How Germans Manage Housing Prices

Eamonn Fingleton, Forbes:

German house prices in 2012 represented a 10 percent decrease in real terms compared to thirty years ago. That is a particularly astounding performance compared to the UK, where real prices rose by more than 230 percent in the same period…

A key to the story is that German municipal authorities consistently increase housing supply by releasing land for development on a regular basis. The ultimate driver is a  central government policy of providing financial support to municipalities based on an up-to-date and accurate count of the number of residents in each area.

The German system moreover is deliberately structured to encourage renting rather than owning. Tenants enjoy strong rights and, provided they pay their rent, are virtually immune from eviction and even from significant rent increases.

Meanwhile demand for owner occupation is curbed by German regulation. German banks, for instance, are rarely permitted to lend more than 80 percent of the value of a property, thus a would-be home buyer first needs to accumulate a deposit of at least 20 percent. To cap it all, ownership of a home is subject to a serious consumption tax, while landlords are encouraged by favorable tax treatment to maximize the availability of rental properties. (emphasis added)

While housing prices in Germany have increased somewhat as of late as investors flee to the relative safety of the German market, the overall trend is downward. To be sure, there’s a complex array of policies referenced in the excerpt above that work in concert to keep housing affordable.   If you look around America, you can find bits and pieces of these  policies in action.  Texas has many of the same restrictions on lending as the Germans, for example.

If we were in Texas, we’d simply build outward from the city: cul-de-sacs as far as the eye could see would keep housing affordable. But we Cascadians are hemmed in by geography and a crippled by a love of the natural environment. So we must build up, instead of out. Still, the same general rules apply: sufficiently increase supply and housing prices will fall.

Comments

  1. aw says

    I’m curious why you bolded that second part of the quote. It is prudent for any buyer in the U.S. to have a 20% minimum deposit, even if the bank might allow a lower percentage. The more important part that explains the difference in the proportion of renters to owners is what follows. It is the tax treatment that is the important difference.

    People here are encouraged to buy in order to take advantage of the mortgage interest deduction. If that were eliminated, some of the boom-bust nature of the housing market would be calmed. Of course, it would also help if we had good renter’s rights as referred to in the article.

    • Nathanael says

      “Tenants enjoy strong rights and, provided they pay their rent, are virtually immune from eviction and even from significant rent increases.”

      Deserves repetition. The concept of “tenancy” as a vested right is still real in Germany.

      • simval says

        Unless of course they open a can of surströmming inside the building, then they are out of here!

        Google it.

  2. Mark Dublin says

    “If we were in Texas, we’d simply build outward from the city: cul-de-sacs as far as the eye could see would keep housing affordable. But we Cascadians are hemmed in by geography and a crippled by a love of the natural environment.”

    Where did you get this piece of cow-droppings, Frank? Some US state whose reputation for physical ugliness is surpassed only by its reputation for the ignorance and cruelty of the people whose presence curses its both its own politics and those of our country?

    Author is right about one thing. A population crippled by a need for clean drinking water and breathable air really does deserve to be left lying on the pavement as punishment for an unnatural affection for the natural environment that produces these things. However, if I cared about anything he thinks, one question:

    When Texas really is built to the horizon and therefore full- will the low cost of the last house give anybody enough money to pay for the last glass of water? Wish he’d move there and report back.

    Mark Dublin

    • Frank Chiachiere says

      Mark, the use of the word “crippled” was stylistic flourish. I thought that was obvious; sorry it didn’t work for you.

      I can say with near certainty that every writer on this blog is a pro-growth environmentalist who vastly prefers the built environment and land use policies of Western Washington to Texas. If you read us for a while, I think you’ll start to pick up on that.

      • John Bailo says

        Also, what is the difference between growing outward and, as the articles says releasing land for development on a regular basis?

        As far as Cascadia…there is plenty of land, North and South of Seattle. At the point we extend our transit rail and improve our tracks to medium speed (155 mph) people will have many more options.

        In addition we should be developing our East-West routes to Inland Washington.

      • Brent says

        That 155 mph won’t be reached if the train has to slow down and stop in Kent.

        But, thank you for that link a few days ago, showing that supply can impact housing costs downwardly.

      • Mike Orr says

        The difference is sprawl. Germany releases land for compact satellite cities, not detached-house cul-de-sacs.

        Vancouver is doing something in between. When the skytrain was extended into Surrey, they built a satellite downtown for it to go to. However, they also allowed sprawl beyond it in Cloverdale and White Rock, which were previously semi-rural.

        The closest equivalent to Surrey here is perhaps Issaquah, which grew in the same time period, and gained an ST Express route. However, the city is not at all designed for walking and transit. The transit center is a long walk from anything, and it’s in such an obscure corner that it takes the 554 fifteen minutes to get from the Highlands P&R to the TC and freeway. There is a lot of multifamily “density” in central Issaquah now; I couldn’t find an single detached house along the 554 between the TC and Highlands Drive. That’s something, but most of it is unwalkable. The bus goes by a school, and while it doesn’t stop (being an express) there’s no local bus either, which makes me wonder how a teacher or student would get to the school if they didn’t want to drive. If you wanted to walk from the school to its neighboring buildings or anything else, that would be a long way too.

      • John Bailo says

        Germany releases land for compact satellite cities,

        Satellite Cities: A concept I have vociferously championed for this state!

        And from what I hear about Issaquah, yes, it needs it’s own transit, and places to go to right there.

      • John Bailo says

        @Brent:

        I’m all for cheap apartments in good places.

        We just have to keep people from outside from moving here and renting them.

        Our crashing growth rates are good news.

      • Mike Orr says

        “Compact satellite cities” don’t have density as low as Kent East Hill. They don’t have five-lane highways like Kent-Kangley Road going through them, much less cul-de-sac houses next to said highway. They may have a few five-lane boulevards instead of highways, with transit lanes and urbanish density along them.

        You keep asking for “more Seattle” or “more Seattles” or “more Wallingfords”, but when offered them you denounce them and say, “No! It must be like East Hill or less dense!” and “It must have more highways and freeways!” and “High-speed rail between exurbs!” Those are all antithetical to anything that could be described as “more Wallingfords”.

        What “more Wallingfords” would look like is replicating the Kent Station area and the small-lot houses northeast of it into lower-density areas, with no more highways, but maybe a strategic boulevard.

      • Spencer says

        Even without the use of “crippled” the statement comes off as self-aggrandizing, as if geography is somehow stopping the Puget Sound region from sprawling. If you look at a map, you’ll probably notice that Seattle has just as many suburbs than most metropolitan areas in Texas.

        Our geography does not constrain us from building cul-de-sacs everywhere – really, they start to the north at about Shoreline, and go all the way up to Marysville or farther.

    • lakecityrider says

      Ouch Mark, just ouch. I’m sure Frank didn’t intend for his article to turn into a referendum on Texas’ land-use policies versus Washington’s so I’ll keep this brief. (By the way, my birth certificate and the driver license I held for many years both read “Texas” across the top.)

      Of course Texas builds out. For many years, and this goes double in the state that more or less started the oil boom (for better or worse), the cheapest and most structurally sound method was to build flat and wide. Most parts of Texas have shifting soil and shallow water tables. There’s also the political and governmental considerations, and if you’d like a treatise on Texas governance through Reconstruction and the Modern Era, I’d be happy to e-mail you one of my college papers, especially the sections concerning property rights.

      However, I find it very instructive that Dallas Area Rapid Transit has the largest light rail system in the United States. Denton County Transportation Authority worked hard for and received the first ever FRA waiver allowing shared track use of DMUs. Houston and Dallas both have 24-hour bus service with routes that have _15 minute frequency_ in the _middle of the night_.

      Frank is right. The Puget Sound region is hemmed in by geography and rightfully concerned with preserving what Mother Nature put here. Old-line property owners really should, in my opinion, learn that their precious single-family housing methods of living are not compatible with either the here-and-now or the coming-very-soon as far as housing trends, economic forecasts, and need for livable cities. That’s still no reason to throw wide-ranging labels against an entire state that has a lot of folks who, I’d wager, have views that the readers of this blog would champion.

      • Brent says

        Howdy, fellow Texan. It seems Seattleites aren’t being displaced by techies. They’re being displaced by Texans. We Texans seem to be voting with our feet for what Seattle has to offer over what Texas has to offer.

    • Mike Orr says

      Texas has so much land it will never fill up, not unless the entire rest of the country moved to it or the US population increased five times. Before that we’d reach the limits of water and food.

      Dallas’ light rail may be the largest in terms of miles of track, but that means it was evaluated based on passenger-miles (which favor long suburban trips, mostly peak hours) rather than passengers-per-platform-hour (which favor many short trips per capita, usually in-city, all day and evening). The difference is how it relates to the person’s goals. People want to get somewhere and do things (those short trips); they don’t specifically want to sit in a vehicle for miles (those long trips). Otherwise the train could go in circles nowhere and it would still be raking up passenger-miles. That’s not to say those long trips shouldn’t have transit, but that the short trips are too often neglected. Short-trip users have specific needs: high frequency full time, more stations, and walkable neighborhoods around the stations. These are what get neglected in passenger-mile-based networks, even if one or two token neighborhoods are given to them (which immediately become expensive because of the pent-up demand for them).

      15-minute night buses is impressive if that’s the normal frequency throughout Dallas. When I was in Dallas twice around 2009 I didn’t look at the city bus routes but used only DART, a suburban route, and the TRE train. DART’s only short-trip areas were downtown and one station north of it. (I’ve heard since then those areas have grown and DART gained a downtown tunnel, but I haven’t heard of any similar stations on the new lines.) The suburban bus route was half-hourly even during the day. The TRE is every 30-60 minutes weekdays, 90-120 minutes Saturdays, nothing Sundays. So it’s borderline all day but not enough for all your trips. But if Dallas pioneered DMUs, thank you.

  3. Glenn in Portland says

    Unfortunately, by nature, the way cities in the USA develop (and unfortunately Seattle has this problem as well, though not quite as badly) is the sheer amount of wasted space devoted to the automobile. Almost anywhere outside the USA, the vast acreage devoted to such atrocities as the Mercer Mess (which, despite the area it consumes, really doesn’t work that well as a highway interchange even now) would be developed land.

    Texas? Sure, they have lots of land, but even there the traffic troubles have grown bad enough from the development patterns that Houston and Dallas both have light rail lines, and Fort Worth to Dallas is served by a local passenger train (it can’t really be called “commuter rail” as it runs a full schedule). So, even there, at least in the metropolitan areas, there is some effort being devoted to alternatives to consuming yet more land with highways.

    • Chris I says

      The amount of land available in Texas is basically irrelevant, because they will run out of water at some point in the near future, and won’t be able to add new residents.

  4. Greg H says

    I think your cherry-picking of two parts of the article and handwaving away the rest as a “complex array” is a little strange. According to the article, the Germans have extremely strong rent control and tenant protections, massive government subsidies to municipalities for housing, and a general favoring of renting rather than owning, which is practically the opposite of most of the United States. Even the article says that the subsidies to municipalities are “the ultimate driver,” rather than simply adding to housing stock/increasing density.

    In the few cases where pro-tenant laws are in place, i.e. strong rent control and a ban on no-fault evictions, those laws are often used as examples on this blog of why housing is so excessively pricy in New York, San Francisco, etc. But according to this article, it’s a crucial part of keeping German housing prices low. Which is it?

    Why is the takeaway from this article “We should greatly increase housing stock and density and restrict lending, like the Germans” and not “We should put far greater legal restrictions on landlords to the benefit of tenants, like the Germans”? As an empirical data point, all Germany tells us is that those policies work well in concert, but not necessarily if only one or two parts exist without the rest, which would necessarily be the case for the U.S. in the near future if any of them were implemented.

    • Nathanael says

      German tenancy rights are quite different from the forms of “rent control” implemented in places like New York City.

      The details of the difference are very, very important.

      • Nathanael says

        And no, I don’t know all the details. My German isn’t good enough. I was able to spot some differences… the New York rules are really poorly thought out… but I wasn’t really able to figure out how the German rules work.

      • Nathanael says

        For one thing, there seems to be a set “allowed” rent increase rate in Germany. And rents are kept high enough to cover inflation and maintenance. (Contrast NYC “rent control”.)

        For another, there doesn’t seem to be the “when the tenant leaves, you can raise the rent through the roof” loophole present in NYC.

        For a third, there’s no such thing as a *non*-rent-controlled apartment, so it’s a level playing field.

        For another, *wages* are kept high enough that’s it’s OK for rent to be rising along with inflation, because wages are rising too. The lack of wage growth is the biggest problem here in the US. (And if they get that problem in Germany… watch out.)

  5. Mark Dublin says

    I admit I’ve got to rein in, like they say in Texas or maybe just movies about it, some rhetorical flourishes of my own. A lot of the vitriol is personal. Over these last years, I’ve had some experiences with the market approach to both housing and medical care that leave a taste in my mouth I wish I could spit out.

    However, I’ll be a lot more sympathetic to discussion about density when I sense an understanding that for life in this country to be decent for anyone who is not a billionaire, we’ve got to end a situation where the standard of sheer blind luck makes gold look worthless.

    And the accompanying understanding that the above paragraph requires the active democratic government, progressive taxation and strong union presence that underlay the manufacturing economy that gave this country its last period of real prosperity.

    Flourishes from my side will be housebroken by the end of decades of concessions to the other.

    Mark

    • Glenn in Portland says

      It can’t be just housing that is built though. One of the things I notice in the Seattle area is that huge areas are being developed for housing, but the houses being built are all huge. There doesn’t seem to be anyone building anything in the 2 or 3 bedroom single living room and kitchen variety that was so popular in the 1940s and 1950s. Those which were built are in many cases being torn down and replaced with much larger houses on the same lot.

      I think that maybe the 20% down payment given here for Germany isn’t high enough. Instead, if it were in the 30% range, it would decrease the demand for housing that people think they can afford, but in reality can’t.

      • William Aitken says

        In the Seattle, land cost tends to dominate the cost of SFHs. In addition, because it costs way less than twice as much to build one 2400 sf house as it does to build two 1200 sf houses. Put together, I suspect that less than 30% of the cost of developing a house on a given lot (land aquisition, financing, permitting, and building) depends on the size of the house. Finally, I’d be very surpised if even this dependent portion experiences meaningful diseconomies of scale in the range that is actually buildable. This all means that halving the sizes of houses would only drop the prices by about 15%. It’s easy to see why developers just maximize the house size, particularly since there appers to be adequate demand for these large houses. It’s easy to see why buyers who can afford to chose $800k 2400 sq ft houses of $650k 1200 sq ft houses.

        To make a serious dent in this problem you have to make it easy for developers to develop smaller houses on smaller lots. In neighborhoods that are already mature, and in which almost all development happens a lot at at a time, this means allowing devlopers to split lots into 2 or more new lots. In practice our land use policies make this almost impossible: mimnmum lot sizes, parking requirements, frontage requirements, setbacks, permeability requirements all contrive to make subdivision hard.

  6. Chazzer says

    I would like to know more about the economic (rather than regulatory) context for German housing prices. I lived with a host family near the town of Goerlitz (deep east germany) between 1999 and 2000. The father owned a construction company and built houses. Directly after the wall fell, there was a significant boom, as many (former) east germans were cash-rich – not having had much to buy in the previous 40 years – and rapidly purchased ‘western’ cars, houses and televisions. Meanwhile, east german factories were closing, unemployment was rising, and population was stagnant or declining (Saxony’s population delcined 15% since 1990 – overall Germany’s population has barely budged in the past 24 years). The boom was grinding to a halt while I was there, and my host-father’s construction company finally went bust around 2003.

    From an economic standpoint, the American equivelant isn’t texas. It’s Detroit.

    • Nathanael says

      That situation was pretty weird, because most East Germans ended up owning their homes outright free and clear as one of the side effects of “de-communizing” the government. Strange economic situation, and it wasn’t stable.

  7. Sam says

    The idea that prices will fall when supply is increased was drilled into all of us in Econ 101 classes by professors quoting Adam Smith. But let me ask everyone something. SLU … over the last 20 years, has housing supply increased? And aren’t they building up? Okay, now tell me, have prices fallen in the last two decades SLU or have they dramatically risen?

    • Mike Orr says

      You can’t look at SLU in a vacuum. Twenty years ago SLU had no housing; it was decaying warehouses and car interchanges. Instead you have to look at where the current residents would be living if SLU hadn’t developed. Answer: they’d be in Capitol Hill, Queen Anne, Fremont, the Central District, downtown, Belltown, Ballard, etc. What would that do in those neighborhoods? It would increase competition for apartments and condos. What does that mean? Higher prices, even higher than they are now. Look at the Bay Area, which suppressed development even further, and whose population rose even more. Look at San Francisco, where there’s a 5-person lineup on each apartment/house and you have to bid up and decide immediately and use a rental agent to get anything. That’s what we’d be going toward if this infill housing weren’t being built now.

      SLU is also unique in other ways. Its development was stagnated for decades until the city council settled on zoning. It could have been built up in the 60s, and then the housing would be older and less expensive than the new buildings. That would have lessened pressure on the surrounding neighborhoods and perhaps have contributed to a larger urban core and thus better transit. That’s if SLU had developed with a density like Summit. But in that era it may have been squandered with strip malls and big-box stores and unwalkable garden apartments. SLU is also unique because it’s a new neighborhood next to downtown. Those neighborhoods always have the highest prices, so you can’t say the price change in SLU is typical of Seattle as a whole.

    • Sam says

      William C, could you give me some examples of dense U.S. cities that are building up instead of out, and increasing supply, and housing prices are falling? Which cities should Seattle strive to be more like?

      • Anandakos says

        Sam,

        The combination of requirements you listed, in particular that the city already be dense and building upward, results in a very short list of perennial favorites: San Francisco, New York, and Boston. There are also a group of older northeastern cities with relatively high historical density which have lost their manufacturing bases and are not building up: Cleveland, Buffalo, Toledo and of course Detroit. Everywhere else that’s now building upward in the central core was low density in the fairly recent past. Seattle and Portland are both in that group, and the reason that they’re building up is that the preference for single-family suburban homes has declined along with the fertility rate. There are lots of one-person “families”; many more two-person childless families; even more single-adult and one or two child families; and of course, lots of empty-nesters.

        All of those demographic groups have lower needs for large housing. It’s true that the adult in the single-adult with children family might like to own a house with a yard, she probably can’t afford one. The other demographic groups are less likely to want to isolation of living in a suburban home and have money to spend on entertainment and eating in restaurants.

        So, all of them are trying to crowd into the relatively small percentage of existing cities which have real “neighborhood” centers from their pre-war beginnings. They don’t all fit so costs for housing are rising in those places.

        It’s still simple supply and demand.

      • Zach Shaner says

        As a matter of of economic fact, building beyond population growth causes housing prices to fall somewhere, but not necessarily in the area it’s being built. Hunger for urban living is so great, especially in large parts of the U.S. that are redeveloping in a recent historical context of urban neglect, that for every X housing units we build Seattle is becoming more attractive to X+n people, and prices continue to rise as a result. You see this all over the world in dense, expensive, amazing, dynamic cities such as Hong Kong and London and New York.

        I always say that more supply is a necessary but not sufficient condition to reach affordability. The converse, not building housing, guarantees UNaffordability. Robert Cruickshank is correct above when he says that the answer lies in both tenant protections and removing regulatory barriers to development. Have just the former and you become a territorial fiefdom like San Francisco, where property ownership is concentrated in a few hands and people compete furiously over the same crumbs. Have just the latter and you get housing bubbles, mass evictions, market instability, and tons of other unacceptable social costs.

      • Glenn in Portland says

        Everywhere else that’s now building upward in the central core was low density in the fairly recent past. Seattle and Portland are both in that group, and the reason that they’re building up is that the preference for single-family suburban homes has declined along with the fertility rate.

        No, not entirely. At least not in Portland.

        South Waterfront? Pearl District? Development in those areas were heavily financed by efforts of the Portland Development Commission. There was a bunch of that in north and northeast Portland too, as well as parts of southeast.

        Sure, we have an urban growth boundary, and it is frequently blamed by developers for the high housing prices in the Portland area. However, the fact is that the urban growth boundary is expanded often enough that it really doesn’t prevent sprawl. Take a look at the outer edges of Happy Valley or Hillsboro or Forest Grove. It isn’t unusual for people to drive from as far away as Salem or further for jobs in the Portland area.

        Yet, housing here is still quite expensive compared to the wages that are actually paid – sure our housing prices are lower than Seattle but view that in context of the average wages here.

        So, increasing the supply of housing really hasn’t done that much to keep housing prices in check.

        Those places where housing is still reasonably affordable are those places that are much less desirable for some reason or other. Vancouver and Clark County? Sure, the housing prices are less there because of the traffic mess on the bridges.

        The place where I live is more affordable than most of Portland, but I am in one of the area so southeast where the city has never gotten around to paving the roads. This has probably kept the housing prices under control here more than anything. Witness, for example, Google Street View of SE 41st Avenue:
        http://goo.gl/maps/fD4KA

        So, if you want to have an area or two in Seattle that has affordable housing, just tear up a few of the paved streets and replace them with gravel, and the housing prices in that area should then become quite affordable.

        Housing prices are expensive in Seattle because people are willing to pay a lot of money to live there. You can increase the supply of housing all you want, but all that will do is provide more space for those who live on Fox Island or Gig Harbor, and would much rather live closer to downtown Seattle, a place to live. The demand easily increases as the supply increases. To really make things affordable, you have to have someplace that is less desirable so that people are actually willing to pay a lesser price due to the reduced desirability.

    • Mike Orr says

      OK, maybe Frank should have said prices will stabilize rather than fall. If developers continue building after everyone has the housing they need, then prices may or may not fall because the new units will be valueless but people still need to live somewhere, and “move-in discounts” can only cause bid-downs until choice is saturated. But developers will stop building when prices stablize. I’d like to see a rollback to 2008 or 2000 levels, but that’s probably more than we can expect. Significant price-lowering would mean jobs have disappeared and people are leaving town.

      I didn’t realize this German town was in eastern Germany away from the Berlin job center. In that case it’s in population decline like Detroit, although not as sharp. So that’s also a factor in the lowering housing price.

      The high prices in SF, NY, Vancouver, London are not a sign that density causes high prices. They’re a sign that there’s a serious shortage of units in walkable, transit-rich, interesting neighborhoods.

      • William Aitken says

        @Mike. For the most part I agree with you, but I think you overstate your case in the last sentence. In particular, it doesn’t really adequately explain high house prices in places like Bromley or Nassau county (I don’t really know either of your west coast examples well enough to comment on them).

  8. BA says

    Lots of ways to increase the housing supply. Detroit has a different model and housing there is amazingly inexpensive.

    There is an enormous amount of developable land along many of our arterials, where infrastructure already exists – the trick is to develop in a way that creates a fully functioning diverse set of uses.

    I passed this weekend the enormous multi-family structures under construction along I-5 up by I think the Ash Way transit center – perhaps with great connectivity to transit, which helps the folks escaping the dreary, boring world being built for them right now. A few more uses thrown in like places to work, eat and shop, would have been good…

    • East Coast Cynic says

      But isn’t the bad economy in Detroit responsible in large part for the inexpensive housing? People without jobs or good jobs can’t pay a kings ransom like they can in cities with much better economies.

      • William Aitken says

        Yes Detroit’s cheap real estate seems to be a demand side issue. In particular, when you lose as much population as Detroit has, housing demand goes way down.

  9. Anon says

    This is the take-away line from this whole thread:

    “I always say that more supply is a necessary but not sufficient condition to reach affordability. The converse, not building housing, guarantees UNaffordability. Robert Cruickshank is correct above when he says that the answer lies in both tenant protections and removing regulatory barriers to development. Have just the former and you become a territorial fiefdom like San Francisco, where property ownership is concentrated in a few hands and people compete furiously over the same crumbs. Have just the latter and you get housing bubbles, mass evictions, market instability, and tons of other unacceptable social costs.”

    Can’t recommend enough.

  10. J-L says

    Western European countries have strong laws in favor of tenants but it isn’t that simple. If you move to a town where no one know you and your employer doesn’t help you find a home, you will have to pay several months rent in advance, with a few months worth not returned when you eventually move out.
    A landlord is allowed to ask for all sorts of references, including from one’s bank. If you don’t have a job lined up it isn’t easy…Sometimes, in very big town, several tenants will be bidding for the same place..and offer extra money to the landlord…

    Tenants pay reasonable rents but they are expected to pay for the painting or wallpapering of walls–it they don’t like the existing ones. They will move in with their own stove and fridge, washer/dryer, dishwasher–if they are allowed. Drapes, light fixtures will be their own etc. etc. etc.

    It used to be that small landlords were not overly interested by making a lot of money out of rents as they would have to pay high taxes.
    What interested them was tenants that took care of a home as if they owned it and stayed there for many years. From generations in some cases.
    What really mattered to the landlords was that the homes stayed in their family for generations…

    The landlady of one of my relatives owned several dozen houses in one neighbourhood, built by her father. When she needed my relative apartment, to join it to her daughter too small apartment next door, she moved–at her expense–my relative to another apartment (a better one) in the area.
    By law the landlady could only charge the same rent as in the previous apartment for one year. But my relative had to buy a whole kitchen–cupboard and appliances–and redecorate the place. She stayed over 20 years in that new home..

    I don’t know if it is the case in Germany but in a nearby European country–my birth country—people working for the national government or for a city (low level bureaucrats, firemen, policemen, school principals, hospitals directors and many many more) are housed in subsidized homes because they are regularly transferred from one town to another during their career and can’t be expected to buy and sell a home every few years, with huge differences in prices depending on the location.
    My parents were in that boat.. Like many other “civil servants” they did own a house they used only during vacations (European have long had a lot of vacations) and where they eventually retired.

    Nowadays reasonable rents are no longer as reasonable as it was for my parents and myself…In my very first job, in a town I didn’t know well, my boss found me a 3 bedroom furnished house, with a once a week cleaning lady included in the rent. I paid 10% of my gross salary but agreed to move at once, if my landlord needed the house, to whatever place he would find for me…
    I was already planning to move to another country anyway…

  11. phil says

    A better source about the German housing market would Deutsche Welle – http://www.dw.de (in 30 languages).

    http://www.dw.de/formerly-poor-but-sexy-berlin-is-now-booming/a-17255934
    “But all the positive numbers have negative consequences as well: dramatically increasing rents for example. Real estate prices have skyrocketed in recent years, and are attracting more speculators.
    Local residents are already being moved out of trendy quarters by wealthy new Berliners, but also due to the construction of new apartments and hotels. Meng says the government must devote itself to new tasks, like affordable housing, now that there is more money.”

    http://www.dw.de/housing-in-germany-grows-more-expensive-than-ever/a-17181528
    The cost of buying a home or renting an apartment in major cities in Germany is rising sharply, the central bank warns. That’s how the crisis in the US, Ireland and Spain began. Is Germany next?

  12. asdf says

    I grew up in Houston and I if there is a single transit route over there that runs 24 hours, that’s news to me.

  13. Kevin says

    “German house prices in 2012 represented a 10 percent decrease in real terms compared to thirty years ago.”

    That statistic needs an asterisk next to it. 30 Years ago Germany was splint in two. When the much larger East Germany was finally unified with the modern West, it flooded the country’s market with cheap housing that still reverberates to this day.

    Anyways, what is it with this Seattle’s hate of apodments and micros? They cover dire demographic in the city and people eat them up as soon as they are built. These can take a huge chuck out of the affordability pie and they do it without eating into the Housing Authority’s and charities coffers.

    Another factor is the city’s hate towards developers, they tax and fee the hell out of them on top of making it as difficult to get through the DPD process until the only thing that can be built is high end units. We are taking the San Francisco approach and it is driving up prices like crazy by limiting supply. For every new unit built means that an older unit will drop in price and help in all rent ranges. This is a smart city, but we do “affordability” as dumb as possible.

  14. asdf says

    Name one bus route in Houston that operates 24 hours with 15-minute frequency in the middle of the night? Even the light rail, I believe, stops running by 2 AM, and offers only 20-minute frequency. (And the city is so sprawled out that very few trips are along the light rail line anyway).

  15. Glenn in Portland says

    Glenn is correct. 80% of American adults prefer living in detached single family homes. Only 8% prefer apartments.

    I’m not quite certain where you go that from what I wrote. Apartments and condos are quite popular places to live. However, here in Portland the only way that affordable housing has been created was through city government action (ie, the Portland Development Commission efforts) or inaction (ie, not paving streets in areas of southeast Portland, so that those areas are much less desirable).

    Despite construction of more condos and apartments, however, it won’t necessarily make housing more affordable. If people are willing to pay for expensive housing, that expensive housing is what will get built unless there is some other type of intervention. Developers have no reason to reduce their profit beyond the maximum available, and that maximum is reached by building housing that makes people pay as much as they can possibly afford to pay. Intervention into these forces is what the city of Portland did in the Pearl District and South Waterfront, in an attempt to make some more affordable housing available. There has also been effort at building “micro-housing” (apartment sized houses only detached so there is more privacy – similar to what you find in the Magnolia area and a few other areas along the alleys where very small houses were built in back yards) and a few other efforts that simply were not being provided by market forces alone.

    Places that are desirable will always have high housing prices, because people are willing to pay the higher price.

    Don’t laugh at this proposition, but seriously consider its possibilities: have housing in the industrial areas of SODO. Obviously, such housing is in a less desirable area, resulting in its being more affordable. Here in Portland, housing in industrial areas has happened by accident in a number of cases. An area will have been converted to heavy industry from old residential decades ago, resulting in this type of thing:
    http://goo.gl/maps/1B3vu
    Swing the viewer around, and you will see that the entire street is fairly dense industrial, except for one light commercial building, and one house which survives by accident.

    In Seattle, you could actually plan this to happen on purpose. Many of those industries in SODO really are not doing anything exceptionally dangerous where it would be a bad idea for residential units to be close by (obviously, explosive manufacturing or what have you does not lend itself to having large residential communities close by). Furthermore, modern industrial arrangement typically means that it is very difficult to have multi-floor industrial facilities, unlike decades ago where industrial use might be on multiple floors. There are a number of places that have mixed use commercial and residential on different floors, and in some of these industries what goes on on the ground floor isn’t that much more obnoxious than what goes on in a commercial environment. Furthermore, some of these areas (ie, the Metro bus base and storage yards) take up a lot of space that could have a building put on top of them due to the nature of the current industrial land use.

    So, perhaps it is time to consider mixed use industrial and residential areas, adding to the already developing supply of mixed use commercial and residential?

  16. Glenn in Portland says

    However, I find it very instructive that Dallas Area Rapid Transit has the largest light rail system in the United States. Denton County Transportation Authority worked hard for and received the first ever FRA waiver allowing shared track use of DMUs.

    DCTA’s efforts at getting a waiver for the Stadler GTWs is something that really could open up a lot of interesting possibilities in the future for other agencies. The possible application all over the northwest including Seattle might be worthy of its own thread.

    However, in terms of having the largest light rail system, there are some reasons for Dallas having that. Once you get past a certain line length, it is better to have higher speed trains operating over main line railroad than what is possible with light rail standards. Thus, for longer distances such as those required in Dallas, you instead would find something along the lines of the 280 line miles operated by SEPTA regional rail services. However, they didn’t have to build any of that from scratch like Dallas did, and had an extensive railroad network in place before electrification started in 1915.

    That 2030 expansion plan Dallas has is pretty impressive for a place that started operation in 1996, and certainly makes it a very interesting place in terms of light rail development. It shows how once the trains are running, people who once opposed their mention suddenly realize that the ground doesn’t open up and swallow a city just because it happens to have a light rail line in operation.

    Certainly, I understand why Dallas did what it did, but many cities will probably not follow that particular pattern due to their development patterns being along main line railroads, and the opportunity to have something more along the lines of DCTA on main line track.

    (and as I write this, they are stringing overhead wire on the poles outside where I work for the Milwaukie MAX line, soon to make us ever closer to the Dallas pattern.)

  17. Kevin says

    “Despite construction of more condos and apartments, however, it won’t necessarily make housing more affordable. If people are willing to pay for expensive housing, that expensive housing is what will get built…”

    New units will always be more expensive, but what new units do is drive down the cost of older units.

    What Seattle does wrong is extort developers and drive up the cost of new units far higher than what they need to be and that also affects the supply side by developers not even building because the city’s fees and taxes make their project a money loser before they even begin construction given the site’s height limits and other artificial constraints. One of the worst offenders in this is the city’s use of alley vacations as a bargaining tool against developers, even though the project would be a full block development and an alley is not needed…

    As I mentioned before, Germany now compared to 30 years ago is a very bad example, that country is a very unique situation. It’s like saying that Korea’s prices in 30 years would be anything near what they are today in real dollars if the north and south would unify all of a sudden. Apples. Oranges. And all that.

    Be realistic and compare Seattle to Frankfurt or Cologne, then you’ll see that Germany doesn’t quite have it as figured out as the author thinks.

  18. Mike Orr says

    There are only so many rich people who want an ultra-luxury unit in Seattle, even if you include Californians and foreign investors who find it cheap. Beyoncd that, there are only so many people willing to pay 50-75% of their income for a top-price unit. So those are both natural ceilings.

    SODO has been protected from development due to a concern over losing Seattle’s industrial base and jobs, and maybe needing that capacity more in the future. However, it has started to be whittled away with the development on the Kingdome lot and the once-proposed basketball arena. Vancouver and San Francisco have lost their industrial base by redeveloping it into housing. That narrows their job base and makes them more vulnerable to booms and busts and global economic changes, so it may not be a great thing in the long run.

  19. ryan says

    “But we Cascadians are hemmed in by geography and a crippled by a love of the natural environment”

    Oh man, when I read this it sounded like the whitest, most middle aged, upper middle class, male bs statements I’d ever read. Like a parody of a parody of a parody of a certain type of Seattleite. Would have been too much even for Almost Live.

    Confirmed by the OP’s picture by the way.

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