I have been working with a team that just submitted an application for funding from the Housing Trust Fund this week, and two things came up. First, our market study confirmed pretty much what real estate people have been saying a lot lately, apartment vacancies are down and prices are going up. That’s a trend that will continue for the next few years.
Second, monthly prices for rental housing—rent as it is more commonly called—are based the costs of construction and debt, and what the market will bear. The determination of how much a particular unit will rent for is made at the pro forma stage not after construction. Often in the public discourse about housing price and affordability the discussion proceeds as if developers build their projects then see what they can “get” for the units. Generally speaking, that isn’t how it works.
Why do these things matter when we talk about affordability of housing near transit or anywhere? Because the way we think about housing price should affect the interventions we make to affect it. That is, if we think housing prices are too high then how we change those prices requires understanding about where prices come from.
The first point is that housing price is affected by supply and demand. There is a stubborn resistance in some quarters to this basic economic principle rooted in culture and politics. Housing, some people argue, is different than anything else. Loosening regulation to allow more housing construction might lead to more developer profit, lower quality housing, and a windfall for the industry at the expense of renters.
But this perception—that allowing more housing construction will hurt renters—just isn’t true. Here’s a paragraph from the latest story highlighting real estate market studies that confirm the important relationship between supply and demand:
The Seattle and Bellevue downtown markets experienced sharper vacancy declines and stronger rent increases than the average. Seattle’s vacancy rate fell 0.74 percentage points to 4.8 percent this quarter, and Bellevue’s rate fell 0.35 percentage points to 4.09 percent, according to Apartment Insights. Both areas saw rent increases above $100 a month.
There you have it, when vacancy rates drop rents go up, a point repeated in market study after market study. It isn’t a radical concept, and it should lead to an easing of regulation to allow for more apartments to be built in Seattle, not less.
How are rents affected by construction costs, debt, and market studies? When a developer builds a project, whether she is a non-profit or for-profit developer, she starts with construction costs. How much will it cost to actually build on the site selected? Then comes an analysis of rents, size of units, and what the maximum-zoned capacity of the site will be. Then the developer has to figure out financing and whether the mix of unit size and rents will enable repayment of debt to lenders and investors.
When all this number crunching is done, decisions are made about materials, building layout, unit size, and how much each unit will command from renters. It is important to note that the price attached to each unit is completely a function of the cost of construction and operations, the debt service to cover those costs, and real estate studies about what the maximum rent could be reasonably charged. If a developer wants to charge too much (or too little), investors will balk, worrying about whether the building will stay vacant or not meet debt obligations.
Price for rental units are not set to fleece renters. Materials are not chosen to be “ugly” or out of character with the neighborhood. Every decision in a new development is a complex set of calculations based on costs, investor confidence, and what renters are likely to pay. If all goes well, a project will attract tenants and the rent they pay will enable payment of debt service, and yes, eventually, some profit or funds from rents in excess of operating costs.
Accordingly, if we want to have an effect on housing price the two policy objectives we ought to have is to increase supply and lower costs of housing production. The latter would make housing less scarce and the former would enable more units but also would enable more competition. A developer would be able to lower his rents in a way that would maintain investor confidence and draw more renters to his product for smaller rents.
Lisa Picard who is heading up the effort to build the Stone34 project in Fremont makes the great point in her presentations that bank funded projects always end up looking the same as the last bank funded project. Banks generally don’t like risk so building design and rents are largely driven by investor scrutiny, not a wealthy developers boat payment. Zoning and design review further limit what’s possible by constraining the number of units that can be built on a site, further limiting the revenues to pay back construction debt. Add conservative design review and it’s a lot easier to see why buildings look the way they do and why rents end up being what they are.
All of this is pretty conventional stuff. What is hard is the politics, and changing the way we permit and finance new development. Understanding where rental housing prices come from should open us to the idea that more is better when it comes to supply, and reducing costly regulations (like excess parking) will lower prices for renters. With more and more people staying out of the mortgage market and looking for better rental housing, now is the time to take action.
Are apartment vacancies up because of “demand demand” as in people really want to live in apartments?
Or because they are waiting out the housing market…that is…what people really want is more, and cheaper, houses. This could be accomplished by removing GMA, zoning for smaller homes, providing better highway access to jobs and designing a combination of low density, neighborhoods.
So an alternative answer would be to build more lower cost and smaller single family homes of the type favored by people who move to Seattle.
John,
Developers of single family housing respond to the market as well. In most cases in new SF development the reason you see large homes is due to market demand and not due to restrictions on the number of units per acre.
John, most places exclude townhouse development and single-family residential 8/12 du/acre type development. The other flipside has to do with not enforcing a MINIMUM density on subidivsion of land. Luckily, some jurisdictions like Redmond actually do have minimum density standards. The GMA isn’t the problem. I don’t know why you would even make the connection you just did in terms of apartment living and want for living in the suburbs in your post anyway. People are *choosing* to live in the cities, not the suburbs. Don’t you get that? Why would a Seattle-based apartment dweller want to live in Kent or beyond? There’s nothing offered there. This is a choice, not an accident because of the economic conditions.
The trends in our country right now are strong inflow of wealthier folks into the center cities, immigrants settling into the outer suburbs, and the poorer neighborhoods moving away from ringing downtowns. This is happening very rapidly, regardless of the economy, and almost below the radar because of the speed of this change.
For Seattle that means more residents downtown, increasing density in the most desirable (good access to jobs for example) neighborhoods and lower income folks being pushed outward.
For Kent, likely a more diverse population is in store – arguably a very healthy improvement.
This week I am in the Fort Collins area.
Today I visited what I consider the New Suburban Town…an outdoor mall which combines forms of streets, traffic circles, wide sidewalks, open air plazas, plenty of shops of course and a dog park. It has parking, of course, and paratransit buses for access.
https://picasaweb.google.com/lh/photo/aC66SXIdMrIJQL5f762X8NMTjNZETYmyPJy0liipFm0?feat=directlink
The horizontal sparsity makes it possible.
It’s nice that it’s more user-friendly than “traditional” forms of surbuban development, it even sounds like it’s attempting to be partially urban and a destination. But it’s just that, it’s trying to be urban. Suburbanites who don’t have the time to go the city, but prefer a more pedestrian and human scaled environment will flock there. Those who really want the real thing will just go to the city. Is it retroffiting the suburbs? Yes. Is it earth-shattering or game changing? No.
Looks like Redmond Town Center?
Redmond Town Center…very!
Here is the residential side of it. This brand new complex exists adjacent to the “town square”. You can bike or walk from the houses to the stores, shops, businesses there.
The “theme” is astronomy. The streets have names like Little Dipper Drive.
Here is the town recreational center, featuring a pool and grassy park with a gazebo and also an observatory (not sure if its functional or not):
http://goo.gl/maps/vYtC
The housing stock is a mix of larger 4 bedroom houses, going down to 2 and 3 bedroom townhouses. And while I was there they are building some apartment blocks (about 3 or 4 stories high).
It’s funny because of the craftsman homes, it’s sort of like a Seattle neighborhood, but in the middle of nowhere and with total sunshine, 90s temperatures and brand new houses:
http://goo.gl/maps/XokR
So, I guess this is my dream…the idea that the answer to the shortage of space in Seattle is to go somewhere else build “more of Seattle”.
It is already cheaper to buy a single family house than to rent an apartment.
Where? Where can I buy one of these gloriously inexpensive American Dreamhouses?
Lots of starter single family homes are available in the outer suburbs, like Kent, for under $180,000. With 10% down and current interest rates around 4%, that translates to a monthly mortgage payment (including principal, interest, escrow, fees, taxes, etc) of somewhere in the $800-900 per month range: much cheaper than an apartment within Seattle city limits.
You can still find some $800-$900 1BR apartments on Capitol Hill, with more plentiful stock in old Ballard (south of Market) and the CD. But it is much more difficult than it should be.
We should be working to increase the availability of apartments with rents at this level. We start by removing requirements that builders construct insanely expensive parking.
But even that’s not enough; we should actively prohibit construction of new parking in the densest, most transit-servable areas of the city (downtown, Capitol Hill, and soon the U District). This will push down demand for automobile infrastructure in areas where providing that infrastructure reaches exponentially increasing marginal costs by shifting demand to the other high-capacity infrastructure we’re already investing in.
Ah, so you can indeed buy apples cheaper than you can rent oranges.
It is indeed a wonder that everyone in Seattle hasn’t up and moved to Kent already. It’s so much *cheaper* there!
Sure, you can buy a cheap house at low interest rates, then completely discount your time driving 1.5 hours each way to work and ignore how much you feed your gas tank.
“It is already cheaper to buy a single family house than to rent an apartment….
as long as you ignore the depreciation and maintenance of the property
as long as you ignore the costs of driving (time, gas, depreciation and maintenance of your vehicle)
as long as you ignore the costs of buying and selling the property (most people are not going to live in the same place for the next ten or twenty years)
In order for it to make economic sense to purchase a home, the monthly payment needs to be substantially less than the rent for an equivalent property.
Ok, I can be more specific.
You can buy a small (sub-1000sqft) “starter house” on a small lot within Seattle city limits for cheaper than you can rent a 700-1000 sqft apartment within Seattle city limits.
The mortgage payments are about 1/2 what rent would be, leaving plenty of money left over for utilities, insurance, taxes, and a nice maintenance fund.
This is assuming around a $150k house and around a $1100/mo apartment, both of which are not hard to find. Yes, you can scrounge and find cheaper of both, but you will not have much choice in location. And if the maintenance bill is what’s throwing you off, look at down-market condos. There’s plenty of livable condos, sized the same as a $1100/mo apartment, that can be had for a $400/mo mortgage payment and a $300/mo HOA.
Something is wrong with this picture.
Searching Redfin, there are currently zero houses on the market north of Beacon Hill for $150k. Those that exist are scary (950sf short sale, a 0 bd church, etc.). These take money and time to bring up to livable condition, and are in far less desirable neighborhoods. Have you priced apartments in Dunlap? Apples, oranges. Find a single family home in Belltown for $150k and we’ll talk.
re: old church… you can find anything you want at Alice’s restaurant. @lack, $450 mortgage payments… let’s do the time warp again. That’s about what I paid originally on my first house out in Woodinville which was 910 sq-ft (since we couldn’t afford anything in Lake City where we were currently living). Prices have reset to about 2002, not to 1984.
The last time I bothered looking the only places that I could find with a mortgage payment the same or lower than my current rent in Seattle had one (or more) of three problems with them:
1. They were serious fixer-uppers needing a lot of work to bring them to even a minimal level of livability.
2. They were relatively remote lacking good transit access and walkability to shopping and restaurants.
3. They were tiny and much smaller than the 3br/1ba house I’m currently renting with a full basement and detached garage.
That said, I do sort of wish I owned the house I’m currently renting. I’d love to replace the oil furnace with a heat pump, upgrade the kitchen, update the wiring and replace the carpets with hardwood floors. The owner unfortunately isn’t really interested in investing any money in the property and hasn’t been open to any proposals I’ve made to share the cost.
Chris:
So basically the same as the bottom-end cheap apartments! The 690 sqft apartment I’m currently renting in a pirate triplex needs an obscene amount of work. I’ve done some repairs and upgrades myself over the past 9 years to improve it, but it’s all money and effort down the drain because I don’t own it. The landlord isn’t interested in doing the kind of serious repair work the building sorely needs, and any other rental property in my price range I’ve seen has been the same story. My best bet for renting is to move to Burien, which would give me an inconvenient commute.
FWIW, I’ve currently got an offer in on a 710 sqft house, in livable condition, with excellent transit and shopping access, just outside an “urban village” boundary. It even has a yard and a detached garage. My monthly mortgage payment there will be roughly $650. It is a short sale. The absolute cheapest 700 sqft 2bd apartments with transit access in city limits start around $900. If you want both transit access AND a walkable neighborhood, you either have to go a couple hundred higher than that, or move out of the city. I’ve spent the past 7 months (since I was notified of my latest rent hike) researching my tiny corner of the housing market, looking at this stuff.
Matt:
Yes, I’ve checked out Dunlap, toured units, and on the ones that passed muster for me, had my applications rejected because several higher-income renters were always applying for the same units (or were outright told by apt. managers our income was too low to apply – at the same time that it is too high to receive subsidized rental housing.). The mortgage lenders however have no problem with my income, so long as I keep the house under $130k.
As for no cheap houses for sale in belltown – there’s not much in the way of affordable rentals there either. It’s not a neighborhood for working-class renters or owners – there’s like 1 apartment building in all of belltown that has a decently sized 2bd for $1100. But you can purchase a condo down the street in LQA for 490/mo mortgage + 450/mo HOA(W/S/G/H.W./p.Tax included).
Screwed up my tags. Here is the example LQA condo.
Sounds like a deal. Someone at work put in a offer on something similar but was rejected in favor of a buyer that was going to bulldoze the place and redevelop. Cash talks. I’m guessing the $650 doesn’t include property taxes? There are some screaming deals to be had in this market. We need another home like a hole in the head but, ya know, over time nothing pays off like good real estate investment. $650 finances about $85k. Assuming 20% down that’s a shade over $100k. Lots in Seattle are worth way more than that. Lot’s O luck.
I’ve been beaten out on 2 previous prospects by cash offers. This one, however, is pretty much investor-proof. The zoning won’t allow more units on the lot, so redevelopment isn’t attractive. The sub-1000 square footage makes it unattractive to renovate and flip to a traditional homebuyer, but is a perfect fit for a prior apartment dweller.
It is worth noting that housing is extremely regulated (not as much as, say, health care, but more than, say, clothes, shoes, and many other “necessities”). Some of rules are really stupid (parking), some are pretty stupid (very specific zoning rules on heights and massing) and some are entirely not stupid (fire sprinklers, sidewalks, etc.).
People talk a lot about the zoning type rules for making larger buildings, but not that much about the other ones, which make things more expensive.
Why are such rules stupid? Most of the objectionable ones are simply not crafted as well as they should be. Very few are actually stupid. There are plenty of compelling interests such in regulating massing and heights and even parking. The question is one of the correct set of regulations and guidelines. Luckily, planning has become more responsive in creating a wider toolbox for sustainability, flexibility, and good design through regulation.
Are you seriously saying that all the rules are good, and none are stupid? Look at the code.
http://www.seattle.gov/dpd/Codes/
“All landscaping provided to meet requirements under this
Section 23.45.524 shall meet standards promulgated by the Director to
provide for the long-term health, viability, and coverage of plantings.
These standards may include, but are not limited to, the type and size of plants, number of plants, spacing of plants, depth and quality of soil, use of drought-tolerant plants, and access to light and air for plants”
” Architectural expression. Cottage housing developments shall include
architectural details that reduce the visual scale of the units. Each
cottage shall employ one or more of the following design techniques to
reduce visual scale of the units:
a. Attached covered porch
b. Roofline features such as dormers or clerestories
c. Bay windows
d. Variation in siding texture and materials
e. Other appropriate architectural techniques demonstrated by the applicant
to reduce the visual scale of cottages.”
Andrew, re-reread what I wrote. I never said that. The first one you cite is reasonable. It allows the department to craft landscaping standards that meet the intent of that code section. We do exactly that at Redmond. The second one is poorly worded with the whole “visual scale” thing. But otherwise, the code is vague enough to have the City work with an applicant to ensure that the intent of the code is met. It’s funny that you point out two fairly *non-objectionable* code citations. If your objection is that they’re not very clear, then may be you have a point. However, sometimes vagueness allows for flexibility whereas highly define code does not.
I disagree that these are reasonable; both are completely unnecessary and don’t really protect the interest of the public. I can put up a cottage as long as it has bay windows? Seriously? A ton of codes like these drive up the cost of construction, and they infringe on property rights.
I’d argue Andrew’s samples are the opposite of vague. Why exactly do we have the design of our cottages dictated to us by the government? It’s bad enough that we are forced to have front yards and back yards and side yards and parking. Giving us the choice of porches or bay windows? Sure, you can go through a painful process to get something else, but man are we going to end up with boring designs.
And the first one – the amount of effort required to even figure out what plants you’re allowed to plant is crazy.
Maybe I’m just jaded because it took me almost 2 years to get a design for my garage approved by the city. The major feature they ended up forcing me to remove? They approved it in my neighbor’s garage – an almost exact copy of my design (I know, I drew up his plans), a few months after I finished mine.
You can be jaded all you want, but community development is the heart of planning. It ensures value of place physically, environmentally, socially, and economically for everyone. You’re free to object but the Police Power permits government to regulate for the health, safety, aesthetic, environment, morals, and public welfare. Landscaping standards exist for screening, providing open space, enhancing the built and natural environments, and adding colour and value to a site and area. As part of this, there is also a compelling interest of providing high quality, native, drought-tolerant, and sustainable landscaping. If that’s truly objectionable, then so be it. Matt, you’re completely wrong. The code exists exactly for flexibility in the cottage housing section, but with caveats to ensure better design than throwing up boxes.
Also, to be clear, Andrew, regulations are not allowed to infringe on property rights. They enhance property rights and mitigate against nuisances. If the regulations infringed, that would be considered a “takings” or unconstitutional in which case the regulation becomes severed from code upon such a finding. That’s incredibly rare.
I’m not arguing that governments don’t have the right to dictate design. I’m questioning the value of many of these mandates. Some of the best buildings in Seattle are boxes that were “thrown up” before our modern codes existed, and wouldn’t qualify for them by a long shot.
Yes, it’s a great idea to require fire sprinklers and exit stairs. But our current codes demand bad design at a high price.
Right, I get what you’re saying but I think you’re overlooking an important aspect. The way development worked is completely different now irrespective of a development code. The pride of construction isn’t what it was, it’s speculator driven, not owner driven. With out some sort of negotiating point, a developer may put up very boring (or worse, hideous) buildings that negatively impact the value of a neighbourhood from the point of the public realm and potentially property value/ability to sell. The real cost to development is the building code requirements and fire access requirements which are highly excessive or preclude lots of development types, not zoning and land use (although parking requirements and density maximums are problematic in particular). Perhaps that’s something Roger should consider in another post. I’m not trying to point fingers necessarily, but it’s definitely more than zoning that’s the problem if we want greater affordability. The other part is modifying affordable housing requirements through the GMA. Every jurisdiction should require 20% of residential development ($, units, or mix of both) be handed over to the local authority responsible for planning for the purposes of social and affordable housing. The piecemeal affordable housing reqs. between cities are a mess. Of course, that’s a bit separate from general market rate housing affordability.
That’s a seriously expensive garage, if you think about it.
Curiously, Matt, what kind of garage were you trying to construct? As part of the house (remodel/extension), a standalone garage like those around the ‘hoods, or a shed? That is a fairly long time to approve something like that from my experience. Not suggesting you did anything wrong, but just curious. I haven’t directly experienced Seattle’s regulations in this area, so I’m not entirely familiar.
Stephen, I think we are coming from very different places on this.
https://seattletransitblog.wpcomstaging.com/2012/01/14/where-are-the-density-advocates/
It was certainly more than a simple box (residential, but with a 7′ retaining wall and topped by a deck). The two years weren’t caused just by waiting for the city, much was the time it took me during my spare time to update my plans in the way they wanted. Then to redesign it when they decided they wanted changes. Then to redesign it when they wanted more changes, and re-redesign parts that I changed the first time that they disagreed with the other plan reviewers about. Etc. Oh, and the roof deck I designed and my neighbors were allowed to install? It wasn’t allowed next to an alley (the same alley my neighbors now have theirs next to), so I changed it into a green roof (same thing, but no railing – someday when someone falls off the roof I can tell them it was to improve my neighbors’ property values).
Matt–Sounds like you had a fun go-around with the Building Division plans reviewers…Yikes.
Andrew–I think we are coming from different places, but not because of the affordable housing requirements (that was a tangential issue). I think development should become more affordable, but the basic way to do that is through allowing additional density. I’ve argued before that we need to initiate neighbourhood level masterplanning efforts. That should happen for every urban village in the city. And I’m not talking the City’s vague neighbourhood plan update exercises. Do the legwork for developers and address all neighbourhood issues upfront and honestly. Not every neighbourhood is going to get all that they want, of course, because it’s a balancing competing interests and real resources. That prevents something like the Roosevelt nightmare, but it also provides certainty to developers. That’s what they’re really looking for: what’s the value? what do you really want to see? will I get my permits quickly? We can do that now. We don’t have to sacrifice the good things in a development code. We need to make it better. But that just leads me to my age-old “let’s do Form-Based Coding”…When we talk about planning, it’s highly layered system between reviewing divisions: Land Use, Public Works Environmental Engineering, Public Works Transportation Engineering, Building, and Fire. Most jurisdictions have not folded all of these divisions together in a streamlined manner leading to many different request for information on a project (delays and added costs). What’s worse, they all are working from separate codes. That’s where your costs are…
That’s true only in the most technical sense, in that courts have ruled that zoning is not an infringement on property rights. But in a more abstract sense, it’s clear that we place much more restrictions on allowed uses of real property than personal property.
This isn’t really an actionable criticism. I just think it’s interesting that even the most fervent conservatives — the folks who booed Thursday’s Supreme Court decision, and the folks who support Florida’s “stand your ground” law — seem to have no objection to the government telling them what kind of buildings they can construct on their land.
Yep. Nice and complete overview of the decisions developers make from whether or not to buy property to its finish materials. This will be a nice reference piece.
“Banks generally don’t like risk”
Really, dude where have you been for the last decade? I think risk taking overleveraged banks crashed the whole economy.
We don’t restrict supply to hurt renters, we do it to help owners. Because if we don’t then rents/prices go down too far and they can’t sell above payoff, they can’t rent for a decent amount to make the estimate in pro-forma and they can’t repay the bank so it can continue lending.
I had a house in south Florida and they blew open the zoning approvals and had 20,000 multifam units come online in one year – 2008. The whole market crashed around those towers and everybody lost a ton of money. I couldn’t get 1/2 my mortgage payment in rent, but when I bought 2 years earlier it was about even. Renters had plentiful choices and absurdly low rents for a few years – but had to deal with absentee landlords, vacant properties nearby, unfinished buildings blighting the skyline, unfinished public infrastructure upgrades, complete dessimation of public services and a backlash that elected a tea-party governor, etc…
I agree we probably need more supply at the moment, especially around Link, but opening the floodgates is a road to disaster. In all things, moderation.
You make a good point, and managing supply certainly plays a part here… that’s where interest rates, smart lending, and incremental zoning changes can have a role. However, in Seattle there is certainly pent up demand for housing and adding 10,000 new units is a small percentage of the 400,000 or so housing units already in Seattle so I don’t see this being a major problem.
If a bank makes a loan and then selling the loan off as a collateralize debt obligation (CDO), as most all the big banks did they no long shouldered the risk associated with the loan. The risk is passed off to the buyer of the CDO. Info about CDOs here (http://en.wikipedia.org/wiki/Collateralized_debt_obligation) or if you really want to learn about this I would recommend reading The Big Short. It explains how it all worked.
I don’t think local governments should be artificially limiting the supply of housing to protect current property owners. That is way too close to encouraging rent-seeking (quite literally) behavior.
If developers and those who finance them want to be stupid and overbuild in excess, then why stop them?
Two of the most expensive housing markets in the country, New York City and San Francisco, also have some of the most extensive low income housing/rent control policies. They are ineffective and just create an atmosphere that discourages builders to build and allows a handful of people to live on the cheap (while everyone else pays to subsidize their discount). I know many people whose sole focus was hanging on to a “rent controlled” living situation whether they truly needed it or not. Keep the market free and let supply and demand control the price and everyone gets a fair(er) deal.
If you want a truly free market then go live in Lagos.
Glad someone finally called out the pressure investors put on developers to be conservative; from parking ratios to unit mix to building design, investors want a proven conservative model. Unless a developer has a ton of their own equity in the project they really have much less sway over the product.
One critique of this piece is the missing analysis of expected return. During the bubble some developers had outrages return expectations, 20-25%! That drives rents for sure. More conservative expectations relieve rent levels.
Also missing from this is an understanding that demand is driven by many things and is not equal among all sub-markets. This nuance is always missing from Roger’s analysis. Demand is driven by amenities outside the development like parks, transit, community centers, schools. These are reflected in rents as well.
Construction costs are the same across the region. Land fluctuates dramatically but only makes up 10% of the project costs. So why do rents vary so much? Lots of reasons that are not summed up in a over simplified supply and demand argument.
Which is why we usually leave the demand side alone. We can drop rents (via reduced demand) by piling garbage in the street, but that’s a terrible idea. Instead, we generally try to make our city more desirable. This is a good thing, despite removing our ability to control the demand side.
It’s the supply side we have control over. Be it heights, burdensome requirements, or zoning we’ve been able to restrict supply for decades. We have the power to stimulate the supply side if we want, which makes modifying or reducing these constraints very fertile ground for discussion.
Amen, supply it up but don’t expect that to be the silver bullett to affordable rents. Look at downtown rents, there is little if any restriction on residential supply but still expensive rents.
Now look at Palo Alto, CA where I just helped a family member find an apartment. Furnished, 1bd apartment in a cheaply built 3-story walk-up adjacent to the freeway, and it’s $3,000 a month. And that’s the best deal we could find. Of course, that’s in a desirable city that won’t allow development above 3 stories. (I walked 45 minutes each way to a park on a sunny day and never saw another soul on the sidewalk – Silicon Valley is for driving only)
Yes, supply-side is an imperfect tool. It probably won’t get you all the way to affordable for everyone without some subsidy on the lower end (though that’s still supply-side). But it’s the only tool we have, short of making our city less desirable.