and the tenant is happy to live in a nice place even though the apartment is not as nice as the rest of the house. By comparison, next door is a rental house going at market rate. New groups of people come through every year or two and the house and property look like a rental - not bad, but not the same as owner occupied.

Two. A cousin of mine used to live in a building in France that was originally an HLM - a "project" building. At some point, the government decided to change the use. The changed some units into what we call condos, some into market rate rentals, and some into subsidized apartments. He bought one of the "condos". The building is pleasant; well kept with small gardens below, though no large barren lawns like we typically see around projects in US. I was amazed at how well it worked - no way you could distinguish from the outside which units were subsidized or even that the building had subsidized units.

pragmatic

Posted Mon, Jun 9, 12:54 p.m. Inappropriate

Good points. I think it should be pretty obvious to everyone by this point that blending is the best solution. There've been enough studies on it to say it's a direct cause that too high of a concentration of lower income families causes an area to suffer in quality of living.

Blending is a hard sell though. Lots of folks like the idea until it's a low income family moving in next door to them.

NickW

Posted Mon, Jun 9, 10:44 p.m. Inappropriate

Possibly you keep the rent low, because you realize that your mother-in-law apartment isn't legal, because you haven't applied to have is legalized. Just a caution: if it isn't legal, and you ever have a renter who becomes upset for some reason, they can report you and you will have to pay quite a bit of money, to them and to the City, to remedy that situation.

sarah90

Posted Tue, Jun 10, 7:37 a.m. Inappropriate

Incidentally, it is 100% legal.

pragmatic

Posted Tue, Jun 10, 7:50 p.m. Inappropriate

Sarah90, why so negative? It's none of your business why he keeps his rents low.

Posted Sun, Jun 15, 8:08 p.m. Inappropriate

Why so negative, common1sense, about everyone else's comments? We all talk about articles and each other's comments here. That's kind of what "comments" are, and you certainly do it a lot.

I have several friends who didn't understand that MILs have to be legalized, and thought that just by keeping their rents low, they were OK.

sarah90

Posted Tue, Jun 10, 7:50 p.m. Inappropriate

Sarah90, why so mean spirited? It's none of your business why he keeps his rents low.

Posted Sun, Jun 15, 8:09 p.m. Inappropriate

You need to post things twice?

sarah90

Posted Thu, Jun 19, 12:07 a.m. Inappropriate

Yes Sarah. I posted it twice to entertain you. That and the crosscut delete button does not seem to work.

Posted Mon, Jun 9, 10:30 a.m. Inappropriate

Listening to these discussions - I don't think people explicitly recognize that the need to provide affordable housing through public funding or zoning incentives is a symptom of the fact that housing costs more to build than many people can afford to pay for it. I'd think one idea would be to look for opportunities to decrease the cost to produce housing. However, as I understand all these policies listed, they either 1) limit supply (which will eventually increase rent) or 2) make housing that is built as market rate rentals more expensive. Additionally, as I understand it, Seattle is considered a city with a high barrier to entry for development - projects are expensive to produce here, due, at least partially, to lengthy development processes and fees. Many of the "jaw-dropping rents" at new apartment buildings are due to the fact they cost over $300k per unit to construct, let alone profit from. Can anyone explain to me why this is incorrect? - Or, if it you think it is correct, could you list any policies Seattle uses that actually tries to decrease the cost of development?

Posted Mon, Jun 9, 10:46 a.m. Inappropriate

I like your idea of finding ways to reduce building costs. I can't answer your implied question of whether construction in Seattle costs more than other cities.

Clearly it costs more to build in an urban environment than in a suburb where you can pour a slab and pop up a 2 story wood frame apartment building surrounded by asphalt.

My observation is that the city is fairly developer friendly - that has caused public outcry about various zoning changes and favors granted to developers for extra building height, etc. Permitting isn't simple but, in my experience with residential, works pretty well. I've heard worse stories about Renton and King County.

In fact, one of the most expensive components of buildings is parking, I think as high as $40K per stall. The city has opted to reduce parking requirements in denser area, which in turn reduces building costs. That is politically sensitive because of the possible effect it has on consuming more street parking.

Some things just cost: builders must meet high earthquake standards. Most buildings must have sprinklers. There must be various sorts of egress. And so on. You can't eliminate these things, though there might be novel, less expensive ways to implement them.

Developers are constantly looking for new innovation on reducing construction costs. I haven't heard of any significant breakthroughs recently although building components off site - in a factory, if you like, does save costs. Hard to do with sky scrapers.

In short, it costs a lot to build in the city. True, providing subsidized housing effectively raises the costs of the other units. It would be better to reduce building costs. Maybe more innovation will help.

pragmatic

Posted Thu, Jun 19, 12:10 a.m. Inappropriate

It also adds quite a lot to building costs to build in an urban, hilly area and to meet seismic requirements, as well as to manage water from below (dig at sea level and see what happens).

Posted Mon, Jun 9, 1:20 p.m. Inappropriate

It sounds like you're kind of proposing a more free market solution where costs would go down due to fewer regulations.

A free market solution is a double edged sword that can swing wildly, though. Having lower development costs could mean reduced rents, it also likely means that so long as there is demand, and supply is short costs will be high. This will lead to pushing lower income folks out of the city or to low income neighborhoods. The city has low income jobs though, so with fewer low income workers to staff these jobs, wages have to increase, now folks can afford to live here again, and demand goes back up... this all just leads to an uncontrolled inflation loop until something happens and it finally busts.

I don't think anyone would argue for an entirely unregulated market, that'd be ludicrous and eventually destroy a city. It's a tough balance to find, where the quality of life and beauty of our city is preserved, while freeing developers to build cheaper and make housing more affordable.

In our mostly free market, supply and demand still exist for housing. There is clear demand for housing in Seattle, and the supply is short, thus the high costs. Unless the speed at which we can build and the supply itself increases beyond the demand the prices won't change. It doesn't matter how much it actually costs to build the building, if people are willing to pay $2.5k/mon for 600sqft, someone will sell it to them at that price.

The regulations Seattle is looking at now are to prevent just this. We want to establish a blended mix of income levels so we don't end up with slums. There are also countless regulations to preserve the quality of living in the city and the cities aesthetic; these are to keep Seattle what everyone is coming here for (though plenty of long time residents will already tell you it's too late and Seattle has changed beyond recognition).

It's all really tough though; it's a super fine balancing act, and for anyone to just dismiss all of these factors with a single solution is short-sighted.

NickW

Posted Sun, Jun 15, 9:44 a.m. Inappropriate

pragmatic,

The GMA has forced density to be dense. But that density is extremely expensive, both due to heavy regulations, but also due heavy demand for the land itself.

You said (and it is true) that "Many of the "jaw-dropping rents" at new apartment buildings are due to the fact they cost over $300k per unit to construct, let alone profit from. Can anyone explain to me why this is incorrect? - Or, if it you think it is correct, could you list any policies Seattle uses that actually tries to decrease the cost of development?"

Just think. If Paul Allen, Amazon and the Bill and Melinda Gates Foundation and numerous other land buyers had gone into more outlying areas, the cost of the land acquisitions for their buildings and therefore nearby housing would be incredibly less expensive, and it wouldn't cost $300,000 per unit to build the necessary housing.

As tech workers grow older, they often marry and have families ... and most young families don't want to live in condos or apartments.

How to make the GMA change so organic growth of job locations happens too? And, yes I realize that Microsoft jobs are widespread on the Eastside -- but I'm talking growth into our other Washington State counties, where jobs are scarce, land and housing is cheap -- and the lifestyles are wonderful (except lacking in actual young families due to lack of jobs.)

The GMA has created an ugly pimple of density. If high tech can have zillions of jobs in India and other countries, it certainly can handle jobs in outlying areas of our own state.

The GMA does nothing to examine areas that formerly had good jobs such as fishing, logging, etc, but that now have very little in viable raise-a-family-living-wage-jobs.

Posted Mon, Jun 9, 12:14 p.m. Inappropriate

Posted Mon, Jun 9, 3:22 p.m. Inappropriate

There are very few housing markets that do NOT mature in fits and starts, action by developer, reaction by politicians and civic activists, etc.

The thing that is genuinely unique for Seattle this time around is that the economic momentum in the region is pushing everything inside the city limits in the same direction - up, and up too fast to maintain our balance as a city. This happened with dotcom millionaires, but lots of desirable property was still available and affordable. Were view houses in West Seattle always more expensive? Sure, but there's a difference between expensive and out of reach, and that's the direction Seattle is headed.

One problem we still have is the notion that growth should be a smooth, consistent, well-managed affair, in an economic world that simply doesn't behave that way. The Bakken Shale is reinventing the Dakotas overnight, and the bust will be just as dramatic on the other side, I'll guess. The industrial midwest rode the boom post-war years, and then the globalization bust on the other side. Some, like Chicago and Pittsburgh made a 3rd chapter for themselves.

BUT NONE of these examples had a nice, smooth, well-managed path to growth, density, etc. It's always a bit chaotic, and what matters most is that the reactions you have should be forward looking and measured rather than reactionary and navel-gazing.

nullbull

Posted Sun, Jun 15, 9:50 a.m. Inappropriate

When the growth is too focused on one geographic area it pushes up prices in that area. Spreading some of the growth into other counties would balance a lot of things, lifestyle included.

I'm not talking taking massive growth into the other 38 counties of Washington - but many of these counties are starved for good jobs and while "Seattle" itself may not care about those counties, the rest of us should because our own children may not be able to afford to live in Seattle when they come of working age. Not to mention that the saner ones shouldn't really want to - the cost and lifestyle isn't impressive.

Posted Mon, Jun 9, 8:11 p.m. Inappropriate

I don't think the city fathers and mothers really understand supply and demand. It sounds good and if the politician can use it in a sentence without mumbling, the council members will act like bobble heads.

All the gibberish about supply and demand is just that, gibberish. The real aim in the end is rationing, which would go a long way to achieving their ideal of a model city. Now if they could just ration model citizens...

Djinn

Posted Tue, Jun 10, 7:11 a.m. Inappropriate

They are trying to ration their model citizens by promoting policies that encourage the middle class to live outside the taxing and regulatory authority of the city.

talisker

Posted Sun, Jun 15, 9:51 a.m. Inappropriate

I think that's the result, not the rationality ...

Posted Mon, Jun 9, 10:55 p.m. Inappropriate

The assumption that growth can continue without cease is the fundamental fallacy underpinning all our political and economic problems. There are many cogent modern analyses of the relevant issues, starting at least as early as Meadows' Limits to Growth, 1972 and Ophuls' Ecology and the Politics of Scarcity, 1977. But no one wants to talk about limits; just watch the response to this post, if any.

louploup

Posted Tue, Jun 10, 8:43 a.m. Inappropriate

More growth requires more people which requires more jobs which requires more infrastructure which requires more resources which requires more sprawl which requires more concrete, etc. etc.

But of course resources are unlimitedly available and life for all has nothing to do with ecological availability and viability! Selective perception doesn't allow for understanding "limits."

Should a new word for stupidity be created?

Posted Tue, Jun 10, 10:25 a.m. Inappropriate

"Cognitive dissonance"?

louploup

Posted Sun, Jun 15, 9:44 a.m. Inappropriate

Oh, I am with you. For the umpteenth time, one definition of out of control growth is cancer. As the wreck on SB 99/East Marginal Way this week demonstrated very well, we have exceeded our carrying capacity. Anyone who has to drive has known this for a long time. If all the incoming folks were what various constituencies want us to believe they are--car free, bike loving, train riding, pedestrians, then there should be a reduction in cars to go along with the reduction in parking spaces on the street and required in the new buildings. That clearly is not the case. While I understand that we want to welcome the tech jobs, it seems to me that many of them could be performed anywhere in the world from a person sitting at home at his/her computer. So why don't we provide incentives for that model? We could figure out some kind of digital head tax so the tax hunger electeds could keep raising their pay, and the rest of us could get some relief from the sun-blocking behemoths being built here, there, and every where. Unfortunately my home town is descending into darkness as we "welcome" all these new folks by building them huge towers and the ubiquitous neighborhood six packs of gloom.

Furthermore, I don't believe the reason prices are so high is because of high building standards. From what I see in progress, most of these places rely heavily on plywood. Then shortly thereafter they are covered in some material with giant chutes leading to huge dumpsters on the street. The builders are building junk because they can get away with and/or because they are being encouraged to do so. I think we're soon going to see the ugly future Blade Runner foreshadowed: dark wet streets with multiple noisy drones buzzing everything like monstrous dragonflies, and danger around every corner and doorway as people react to overcrowding with vicious self-protectionism. Not a pretty future, but sure looks like the direction we're heading.

mspat

Posted Sun, Jun 15, 9:54 a.m. Inappropriate

The prices are so high because the land is scarce and there are many buyers competing for the same land in Seattle.

The GMA has caused this pimple, as well as the politicians who feel we should all be happy to climb out of our cars and live massed together in tight living quarters in the name of "sustainability".

But the reality is, it is the GMA that has created the masses into the same area.

Posted Mon, Jun 16, 7:46 a.m. Inappropriate

The drastic back-ups from traffic incidents are not a sign that we have "exceeded our carrying capacity." Rather, the excessive time needed to 'investigate' these accidents is far longer than any municipality in the U.S. The fire/police should not need to take so much time, especially given the technology we have (imagery, etc.) that can greatly expedite this process.
Also, plywood is not a 'cheap' building material. Your assessment of whether a structure under construction is being done properly is inaccurate at best and comical to those in the know.

jeffro

Posted Tue, Jun 17, 1:16 p.m. Inappropriate

Happy to have amused you. Whether or not plywood is a cheap building material, I'm glad I don't have a house built with it, and I stand by my right to the opinion that what is being built is, for the most part, pure junk.

As for the your dispute that "the drastic back-ups from traffic incidents are not a sign that we have 'exceeded our carrying capacity,'" the time needed to investigate is surely a factor in worsening the delays. However, if fewer vehicles were on the road to begin with the delays would be correspondingly shorter. Since the electeds are continually assuring us that everyone moving in eschews cars and rides buses, trains, trolleys, streetcars, or they walk, then the only answer is we have too many people if a minority of drivers constitutes such a huge volume that we have hours of gridlock.

mspat

Posted Mon, Jun 9, 11:27 p.m. Inappropriate

The "progressive" solution is obvious: A property tax levy to subsidize "affordable" units for well-spoken, gentle artists. Most of the "progressives" are too stupid to know that a levy will drive up rents, so why not go for it?

NotFan

Posted Tue, Jun 10, 8:36 a.m. Inappropriate

This article's first sentence, "Seattle has an affordable housing problem, and the city’s attempts to fix it aren’t working" requires just a little cause and effect thought. What contributes to a rapidly growing poverty cohort in this city? A major contributor is the population-growth drivers, illegal immigration (and legal), and the city has done all it can to invite/implore as many as possible to come here without assessing the costs, let alone the sustainability, of doing so. There isn't a difficult-to-solve problem we have that is not exacerbated by this policy, let alone the mockery it makes of having laws. But this policy is dictated by money/power interests that believe that unlimited growth is possible, and the cheap labor provided adds icing to the cake.

Posted Tue, Jun 10, 8:49 a.m. Inappropriate

And finally, was the person who wrote a question about "supply and demand" awareness serious? The best response is "clueless in Seattle."

Posted Tue, Jun 10, 10:59 a.m. Inappropriate

We're merely continuing a trend that was interrupted by the Great Recession - adding at the top end while tearing down at the lower end.

Exacerbating the issue are owners-become-renters following the real-estate bubble, reverse-white-flight (gentrification), unconscionable rent jack-ups (Lockhaven), tech employment inflows (Amazon, biotech), contradictory zoning rules (both encouraging and discouraging adding density), etc.

Why do supposedly socially-responsive council members cater to developers and landlords? Money. It's not that measures can't be taken - there just hasn't been the will.

Posted Tue, Jun 10, 1:49 p.m. Inappropriate

It's clear to me that any values beyond pure profits must be built into the system by social institutions like, in this case, the City Council through zoning ordinances.

There are a number of things that could be done:

1) Lower the bar on incentive zoning. It's clear that the incentives built into current zoning are not working to expand or even maintain the affordable housing we currently have. For one thing 80% of median income is too high a bar. It needs to be lower so that the affordable housing that is built is available to people who have lower incomes.

2) Require that any developer that destroys affordable housing must replace it with comparable housing either on site or in some other location. I doubt very much that developers will lose money, they just won't be able to make as much as they would without this requirement.

3) Require that a certain amount of affordable housing be built into any new development. I agree with others who have commented here that mixing income levels is preferable to segregation which has been tried and found wanting in many cities.

We must build into our laws the social values we want to see. Corporations are by definition "amoral", i.e. without morals. Profit is the value that drives most large businesses and even some small businesses. So, if we want to maintain certain values in our society, we must require that they be a consideration when change happens. By and large we do that through peer pressure and through legislation. To do otherwise is to ensure that we will continue to get what we are getting which is an increasingly unequal society. There is plenty of evidence that more inequality results in more negative consequences.

Personally I'd rather live in a more equitable society.

nwcitizen

Posted Tue, Jun 10, 2:30 p.m. Inappropriate

NW Citizen -- your gall never surprises me. You would rather live in a more equitable society, really. Then why don't you move out of the exclusive neighborhood you live in, with a private beach on Puget Sound and truly mix with the souls you want to save. Or is it that you want the rest of us to mix with the souls you want to save so you go home to that multi million dollar home of yours and idealize your so-called equitable society?

Norge

Posted Sat, Jun 14, 8:48 p.m. Inappropriate

Norge, you have obviously not had the pleasure of being invited to NW Citizen's house (no puzzlement why). It does not have a private beach and it is not a multi-million-dollar house. NW Citizen spends most of her time and her money not only "mixing with" but helping the human beings you deride. She is one of my heroes. You are not.

sarah90

Posted Tue, Jun 10, 7:45 p.m. Inappropriate

I doubt Seattle can get housing supply and demand right. There is far too much micromanaging of forcing people out of their independence (ie, vehicles).

Ballard is now officially ruined - it's dirty, it's gross, and the new apartments of cheap density are blights of ugliness in what used to be a charming in-city neighborhood.

C'mon. Let's put a few a-podments and really screw it up.

It's depressing to see the Seattle of today, and I'm not talking just Ballard.

Posted Mon, Jun 16, 7:32 a.m. Inappropriate

I love most of the changes in Ballard. Many of the new units (like the large complex on Market Street West of 24th) are not built cheaply at all. In fact, the brick, steel, etc. really makes those old dumpy houses in Ballard stand out as the truly cheaply built housing stock.

Dirty? Gross? What part of Ballard do you refer to? Maybe time for you to take some ownership in your neighborhood and clean it up. Or move.

jeffro

Posted Wed, Jun 11, 8:36 a.m. Inappropriate

Ok grandpa. Everything was rosey until, yes, condos came to Ballard. Good grief. News flash - things change, the world moves on.

Lily32

Posted Wed, Jun 11, 8:48 a.m. Inappropriate

thinkstoomuch: "I don't think people explicitly recognize that the need to provide affordable housing through public funding or zoning incentives is a symptom of the fact that housing costs more to build than many people can afford to pay for it."

Housing prices are what they are and rising because private investment is happening at the top end of the market, not where the demand is the greatest, but where returns are the highest. Public investment at the low end of the market is insufficient to meet demand for low-income housing, as long waiting lists testify, while tax incentives and credits only minimally add to the supply in the middle of the market.

If we want Seattle to become like San Francisco, with only the well-to-do and the poor able to afford to live there, we only need to continue doing what we're now doing (and not doing). If we want only the well-to-do to be able to live here, we need only to do what you're recommending.

Posted Wed, Jun 11, 2:27 p.m. Inappropriate

A bit of history. In the 1960s, Seattle was a fairly low-profile city. Boeing was a major employer but we also had a heavily unionized work force (look up Dave Beck) including in service industries and restaurants. Commercial fishing also put a lot of money in people's pockets. So, a well-paid blue collar sector with a small number of really wealthy people who mostly didn't show off their wealth. All very Scandahoovian polite.

Boeing goes in the toilet in the 70s. Housing is dirt cheap. Queen Anne hill, for example, was littered with vacant homes that had gone into foreclosure. My military retiree father bought a 3-bedroom, brick Tudor with a sweeping city view for $29,000 in 1970.

Fast forward. Unions decline and wages stagnate in Seattle along with the rest of the US. Microsoft, RealNetworks, Amazon, Nintendo, etc. bring in large numbers of highly paid people who want to live in the city. These, often young, workers want to live on Capitol Hill, Queen Anne, Magnolia, Wallingford and, the last blue-collar bastion, Ballard. Not so much in Renton, Beacon Hill and points south. But prices everywhere go up and up due to a large population of tech workers making lots of money.

Now, the economics lesson. Builders do not build "affordable" housing. They build the most expensive housing they think they can rent or sell. New construction is expensive. The market wants high-end finishes so that's what's built. There is no free-market solution here. For those who advocate repealing zoning and growth management, please offer some hard numbers on how many units (and what type of units) would have to be built to produce even a 10% drop in average rental or sale prices. As long as there is a large, pent up demand for housing among the well-to-do, prices will never decline sufficiently to be affordable for lower-income workers.

I've looked at past efforts to provide incentives for building more affordable units. These had little impact because the rents, tied to 80% of median income, were still too high for many people given the highly skewed income distribution in Seattle. Many builders had no interest as the incentives were too little to overcome market prices.

This situation is not unique. London, New York, and San Francisco all have been dealing with this problem without much success. Some businesses will decide to locate in smaller, less hip cities so that their employees can afford housing. The lure of the big city, however, will keep housing prices high baring some major economic meltdown.

By way of disclosure: while I dislike what's happened to Seattle (I live in Ballard) I can't be accused of sour grapes. My house, owned free and clear, has appreciated greatly in price. I also own commercial rental property in Ballard. Same deal. Maybe someday I'll be forced out but I hope not.

Mr_Jones

Posted Thu, Jun 12, 4:03 p.m. Inappropriate

I'm just going to throw out a few factors that need to be considered and clarified.

1. Definitions of workforce (which workers) and affordable (to who, in Seattle not Area terms). I realize that we humans like abbreviated memes, but these must be elaborated.

2. Responsibility to build for which sectors needs to be clearer. If the city (we citizens) are responsible to build, then we citizens should not be funding non-profit low income providers building 'mixed' --- code word for housing for people with fairly healthy incomes.

3. Financing needs to be dealt with. The banks that control the financing (or investors of self-financed development companies) base 'penciling out' on the maximum profit allowed by Land Use codes. This has two implications:
a. ratchet back or condition all upzones for inclusion so that increased land value is not a cost and increased profit for a land owner (who in many areas sat on land and left it underdeveloped often for decades), but available development funds are directed to cost/benefit for the building itself. This implies some expectation of simpler upzoning procedures if conditions are met.
b. enable easier financing for homeowners to build mother-in-law apartments. I hear a lot about this being a helpful solution. It actually could be a way for people to stay in their homes. But, I know the bank lowered my line of credit, even though my area was pretty unaffected by the crash and I always stayed well on the upside of my mortgage. Imagine someone with a fixed income, or really upside-down. Some folks already rent out rooms. Renting out an apartment could financially stabilize their housing situation.

To be clear, everyone who is developing or wants to build in Seattle are now subject to the conditions set by the large banks. Ask why you are not seeing many if any small developers, why non-profit housing providers struggle mightily to be creative, why the city doesn't just build the low income housing and housing for the homeless that is needed, and why incentives do not work. The solutions might require a state bank or city financing capability to be part of the picture.

Posted Thu, Jun 12, 9:05 p.m. Inappropriate

CriticalThinker, you think the city should just build the low income housing, and housing for the homeless because the larger financial institutions will not do those deals for small developers or non-profits?

What then do you want? Taxpayers to pay for those high risk developments, which will certainly make the cost of building exponentially higher.

That won't work.

Posted Fri, Jun 13, 2:47 p.m. Inappropriate

Common1sense, you overlook quite a bit of sense, but these three pieces of common sense are so obvious as to never be considered. Big mistake.

1. Upzoning always raises the value of the land, never good in terms of working class housing with but one exception: when the new values far exceed the market in dead, down, or plodding markets, the dilemma provides homes for hermit crab residents and businesses as 'sellers' hold for 'the market sure to come.' In markets like the one that busted and the great delusion in progress, upzoning make planners and electeds feel good about "having done something, no matter that it makes the task just that much harder.

2. Seattle's (most any place's) initial zoning kept upper class areas at current use and treated working class areas to zoned use in excess of current use. Because of doing that to the tune of 1 million people, this made little difference for a long time. Houses zoned multifamily slowly becoming cheaper than those 'protected' by single family zoning until finance-state mischief boosted demand at the same time Seattle 'upzoned with informal interpretations, updates, and outright upzones—all laying more and more waste to our most affordable places of adobe and business.

3. New construction is always the least affordable to anyone rich or poor, and anything beyond wood frame on top of one or two floors of noncombustible is counterproductive to build when the aim is high affordability.

So, one might well ask, but too few do, why all this shooting ourselves in the foot?

afreeman

Posted Sun, Jun 15, 9:57 a.m. Inappropriate

The GMA requires it, that's why.

The GMA isn't a healthy tool.

Posted Sun, Jun 15, 9:03 a.m. Inappropriate

how about denying developers the opportunity to fund Councilmembers' campaigns and limit their lobbying hours? Let's stop letting developers run the City.

Posted Sun, Jun 15, 9:34 a.m. Inappropriate

How about an economics 101 test for all candidates for any office?

Posted Sun, Jun 15, 12:29 p.m. Inappropriate

The GMA is not the problem. Take a tour of Mountain View, Palo Alto, San Jose etc. Then point out the cheap housing.

Sprawl brings it's own costs and virtually all of them shouldered by the public. Developers, even when charged impact fees, don't come close to covering infrastructure costs of roads, utility expansion, increased traffic, pollution runoff, schools and on and on. Look how long it took to just site Brightwater treatment plant, even with a host of gifts to special interests. Not all of us want the NW to look like one endless city accessed, badly, by freeway. Rarely do I find anti-GMA advocates in favor of mass transit. When asked how we move people from sprawling suburbs to work and shopping the usual solution is to build more roads. All on the taxpayers dime.

Seattle still has buildable lots within city limits. That has no effect on the demand for lots/homes in the most desirable neighborhoods. In the last month I've watched several multi-million dollar homes being gutted to the studs or just being knocked down for something grander. The house next door to my mother on QA was purchased for 1.5 million cash and remains unoccupied three years later as the owner continues a total remodel. No problem he owns two other homes in the city. The GMA as culprit is fantasy.

Mr_Jones

Posted Sun, Jun 15, 2:37 p.m. Inappropriate

The GMA is the cuprit for the density problems and the lack of living wage jobs in rural counties. Make no mistake, there is great wealth in the high tech industry, but until the GMA changes a focus to include the entire state by pushing jobs where jobs no longer are, I will disagree with you.

As to "sprawl", we're not talking new growth by much - we're talking just enough jobs to make outlying counties be able to exist for young families, and bring hope of jobs and stability instead of the usual welfare, crack, meth and these days, heroin.

Basic infrastructure already exists. What exists in greater numbers in the last 3 decades is far more poverty, and in the 20 years since the GMA was created, that poverty is escalating.

Posted Mon, Jun 16, 7:25 a.m. Inappropriate

No, this is not true.

The GMA may be responsible for higher housing prices WITHIN particular urban areas - but this also has to do with what is perceived as a desirable place to live. North Bend, for instance, has the flexibility to adjust their UGA but no matter what they do Microsoft is not going to build a campus there.

It's simple - Seattle - Bellevue - Redmond is where the talent wants to live and where there is reasonable infrastructure and amenities. The GMA isn't responsible for the rural poverty we see - it's a trend across America as there is less and less emphasis on resource extraction industries - and those that remain have become much more efficient.

Treker

Posted Thu, Jun 19, 12:22 a.m. Inappropriate

Adjusting North Bend's UGA is

a) not necessary, and b) North Bend is in King County and is not in a rural county with no jobs.

b) when the Microsofts' and Amazons' decide to support their own home state citizens first, and lead by example, they will build small job centers in rural counties in Washington and also in other states and create jobs. But the state GMA makes these companies cluster into the strong cities with incentives of many kinds. It's not healthy, and it is destructive.

Organic growth would mean jobs disbursed into all the counties. Not major job counts, but enough to keep more jobs in this state, and help make rural counties sustainably viable.

Posted Sun, Jun 15, 3:39 p.m. Inappropriate

GMA @ Conception:
The concept of shared growth appears in many places throughout the original GMA, but unlike affordable housing did not even make it to an "oh-by-the-way" goal and the concept has essentially disappeared from the text. The concept of a working landscape faired somewhat better.

GMA in Practice:
Reality Check & Quality Growth Alliance Next Steps @ Seattle City Council Aug. 2008
[free-marketeers fall hard for carbon reduction]
Minute 43 http://www.seattlechannel.org/videos/video.asp?ID=2010827&file;=1

Minute 56— Plan for five concentrated regional centers reduces VMT by SOVs the most.
Minute 64— Quality of life = more infrastructure = bigger revenue stream from state.
Minute 72— ULI's first effort to tie land use and carbon reduction— a perfect storm!
Minute 82— Location of affordable housing not suited for this particular approach.
Minute 84— Concentrate growth! Regional equity disperses it.
Minute 87— QGA+ ULI Seattle's tremendous political support will overcome concentration's unpopularity

afreeman

Posted Thu, Jun 19, 9:19 a.m. Inappropriate

How can you ever have a balance between supply and demand when everything in the society works overtime to create and foster more demand. That's what our city, county, state and national government has as its guiding principle in everything. More and more without ever giving serious consideration to limits to everything.

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