A new study reported last week suggested that the state Growth Management Act has played a significant role in adding to the cost of local housing, perhaps adding as much as $200,000 to the median home cost since 1989. I have little doubt that the GMA has been responsible for some cost increase – it does, after all, ration developable land. Nevertheless, it would be wrong to blame the GMA for the lack of affordability. For one thing, the market and consumer tastes have a lot to do with the problem.
Part of the demand side of the equation is, of course, growth: more people. But what is it that those people want? They want bigger houses, bigger condos, and bigger apartments. It's tough to meet density goals when the number of people per home is shrinking and the size of the homes is increasing. It means more and more people are eating up more space – and space costs more. This is a national phenomenon.
I was looking over a 2007 report, Housing Facts, Figures and Trends, from the National Association of Home Builders (a downloadable copy is here) and the trends are stunning. Builders respond to market demand. What is it people want?
In 1970, the average new single-family home was 1,500 square feet; in 2005, the figure swelled to 2,434 square feet – an increase of over 900 square feet.
In 1970, 36 percent of new homes were under 1,200 square feet; by 2005, only 4 percent were. In 1970, only 10 percent of homes were over 2,400 sq. feet; in 2005, 42 percent were.
The first Earth Day (conceived at a conference in Seattle) was in 1970, and it strikes me as interesting that just as the country began to become more widely and publicly eco-conscious, we also became more greedy about our personal space.
American homes are bigger, taller, and with more amenities than the houses of old. The result: a large increase in the number of new two-story-plus homes (17 percent in 1970 vs. 55 percent in 2005), the number of bedrooms (four bedroom homes grew from 24 percent in 1970 to 39 percent in 2005), the number with 2-1/2 baths on the market has doubled, and the number of homes with two-car garages has increased from 39 percent to 64 percent – with an additional 20 percent of new homes sporting three-car garages. Size has mattered, too, in new multi-family housing, where the number of units over 1,200 square feet has doubled since 1990, from 20 percent to 43 percent.
America could be scaling expectations to bring about a lower-cost reality. We have not. But don't blame it all on the sprawling suburbs. You can see this upsizing in Seattle neighborhoods where bungalows are being remodeled and renovated by new buyers. Often, you'll see buyers take a small, 1,000-square-foot home, expand it, add granite countertops and a professional chef kitchen, add a deck, a bunch of bathrooms and walk-in closets, and flip it for high-end resale. A perfectly habitable small home that cost cost $500,000 has now been upgraded with completely optional lifestyle amenities, and the price more than doubled.
This creates a kind of in-city sprawl where single family homes become preserves of the wealthy, who can buy their way out of density and indulge their tastes for more space and extras. The inflation of price has a lot to do with optional amenities. That has an impact on affordability and does little if anything to benefit the environment. In fact, many times it hurts because backyard green corridors and trees are often removed for that add-on sun room.
Another issue is the economic profile of the people who live here now. Part of the run-up in home prices has to be well-paying job generators like Microsoft and other tech enterprises that have produced so much instant wealth.
In the early 1980s, I worked on a $30 million capital campaign for a local research center. Our crack fundraising research staff put together a list of everyone in greater Seattle capable of making a $1 million donation. That list fit on one, typewritten sheet of paper. Last year, a London-based market research firm, TNS, reported that King County alone had 68,390 millionaire households. Comparing the two is a bit of apples and oranges – I know a million dollars isn't what it used to be – but a list of millionaires of the caliber we were looking for in 1982 would today likely make up an extensive database. The affluence boom has helped push median home prices far beyond the ability of median income earners to buy them.
Environmental protection has costs, but so does growth. We may be paying a premium for our homes because of the GMA, but we are also paying higher taxes for transportation, new schools, law enforcement, and a myriad of other things that expand along with the population. There are few things we individuals have control over in this complex system, but one is that we can each cultivate a lifestyle that fits with the times and consumes less space. Instead of continuing to upsize our expectations, we should be looking to live more modestly and less conspicuously.
Changing the market dynamics begins at home, where taste and preference can make a difference.
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