Charles Mudede’s anecdote about renting makes a basically correct argument that our cities will eventually invert their late-20th century income pattern. But on the way there he repeats a common critique of the rising rent:

The rent for her flat… recently increased to $1,000. Yes, her flat is tiny. Yes, everyone has heard the same story over and over. Yes, no one is doing anything about it, and nor can anyone do anything about it because the economic forces at work in this growing city are much deeper and more powerful than its form of democracy.

The section I’ve bolded strikes me as exactly backwards: high housing prices are the triumph of “democracy:” in this case, hyperlocal groups of active citizens championing severe regulatory constraints on housing supply, and (sometimes incidentally) boosting their house values in the process.

There’s an interesting debate on just how democratic the process really is. How representative are these active voices, and is the neighborhood the appropriate scope of interests to consider? Moreover, any democratic process will almost certainly underweight the interests of future residents, which is really what new housing projects are about.

Nevertheless, once you’ve put hard limits on housing supply, politics and economics merely decide who gets in to the inadequate number of homes. Under capitalism, given decent living conditions in the city, it’s the rich; in a rent control regime, it’s longtime residents and the well-connected. In a system where the government owned all the housing, it’d be politically favored groups. But any and all of these systems are inherently less fair than building homes in Seattle for all who want them.

69 Replies to “Capitalism, Democracy, and Rent”

  1. Suggesting that existing “active citizens” would champion “severe” regulatory constraints simply to improve the price of their homes — how can you get more narrow minded on this subject than that? I see, these “active citizens” are simply greedy and selfish money grubbers. Come on, this simplistic and crude caricature isn’t plausible, believable, or even the least bit creative.

    Besides, what’s with the “building homes in Seattle for all who want them” nonsense? Go ahead and build homes for “all who want them”, as long as you stay within reasonable regulatory constraints nothing is stopping you. Have at it. Oh but don’t worry, nobody will be holding their breath because your little pseudo-manifesto is such complete gibberish no one could buy it except for a handful of lonely, bleak and restless libertarians that need this kind of bunk for their sustenance.

    1. Agreed. There are plenty of density proponents who oppose the monstrosities being built in Ballard. Developers are out to make money – that’s not a bad thing in capitalist America, obviously. But often aesthetics and scale are detrimental to profits. That has to be just as obvious, right? We use regulation to enforce at least a basic level of consideration for the environment. It’s no more greedy and selfish than developers are.

      1. barman,

        Some regulations retard housing growth, and some don’t. Things that are detrimental to profits are likely to be detrimental to building lots and lots of housing, within certain limits.

        I’m surprised to see you suggest that we would limit housing growth out of “consideration for the environment.”

      2. By environment in this context I mean the urban environment, or the neighborhood as it exists today and how residents wish to shape it towards the future. Some people are greedy – they exist in every group. There’s no possible way to un-regulate ourselves out of rising cost of living and to argue that is ridiculous.

      3. One thing that impresses me about Portland is somehow their process results in better buildings.

        I don’t see the process there as necessarily limiting scale as there have been some large developments in newly up zoned areas.

        Vancouver too has done better in the esthetics and design front.

        For some reason the process here leads to ugly, badly designed buildings.

      4. Thanks for mentioning Ballard, barman, because these abstract discussions of “free markets” are starting to leave the exact smell of spoiled meat and fish coming out of markets missed by the Health Department.

        My late wife and I lived in an a complex in Ballard dating from around World War II. Year before last, the fine man- not a professional property-owner but a professor who wanted to leave his children an income, had to sell the complex.

        There were some young people living there, but I think majority of us were people in our fifties or over. All of whom had spent their lives working at modest jobs that didn’t leave us much by way of income or savings.

        Early on, new management staged a concerted campaign to persuade us all to leave. A month-long siding and roofing job on all our buildings with all of us still in them made our homes unlivable- without a penny of compensation.

        We were all invited to return when renovation was done- still no elevators added- with rent about double. Some help was offered for relocation- but not enough to change basic imbalance of the relationship.

        Come on, anybody. Tell any of us we were dealing with any exchange voluntary, free, and equal- which I believe are all elements of a classic economic “free market.”

        “The market”- and there’s argument whether all the good choices are on one side actually fits any classic definition of the term- as term is understood now, is a good tool for its purposes- like apportioning cars, TV sets, and espresso,

        For shelter, drinking water, nourishing food- and education and transportation- let me put it this way: is it a good idea to run a property by fitting a huge tank on the power motor, tying down the throttle, and turning it loose unguided?

    2. Carlton,

      In spite of the rudeness of your comment, I added the words “sometimes incidentally” because I don’t mean to imply that raising their own home values is the only reason to oppose density. Some people are more concerned about traffic, or keeping out people who rent, or just don’t like to have a lot of people around, than giving other people the opportunity to live here.

      But I don’t think escalating house prices is a “problem” as far as most of the electorate is concerned, which is why I think portraying high rents as some sort of defeat for democracy is nonsense.

      The idea that current regulatory constraints are “reasonable” really is the crux of the debate. I would say that most restrictions on height, number of units, and parking requirements are arbitrary, unreasonable, and work against important social goals.

      1. Which is still no more relevant to the conversation than the counter argument of ‘developers are greedy’. It’s only fueling the fire with rhetoric, not intelligent conversation about what to do about the rise in our cost of living.

      2. The conversation in this post is about whether rents are rising because a capitalist class has subverted democracy. I’m pointing out that it’s very much in the interest of many voters for housing prices to increase, and that has some relation to rents.

      3. Maybe in the future all posts about the philosophy of capitalism and democracy should go to Page 2, isn’t that what it’s for? That way the rest of us can keep up with news about transit without reading the same Roger Valdez-esque hyperbole that plenty of other blogs both local and national cover.

      4. Please click on the “About Us” link on the right above. “The blog also focuses on density and the urban form, and other forms of alternative transportation like bicycling and walking.”

        Density is critical to good transit. And transit is critical to good density.

      5. Ok Matt, but even the linked SLOG article is ridiculous. Average rent is higher in Kirkland than it is in Seattle despite being a suburb. There are plenty of cheap cities too, like Tacoma or St Louis. Seems to me the driving force on price is property owners charging the most they possibly can, based in part on supply/demand *OBVIOUSLY* but also due to so many other factors, writing a 4 paragraph blog post about it is bound to be an oversimplification.

        There’s nothing we can build to lower prices in this city unless it’s a giant woodchipper in which to put bankers and real-estate investors.

      6. No. Prices are high in Kirkland or Palo Alto for the same reason they’re high in Seattle or San Francisco – more people want to live there than supply allows, and politics and building codes severely limit supply.

      7. Matt, you’re forgetting one thing: more people want to live in those places and are willing to pay high rents to do so.

        “Supply and demand” doesn’t actually say anything about what drives the price. It just describes the mechanics by which prices reach equilibrium.

        You can’t drive prices to zero just by increasing supply.

      8. Of course not. But every additional unit you build allows one more household to live there. In theory this marginal household was just a little bit too poor before to outbid the others.

        Making up some numbers, if 250,000 households live in a city and the lowest market rate rent is $501/month, and the 250,001th richest household that wants to live in that city can pay only $500/month, the rent on the cheapest rental will be $500/month if you add one more home.

      9. The demand for restrictions on development is often a fear of change. There are other factors that can drive a demand for development restrictions such as those you mention.

        Opposition to new development is often emotionally driven and doesn’t necessarily have a rational basis.

        OTOH the pro-development side carries with it the legacy of entire neighborhoods destroyed in the name of ‘progress’ be it urban freeways or urban renewal. It also carries the legacy of fields and forests replaced with subdivisions and shopping malls.

      10. Only in Seattle can someone start a paragraph with “making up some numbers”, and expect to be treated as if they’re contributing something to the conversation beyond the airtight-modeled perfectly-elastic Neoclassical 101 dogma they were fed years ago, with similar “made-up numbers”, in a single semester of core college curriculum.

        Again: the repositioning of economics as a “hard science” — and one with assumed broad theoretical consensus — remains the great right-wing coup of the late 20th century.

      11. If you all haven’t seen this, please check out DPD’s development capacity report prepared as part of Seattle 2035:

        It shows how much zoning capacity there is in relation to the amount of expected growth, including breakdowns by zone. (Side note: in the last 20 years the overall population growth forecasts have been very accurate.)

        Counter to the popular narrative, there is actually a lot of zoned capacity in Seattle. It is an amount that far outstrips the next 20 years of expected household growth.

      12. Martin, some people also are concerned about what they think of as human scale, and also about the inevitability of being forced out of their homes to make way for the wealthier people who want their space.

        Other people are concerned that urbanists will let the suburbs off the hook about creating walkable, livable places for the majority of the region’s new residents to inhabit. The notion that Seattle needs to accommodate all the growth to avoid another generation of immigrants living in soulless, car-dependent sprawl is, to me at least, the ultimate cop-out.

        You put this in polarizing, black-and-white, selfish vs. idealistic terms. To me, that’s the worst of the internet. I hope to see the STB start looking for solutions rather than demonizing people for caring about their neighborhood. To suggest that neighborhood involvement is all about property values is nutty. In fact if you care about property values, you want to maximize the development around you. I believed that when I was a college student and renter just moving here, but it doesn’t take long to see that people get involved in their neighborhoods because they want them to be better and better places to live.

        One more thing. This is the blog that understands that adding new highway capacity does not necessarily result in less congestion. When you look at the fastest growing places and see that those are the places where prices are skyrocketing, doesn’t that make you stop and think, at least for a moment, whether sometimes new supply can stimulate more demand than will be accommodated?

      13. also about the inevitability of being forced out of their homes to make way for the wealthier people who want their space.

        This is a doubly bizarre reason to promote a policy that restricts new housing. First, because it works directly against the presumed goal of keeping costs down to restrict supply relative to demand, and second because it seems deeply confused about the very idea of home ownership. No matter how rich someone is, they can’t have your house if you won’t sell it.

      14. some people also are concerned about what they think of as human scale

        The elevation of aesthetic concerns over very real social, economic, and environmental problems.

        Other people are concerned that urbanists will let the suburbs off the hook about creating walkable, livable places

        STB has written about suburban development plans more than just about any other source. But this sure reads like a hope that someone, anyone else take the density that these people don’t want.

        To suggest that neighborhood involvement is all about property values is nutty.

        Bad writing that I have already apologized for and corrected.

        sometimes new supply can stimulate more demand than will be accommodated?

        I don’t think stimulating more demand would be a bad thing. If it won’t be accommodated that’s more likely a planning issue than an economic one. In contrast, inducing more highway demand is terrible.

  2. We need a Density Lorax, that comes to community meetings and speaks for the future renters.

    1. It would be great if we had a few more of you folks turn up at community meetings. There needs to be some folks who will speak for the renters, not just folks who will concern troll for them.

      If you live anywhere in the city and rent, please show up. Please stand and be counted.

      You have the right to more rental options, and not to have your apartment size dictated for you by angry home owners. You have a right not to be priced out of the market because someone thinks no one should be allowed to live in an apartment as small as you might be comfortable with.

      Renters should decide what size of apartment they are willing to rent, angry home owners who will probably never rent again should not dictate this for us.

    2. By stand and be counted, I mean go to your local community council meetings.

      The more people we have going to these that live in the communities and who also rent, the closer they will look to something that actually represents democracy.

      1. The few times I went to my neighborhood council meetings, they were pretty benign. Other than at a few key points when the city asks for a neighborhood plan (every decade or so) do they really have any power?

        I’d rather send people to Council committee meetings.

      2. Neighborhood updating to that plan is going on right now.

        There is definately a reason to go asap.

    3. But what percentage of renters are doing so because they want to as apposed to the need to. The latter represents the tipical future move up buyer who are for the most part stuck in finantial limbo do to numerous factors.

  3. This is the situation in every desirable, economically healthy city in the world. And, with the only exception I know being the US between 1950 and 2000, has been so throughout humanity’s recorded history. Cities always attract more people than can comfortably fit in the existing housing stock. So they either grow outward until they can no longer operate in a coherent manner or they grow upward until they reach either the limits of existing building technology or a height at which new residents can no longer afford to buy or rent the next unit.

    Is this harsh on less skilled people who may have been fortunate enough to be born in the city either during a less popular time or to parents who were better skilled? Yes, it is. Such folks will eventually be forced out of the city they presumably love. But in all honesty, there is nothing that can be done about that except provide them with reasonably inexpensive access to the city from the nearby hinterlands to which they move in order than they may still maintain contact with the city if they so choose.

    Once Seattle was “discovered” (and the summer rains dried up; thank you Exxon and Peabody Coal!) the painful process now taking place was inevitable.

    As to Martin’s wish to build more density throughout the city, a better idea would be to demarcate several areas with decent views either at the tops of hills or at the base of bluffs and give developers carte blanche there, with impact fees sufficient to provide adequate high capacity transit to the new areas.

    1. Well, I did think of another period when cities did not hold their attractive power. The late Medieval period of The Black Death. People were fleeing cities if they could then.

    2. Is Seattle any less affordable than it has been in the past? People tend to think this argument is all about rent prices, but it begins with home values. “Affordability” means lower home values, which homeowners tend to dislike.

    3. “Is this harsh on less skilled people who may have been fortunate enough to be born in the city either during a less popular time or to parents who were better skilled?”

      I do not agree with the use of “less skilled” here. The implication is that lower income people deserve their fate because they just aren’t “skilled” enough, and if they really wanted to live here, they’d just go and get themselves some more skills. Which is a gross and judgmental oversimplification. All you have to do to realize that skills aren’t the whole story is to be older (or female) and see what that does to your position on the job market, skills or not.

      This is a bit peripheral, but I think it is important to recognize that cities are not just a place for the limited few who happen to have an acceptable set of “skills.” (Which, in reality, are the right age, the right connections, and the right luck more than they are skills.) I’m not on the John Fox anti-development side of things, but I don’t think it’s right to turn poverty into a moral failure either.

      1. This hints at an issue that I’m still reflecting on. In practice there are a limited number of housing units to go around, and demand from all income levels that exceeds that. So who gets left out?

        The rich are going to find their way in; that’s simply inevitable. It doesn’t seem right, as you suggest, to say that poor people should all be relegated to the suburbs. But then why is it right to then relegate the middle class there instead?

        For me, the first priority is to minimize our need to choose by building as many housing units as possible. Let’s minimize the pain before choosing how to spread the pain around.

  4. I’m still waiting for someone to show us some evidence, some numbers, that support the argument that Seattle doesn’t have enough developable property to accommodate expected growth for many years to come — evidence that we need to loosen development regulations or rezone SF properties to MF.

    1. The problem is that “density islands” make for really poor urban planning.

      They reinforce the segmentation/striation/arbitrariness that already exists, and keep relatively proximate places physically and psychologically distant from one another. They undermine the goal of comprehensive and multi-purpose transportation, and ensure that service needs and service levels remain forever mismatched.

      Moreover, they help to efface history and negate the ability of the city to grow, organically, anywhere. The wholesale eradication of existing built environments, seen (and pointed to as symbolic of the “terror” of density) in Capitol Hill and elsewhere, is a direct result of the hyper-targeted “island” approach. The results are not just ugly: they’re often significantly less dense of frontage, hostile to business density and variety, and devoid of the visual interest that encourages healthy pedestrian use.

      Outside of commercial centers, the “density island” policy — so restricted and gerrymandered that it’s more of a “density quarantine”, with all the fear-based connotations that entails — yields a similarly unhealthy and inorganic result, ensuring that any area “unlucky” enough to find itself inside the boundary will be plundered and remade by outside forces until unrecognizable.

      By contrast, imagine if restrictions on multi-family retrofits and constructions were loosened everywhere, returning the idea of organic change, of gradual mixing-and-matching of types, eras, and architectural styles, to the modern city. Desirable areas might see more demand pressure than others, but no area would see the kind of unwithstandable efforts that today make upselling, turnover, and teardown inevitable. The current seas of single-family might even discover that it’s pleasant to live near a corner store with a tiny law practice above it, or that zero-setback, retail-free rowhomes can attractively coexist with small houses, just as they do all over the world.

      Perhaps Seattle might discover that being a contiguous city — a unified whole, rather than a fragmented and suspicious array of partisans divided by arbitrary lines on a map — feels kind of nice!

      1. I spend enough time arguing with you, d.p., that I should recognize when you hit it out of the park. Bravo. I wanted to respond with something like this but you said it better. +1.

        And this is something that my current neighborhood — out in the much-derided ‘burbs — accomplishes much better than most places in Seattle. And that’s a big reason we moved there. I live in a small condo building, which is across the street from single-family, a block down from a couple of large apartment complexes, and a few doors down from townhomes. The street is thoughtfully designed so that all of those uses coexist very well indeed. The neighborhood wouldn’t be disrupted in the slightest if one of the SFH turned into two townhomes, or even if half a block were replaced by rowhouses. And it’s all within very easy walking distance of a grocery store and some restaurants. “Organic,” indeed. Yet to hear my former Cedar Park neighbors talk, my neighborhood would be a ruined shell.

      2. Rright on! We need to permit much more variety in the current single family zones – an intermingling of different housing types and commercial enterprises with appropriate gradations in scale and activity and very careful attention to transportation needs.

      3. Ditto to what David Lawson said, this is an excellent and spot-on comment. One of the reasons I’ve long been unable to take seriously the notion that modest density increases–ADUs, small lot construction, 3 story no-setback and courtyard apartment buildings and so on–in single family neighborhoods will automatically have a deleterious effect on the character and value of those neighborhoods is that I lived in a part of Wallingford for years that had exactly that, mostly built before the SF restrictive zoning rules settled over much of Seattle. It was an expensive, pleasant, highly desirable neighborhood, despite the fact that some diversity of housing options allowed a near-broke single graduate student like me to be a neighbor to families who could afford 700K homes.

        Excessive homogeneity is an enemy to quality city life. The half of the population who recognizes that when it comes to the same dreary condo styles sprouting up in urban villages can’t see it when it comes to SF neighborhoods.

      4. “The wholesale eradication of existing built environments, seen (and pointed to as symbolic of the ‘terror’ of density) in Capitol Hill and elsewhere, is a direct result of the hyper-targeted “island” approach. The results are not just ugly: they’re often significantly less dense of frontage, hostile to business density and variety, and devoid of the visual interest that encourages healthy pedestrian use.”

        Quoted for truth.

        Sometimes it feels pretty lonely around here being pro-density while also supporting sensitivity towards historic preservation. But the best cities are a mixture of old and new and maintain a large amount of the old, which tends to be very human scale and pedestrian-friendly. Zoning and regulations that don’t destroy livable, human proportions by forcing all the density into tiny areas while not allowing it anywhere else are one way to do that while maintaining a link to the historic context of the place.

        Maybe some people would like to visit Paris or London if they were entirely new and shiny, but not me. That’s a theme park, not a livable city.

      5. What d.p. said. Much of the opposition to additional development is likely caused by isolating it to small areas of the city. Furthermore developers tend to build as large of a project as they possibly can which in these areas tends to be bread loves rather than small courtyard apartments.

      6. Then I guess we better toss out those “density islands” better known as Urban Centers. And their little brothers known as Urban Villages. Here I had been lead to believe this was smart planning, to put density where infrastructure is or can be built to accommodate it. So that transit markets can be made large enough to support rail transit. How did I get so misguided.

      7. You can’t pin that one on me, RD. I’ve long noted that Seattle’s widely spaced, “node-based” approach to high-capacity transit infrastructure contradicts the experience of pretty much any city you can name with successful high-capacity transit infrastructure, and may wind up accomplishing depressingly little for total urban mobility, outside of aiding the once-daily commutes of the select few with access at both ends.

        The cynic in me would also note that many areas within the Capitol Hill Density Quarantine will have terrible Link access, and that a high-capacity outcome reaching the Ballard Density Quarantine will be decades late and of uncertain quality or reach. The Roosevelt Quarantine — the most hemmed in of all, and most hostile toward the concept of organic and contiguous mixed-form urbanity — has managed to become a $300 million station-upgrade boondoggle while making no one happy.

        We need comprehensive transit to address the infinite permutations of daily movements that define us, nominally, as a “city”. Fast, unhindered rail must be a part of that, but we’ll never be a city with the density to make rail ubiquitous. So well-routed spines with good intermodal transfers and minimized access penalties are a necessity, as are investments that make our complementary bus network legible and scalable and trustworthy.

        Somehow, though, the New Yorks and Londons and Montreals and even Los Angeleses of the world do fine without a subway line to the front door of every block where apartment buildings and houses coexist.

        I like that Ballard and Capitol Hill are filling in as three-dimensional urban places. I would be bored to tears by the monotony found just half a block off, say, Greenwood or Alaska. But it would be folly to ignore the affronts to architecture and pedestrian quality that the two disproportionate “growth targets” have withstood, and the negative connotations that are ascribed to “urbanity” as a result. Such is the impact of places all of our eggs in just a couple of overheated baskets.

        I admit to being surprised at the popularity of my above comment. I feel like I’ve been saying these same things for years.

  5. But any and all of these systems are inherently less fair than building homes in Seattle for all who want them.

    This is ridiculous. How many people would want a house in Seattle? Two billion? I bet I could round up a least a billion people would take a house in Seattle.

    No matter what, market forces are going to be at play, and the market is always going to be more powerful than democracy in this scenario. Even with completely laissez-faire zoning, there would people who would “want” a house but no one would build one for them. We can then add reasonable regulation (sprinklers, etc.) that would exclude even larger groups of people.

    High prices aren’t a factor of democracy as much as market forces colliding with democracy.

      1. After giving this a little thought, I can think of a few places that have rapidly increasing populations & yet home prices despite demand really haven’t budged. Suburban areas of both Houston & Dallas, non coastal Florida, urban Chicago oddly enough including The Loop & several sections of Las Vegas. But one of the strangest areas is metro Miami in that once you travel west a few miles from the beaches, prices drop like a rock & I’m talking about Sunrise & Penbroke Pines witch isn’t all that far from Miami at all.

      2. Having worked in Chicago in the early 2000s, I can ensure you that the cost of housing there has not been remotely stable.

    1. That’s a needlessly uncharitable reading. Obviously, some restrictions are implied. The US immigration regime rules out billions, and the non-infinite number of jobs rules out most of the rest. There are three categories of people who want to move here: those who get, or can reasonably hope to get, jobs (or become students) in the region, those who are independently wealthy and/or can work from home and live where they want, and want to live here, and retirees who want to be here. Some of them will prefer the suburbs, but I don’t see why we should have housing policies that force significant numbers of these people who’d prefer to live in the city to be priced out and live in the suburbs instead (or out-complete and push into the suburbs a current resident).

      1. No it isn’t uncharitable, if you speak in hyperbole you must expect push back. It’s generally the problem with Martin’s writing in general. His reasoning doesn’t start at first principles, so he always ends up making the blanket statement several rungs up the logical ladder.

  6. The thing is, it’s not just homeowners that are opposed to new construction. Almost none of my friends that live in Seattle are homeowners, yet none of them are happy about new construction in the city. I think the reason is that Seattle is a lifestyle destination city. People are moving here because of the way it IS, and so if that changes visibly they are going to be upset. If we think about fast growing pre-war cities, jobs and industry were the engine of their growth, and asthetic characteristics were really an afterthought. Yes, Seattle is having something of a tech job-boom, but again, those tech jobs are based here largely because Seattle is an attractive lifestyle destination.

    1. Well said.

      (That comment was rejected because it’s too short.)
      Unfortunately I’m not allowed to just say “well said,” I need to say something more longer, I mean, more meaningful so I’ll just add “and I agree.”

    2. I think your friends are working against their own interest. Unless they intend to displace people with lower incomes than themselves, they can’t live here if we don’t build units for them.

  7. One could remove all limits on new growth and it would not necessarily make housing in Seattle affordable. It would surely help slow the rate of increase, and is probably a good thing to do in itself. But the bigger problem is that in a capitalist system, housing becomes a good subject to the whims of the market, rather than a human right guaranteed to everyone. Under those capitalist conditions, you get soaring rents. Under real democracy, you get affordability for everyone.

    Martin is unhappy that democracy has produced limits on growth. I don’t like those limits, but I don’t believe we should just toss aside democracy and leave everyone to the mercy of the market. Instead we need to use democracy to overcome capitalism’s flaws and provide affordable housing through a mix of major new investment in publicly owned housing, rent control, and new private construction.

    I’ll say this though. Any effort to support new growth that is rooted in the idea that it’s somehow wrong to encourage people to become long-term residents with affordable housing costs is doomed to fail.

    1. Under real democracy, you get affordability for everyone.

      What is your operational definition of “real democracy” here? It seems to me that if “real” democracy has any kind of local component, locals use it to advance their own interests against those of newcomers, which de-values the issue of affordable housing for those who don’t yet have it. This goes a long way in explaining the popularity of exclusionary zoning, but also rent control. Heck, a commenter here who usually comes across as sane and non-evil (Glenn from Portland) made what appeared to be a meant-to-be-taken-seriously argument for a set of policies designed to make it prohibitively expensive for people born outside the Pacific Northwest to move here.

      It feels to me like you’re using the phrase “real democracy” to hand-wave away the challenges associated with “actually existing democracy.” (Or, in your second paragraph you seem to associate “real democracy” with “pursuing the policies I happen to think are ideal.” The problem here seems too obvious to bother to spell out.)To state the obvious, this kind of utopianism isn’t particularly helpful in solving problems where democracy is limited by the not always fair, not always wise preferences of actual people.

    2. Robert,

      I certainly agree that we shouldn’t “toss aside democracy”, although I wouldn’t mind some reform of our institutions while keeping them democratic.

      However, it is certainly regrettable when the opinions of a majority (or large minority) of people lead to bad policy outcomes, and that’s what’s happening here. Segregation was popular, anti-immigration measures are usually popular, and restrictions on housing growth are often popular as well.

      I’m agnostic as to how you get the units as long as you get the units. The policy framework you suggest would likely help in some respects, but unless it is truly, unprecedentedly massive, it’s likely to simply shift the people excluded to somewhere in the middle class. I am open, however, to a tax that isn’t specifically being on development being used to fund more public housing.

  8. My old question about a “market”: is the real debate about markets not about buyers and sellers, but for things people really need for survival: “Are you the poor creature hanging on the hook?”

    Will also say it again: think it’ll be a freer market when “affordability” is achieved by paying large majority of population wages high enough to afford well-designed, attractive, and comfortable places to live.

    Recalling last time large number of working people lived in cities was when US industries employed a very large number of people at wages that let them buy houses.

    Enforced by labor union contracts- all of whose disappearance directly coincided with just about every social problem we’re looking at today.You want “Happy Days?” Bring back the economic equality that used to provide them.

    Also: curious how much grass-roots political force it would take to get Seattle to remove existing barriers to the “Cottage” communities like across from North Seattle CC on Greenwood, and in Langley on Whidbey Island?

    What’s the free-market capitalist interest in keeping them out? Sounds like Communism, especially the Stalin variety that littered the old Soviet Union with bad art and worse architecture.

    Tyrants always love bad aesthetics.


    1. Whenever I mention “markets” there’s always a thread of people reacting like markets are a cartoon villain. Markets are the response of people to incentives: sometimes that creates good outcomes, sometimes bad ones.

      One thing unfettered markets are really good at is meeting demand for a product as long as the demand is wealthy enough to afford the cost of production. That happens to be a very big part of the housing availability problem in Seattle right now.

      There are of course many people who can’t afford those prices, which is why public housing subsidies exist, and that’s great. These are largely two separate problems! Which is why trying to solve the second problem by making the first one worse isn’t very satisfying.

  9. Big picture: Densitiests who used to claim the more housing that is built the lower prices will go are now desperate to explain why that isn’t happening. Tell me something. In 1970, when there weren’t dozens of cranes in lesser Seattle’s skyline, were housing prices more affordable? BTW, 1970 city population: 560,000. 2014 city population: 640,000. Seattle hasn’t grown that much in 45 years. What’s changed? Democracy? Nope. The real culprit is high tech. More on this later.

  10. I think Talton is right on. The real problem that stands behind the debate on housing is stagnation of regular wages and rising economic inequality between the financial/tech haves and all the other have-nots.

    I am a builder and developer and thought I would pass along some of my thoughts.

    I tend to see some real stereotypes at play in every discussion on this topic.

    There is a lot of talk of greedy developers as though greed is more a requirement of this profession than others. But during the recession builders lost their assets, retirement funds, homes and personal property to the banks. Developers and builders have to sign personal guarantees that make them extremely aware of risk. It is not a profession for the faint of heart. How many software developers would stick with it if a condition of employment was that they lose their house if a bug is found in their work?

    And speaking of banks, most banks are not back in the business of financing builders. Those that are back in this business are responding to the lack of competition by charging very high rates and fees. Many small developer/builders who cannot get bank financing are getting their money from hard money lenders who charge Tony Soprano-style interest rates.

    Land is expensive in Seattle. Why do we not see any articles or editorials about the greedy property sellers? An adult child of an 83-year-old woman auctioned her Ballard lot to the highest bidder this week. Mom bought her house and lot for $4800 back in the day, but the daughter is going to get $800,000 and four months of free rent. True story.

    Building is expensive– and getting more expensive by the day. When you compare the cost of building housing now to building at some point in the past, it seems that someone must be gouging. But in part, that is because people do not think in inflation-adjusted terms. It is also because it is not really an apples-to-apples comparison. Modern buildings require extensive engineering, permitting, and have much more advanced and efficient systems. Comparing housing now to what was built even 10 years ago is like comparing a 1960’s era economy car to a Prius. Both have 4 tires and are offer transportation for 5, but there the comparison starts to break down. I mean, wouldn’t you rather get more than 11 MPG and have a seat belt or two?

    The result is that margins are tight. Twenty years ago, cap rates (a measure of investment performance) for rental investments in Seattle averaged 9-10%. Right now they are less than half that. If it were not for the fact that interest rates are basically zero, it would make no sense at all.

    And there is the bad news. As the Fed backs on quantitative easing and raises interest rates, housing will likely become more expensive– not less.

    There are no magic solutions to the problem of rising housing costs. The best public policy approach may be “First, do no harm”. We should certainly avoid economically illiterate proposals like rent control and transfer taxation that are documented to make things worse rather than better.

    1. Thank you for your comment.

      Something people often forget is developers in general won’t build buildings there isn’t demand for. Even if the developers want to build them there may not be financing to do so. Sure developers and their financiers can mis calculate and overbuild, but when that happens they tend to lose their shirts.

      So if a developer wants to build a 120′ building in a 65′ zone chances are there is demand for the space even if the zoning doesn’t currently allow it.

      A word about ‘zoned capacity’ if you watch a particular lot with zoning higher than the current use get passed over for development in repeated building booms there generally is a reason. It could be the property owner simply isn’t interested in selling or developing the lot. It could be there isn’t enough demand in that location. It could be the site contains a historic building. It could also be there is no easy way to meet all of the code requirements on that lot with the current height limits and still make the project pencil out.

    2. Thank you for providing the developer perspective. I would have thought more banks would be getting back into the construction lending business in Seattle because the housing market is so strong. Seems like a missed opportunity when banks keep buying near 0% Treasuries, but I’m not a banker.

      Rising rates are not necessarily a terrible thing for the Seattle market. The fundamental demand is there and more expensive mortgages will deter renters from buying. Ridiculously tight credit standards, not rates, are the bigger issue (and when Ben Bernanke can’t get a mortgage, this has reached the ultimate absurdity).

  11. I am baffled by how participants in this conversation seem to be laboring under the idea that the real estate market, left to its own devices, optimizes for providing housing for the non-rich. Providing non-rich housing is simply less profitable than providing housing for the rich — and it remains less profitable, because the rich have a wildly disproportionate ability to turn desires into effective demand.

    It’s helpful to borrow terms from transit debate discourse here. Providing housing for the wealthy doesn’t work to soak up demand, as a naïve analysis would have it, because of the effect of _induced demand_. If there is more housing for the rich, the rich will want more housing, just as, when highways become momentarily unclogged after the construction of additional lanes, more people start driving for more trips, and the highways become clogged again.

    One thing that makes me uncomfortable with this blog as a whole is a failure to even consider the possibility that under the current income distribution, the market is precisely as bad at providing housing as it is at providing transit.

    1. Moreover (although this is currently more of a problem in San Francisco and New York City than Seattle) no amount of new construction of market-rate housing will bring down housing costs in fashionable American cities, since new units in new buildings are increasingly being sold not to people who intend to use them for housing, but instead to people who intend to use them as a means to bring wealth into the United States and keep it safely parked.

      It is deeply unfortunate that the people running this blog, who are otherwise relatively thoughtful and who moreover understand that the market can’t effectively provide some things (like, for example, transit) nevertheless refuse to consider putting the weight of their words behind the provision of housing through non-market means instead of quixotically trying to sell people who know better on the idea that the market, if left to its own devices, would optimize for the provision of housing for everyone.

      1. I’m pretty sure most here would fully support the construction (and subsidy) of more low income housing. However unless you want to start subsidizing middle income housing as well, you’ve got to allow the market take care of that.

      2. Would that be the same market that actively destroys existing density-enabled units which, thanks to non-fungible* attributes such as age and unit dimension and the fact that construction was entirely paid off decades ago, would never have been able to achieve the high rents at which its replacement is guaranteed to be set, regardless of the intensity of housing demand?

        (Which does not suggest, of course, that its replacement will be “better” in any tangible way. It will merely be massively indebted to its lenders, and contractually obligated to demand outlandish rents that will aid in the distortion of value-setting of its neighbors near or far, in the far-from-elastic** environment that is the real estate market.)

        *Facts v. Econ 101 Neoclassical Dogma, exhibit A
        **Facts v. Econ 101 Neoclassical Dogma, exhibit B

      3. >However unless you want to start subsidizing middle income housing as well

        Yes, that. Exactly. That is what we have to do. You’ve got it.

      4. That’s a recipe for a vicious circle. Throw subsidies into the market, housing just gets more expensive in response to the subsidies.

        You’re right that the market doesn’t do a good job of ensuring that housing at all income levels is available. But you have to admit that so far we haven’t found any type of government intervention that works well either. Subsidized housing for very poor residents is a bit of a disaster in terms of both efficiency and housing quality but is still desirable because outcomes for those residents without it are even more disastrous. Other interventions have had even worse effects, and “preservation” or anti-displacement efforts have had the worst effect of all: a few lucky existing residents do get to keep their affordable housing, at the cost of driving housing costs into the stratosphere for everyone else.

        I haven’t seen any evidence of the “induced demand” you hypothesize. That hypothesis gets the causation backwards. New housing for the rich is built because rich people already are demanding housing in the area where it is built. It’s too expensive a venture to build completely speculatively. If it weren’t built, the rich buyers who are buying the units would still get their housing, but by pushing out poorer residents instead. Just look at our own SLU. Amazon was going to locate there whether or not a bunch of new housing was nearby. If Via and company weren’t built, all those workers would have just bid up prices on existing supply in Capitol Hill, Queen Anne, and Belltown even further. The housing market only has a trivial effect on the job market, while the job market essentially drives the housing market.

      5. New construction is expensive, but it takes pressure off old construction. If we go the route of preserving every “historically significant” parking lot like San Francisco has it simply means the prices of exsiting housing will escalate all that much faster. Older apartments will either be converted to condos or upgraded to ‘luxury’ units. Current residents will be priced out or forced out for the conversions and renovations.

        Rent control is an even worse idea than a development moratorium or simply tying it up in so much red tape that few try. It really hasn’t worked well in either San Francisco or New York unless you are one of the lucky few with a well below market unit. There is also the slight problem that rent control is currently illegal under state law. Good luck getting that through the legislature.

        What would help is opening more of the city to development, reforming the land use and building code to remove some of the expensive and unnecessary requirements, and applying whatever mojo Portland and Vancouver have that is leading to much better new buildings in those two cities,

      6. I’m just going to assume that people who think that there’s no evidence that public housing for all classes works are arguing in good faith, and really haven’t ever looked at how it works in (to take two arbitrary examples) Vienna or Singapore.

        Here’s a fantastic article about how it works in Vienna.

        (congratulations, you’re one of the ten thousand.)

      7. If the US had ever, anywhere, demonstrated that it could run public services as well as Austria, I might believe the Viennese model was workable here.

        In the real US, there’s no chance. We are barely able to run a transportation system, and housing is FAR harder than transportation to get right.

        Here, if we tried to offer a middle-class housing “public option,” one of two things would happen. Either 1) it would be swamped with demand, the slots would go only to the connected, and it would have zero effect on the broader market, or 2) it would be so poorly executed that it would have no demand and have to be converted into traditional low-income housing, and it would have zero effect on the broader market.

Comments are closed.