U District House

Whether or not the current run-up in housing prices constitutes a “new bubble” is an open question, but it can’t be denied that the U.S. housing market is awash in investor capital, seeking outsize returns in a world where there aren’t many to be had.   Case in point: Goldman Sachs bringing back the bubble-inflating CDO.

The Giant Pool of Money is back, and it’s hunting for houses.

Re-inflating the housing bubble is problematic for plenty of urbanist reasons (and for other reasons as well, but let’s stick to the urbanist ones). It makes affordable housing construction more expensive, exacerbates NIMBYism, and, most importantly, reduces diversity through displacement.

From a political perspective, however, re-inflating the bubble is a winner.  Homeowners vote in disproportionate numbers, and bubble re-inflation is an easy way to put people back in the black.  Consider that the number of voters who are underwater on their houses has been cut in half since 2010:

Unwilling to make critical investments in public infrastructure or education, or force the banks to take a haircut after the 2008 crisis, our austerity-obsessed government has inadvertently deployed the giant pool of money in service of private infrastructure – granite countertops and roof decks. At least we’ll get the units.

Cities, meanwhile, lacking adequate representation in Congress, have been left for us to sort out the problems of expensive housing for ourselves. (Not just housing, but a host of issues, from housing to transit to guns.  It’s a national version of Ford-to-City.)

Charles Mudede and Cary Moon have a series of articles – 1, 2, 3, 4 – in The Stranger channeling this line of thought in the context of Seattle’s housing crisis and, importantly, offering some solutions.   If you can set aside the repeated swipes at neoliberalism (a frustratingly vague term), the articles are useful for widening the scope of our housing debate away from a provincial battle with NIMBYs to the challenge of a world awash in cheap capital.

It’s hard to endorse all of Mudede and Moon’s solutions, since many of them are vague toss-offs, often in the form of a question.  Requiring all homes to be owner occupied, for example, is probably a bad idea (although Vancouver’s tax on foreign buyers seems to be having an effect).   But at the core is a sound set of policies: expand public housing, allow more development, get creative about new forms of collective ownership (including land trusts, which I’ve written about previously).  A good chunk of these ideas could be described as HALA on steroids.  Notably, the phrase “rent control” appears zero times.

Two points that I would add to the debate, which may or may not make me a neoliberal squish: first, today’s market-rate housing is tomorrow’s affordable housing.  Once the original owners have paid off the construction costs, a house or apartment becomes much more affordable and can remain so for 100 years or more.  Much of the “naturally occurring affordable housing” Moon and Mudede laud was originally built for wealthy people.

Secondly, we do need to upzone, an idea that goes mostly unmentioned in the article. Backyard cottages aren’t gonna cut it.  Especially in the urban villages but really across the city. And not only within Seattle but across the region as well.  Housing reform can’t stop at the edge of Lake Washington.  Fortunately at least some upzoning is on its way.

71 Replies to “The Giant Pool of Money Finds Seattle”

  1. “… to the challenge of a world awash in cheap capital.”

    The world is actually awash in cheap debt and capital is concentrating in real estate land value, but cheap debt is what is driving the global run-up in real estate values. The fact that cheap debt is what is driving the surge in real estate prices means that we haven’t learned the lessons of 2008 (and 1929).

      1. First, credit does not equal capital. This basic misunderstanding is why the Federal Reserve’s policies are so misguided.

        Second, eliminate cheap debt and you would solve the “affordability” problem. Home prices would crash. Renters who saved enough for a down payment would find ownership much more within reach.

  2. …first, today’s market-rate housing is tomorrow’s affordable housing.  Once the original owners have paid off the construction costs, a house or apartment becomes much more affordable and can remain so for 100 years or more.

    So, where is this affordable housing in today’s market? It can remain affordable for 100 years only if it isn’t sold off in a housing bubble and its value readjusted upward to an unaffordable level.

    Seattle’s real estate market is caught up in a global frenzy of real estate speculation. To combat the problem we can either feed the beast by building at a breakneck pace (BUILD, BABY, BUILD!) or prepare for the inevitable bursting of the bubble. It’s kind of a doom or gloom choice but supply and demand will eventually equalize.

    1. You posit we either need to build a bunch OR be caught in a bubble? I don’t think those are mutually exclusive. In addition, if prices are declining (what many people think is a solution), builders aren’t going to bring new supply to market.

      I think in the end we should relax zoning and allow thr market to create more development where it is artificially limited today (montlake is the poster child-think of the transit service squandered on large SF lots). Then stop worrying about bubbles or elaborate bureaucratic formulas that create elusive token affordable housing for a chosen few at the expensive of everyone else.

      1. The cost of labor and materials isn’t what’s driving up the cost of construction–it’s the cost of land acquisition which is fueled by global real estate speculation. So, if it’s the cost of land acquisition that is falling, developers would rush in quickly to build. The laws of supply and demand dictate that. Just about anything built now will be unaffordable for middle class families and it won’t make 20th century construction affordable either.

      2. Right, so lift the arbitrary ban on further development of 65% of Seattle. Bingo…new land to develop.

      3. The cost of materials is not a problem now but it could become so in the future with rising scarcity, or if overseas shipping shuts off due to to wars or oil prices or climate change. We should assume we have a finite number of years to build the new urbanism, and if we don’t do it before a materials shortage chokes off construction, we’ll be left with high-energy-dependent unwalkable neighborhoods, and those in themselves will become an increasing cost burden and opportunity burden to people. Europeans if they’re not nice will say, “Americans, you made your bed, now lie in it.”

      4. We are trying to build a sturdy, not fancy, 850 sf house in our backyard. Took our design to several contractors. Their estimates were all +/- $300,000 just to build the house. I don’t believe it is just the cost of land that is driving housing costs high.

      5. Among the problems is that builders are able to make more money building for large national tract builders, such as Lennar.

        The craftsman houses of 100 years ago could be ordered by mail and would come on a railroad flat car. We need to go back to that type of house building model if we want affordability. It costs money to do everything custom. That’s why the big builders only have about four floor plans.

      6. The cost of materials and labor has not gone up much relative to inflation. The cost of land has gone up dramatically in certain places. So an identical building in central Seattle, Tukwila, and Lakewood has a significantly different price tag and rent. It also depends on how close it is to the city center or a major transit stop it is, with Seattle having a couple-mile radius around downtown where a high level prevails and then gradually goes down, while Tukwila has a much smaller dropoff of a few blocks, and Lakewood may have no spike location (the closest being downtown Tacoma).

        One interesting thing is that while most people drive and ignore transit when choosing a home, they nevertheless behave as if transit were a major factor, by paying more in places near a major transit stop or with a frequent line.

      7. @Homeowner: they really don’t want to take on such a small job. Buy a kit house or a prefab instead. You can find companies online. Some of the local lumber companies offer precut and know contractors that will handle assembly for you.

      8. @Homeowner, @Phil in the NW: Kit/prefab is a good idea. Or, find a smaller contractor that does want to take on such a small job.

  3. >> Housing reform can’t stop at the edge of Lake Washington. 

    But no one ever looks at the region as a whole. Seattle is blind to anything on the east side of the lake.

    I think we’d be far better off as a region if we thought of Seattle as a metropolitan area. As long as Seattle follows the San Francisco model we’re always going to be struggling for space. Even NYC has respect for neighborhoods not on the island.

      1. Do something in the region outside of Seattle occasionally (excluding work.) Businesses and cultural activities outside of the city suffer because no one ever travels east except to work.

        I didn’t mean to start an east-vs-west battle here: this isn’t /r/Seattle.

      2. Why? No offense intended, but unless I am going there for business or to visit friends (or hike, but that’s much farther east), there isn’t any particular reason for me to go east as everything I need is in Seattle. I don’t mean this to be anti-Eastside (it isn’t; my family were Issaquah – Squak – pioneers), but why would I take a lengthy two (or more) bus ride or have to drive when I can get to most places in the city I wish to go to via transit and walking?

        If I need something that’s only available on the Eastside, of course I’ll go there – there’s a little Brazilian store in Kirkland I’ll need to visit next weekend, as an example, and a couple of restaurants I love – but generally speaking I don’t need to cross the lake. Most cities I’ve lived in above a certain size are like this; if your needs are met nearby you don’t travel across the metro area to accomplish the same thing.

    1. That doesn’t strike me as a true criticism of our region. Tons of Seattleites commute to the Eastside and vice-versa. Our transportation systems, including transit, are thoroughly regional; how many other cities in America get as many commuters to suburbs like Redmond and Bellevue on truly public transit? In the Bay Area these commutes cross agency boundaries and only get bridged by expensive rail lines. Our local transit agency cover a large county and the regional agency even more area.

      Even the city of Seattle, as incorporated, is much different from SF, more like Chicago in shape, constitution, and size relative to the region. There’s much more room for Seattle to absorb the growth of its region than for SF.

      On the media side, outlets from the Times to STB routinely cover the transit and planning stories from the whole region, including Bellevue’s TMP, Shoreline’s planning process, and P&R controversies from Mercer Island to Puyallup! Whatever their other faults Seattle’s “urbanist” crowd gets around, with substantial knowledge of most of the places Link is and isn’t going.

      What do we have in common with SF? We’re an attractive place to live and work and are currently drawing transplants from all over the world. Our growth has surpassed our housing supply and we’re in an uncomfortable position where there’s no short-term magic bullet for mass housing affordability. And we (our whole region, like the Bay Area) are constrained significantly by natural features, then again by man-made infrastructure, and then again by resistance to change within existing neighborhoods.

      Anyway, I’m pretty sure I’d take our political issues over theirs seven days a week…

      1. Transit is one area where we do act regionally. And coverage of transit responds in-kind.

        Even on this blog we’re good about paying attention to regional planning. But there’s definitely a willingness to paint the east side with a broad brush. According to many of the comments here we’re all Kemper Freemans, Surrey Downs residents, in our million-dollar McMansions driving Land Rovers between the malls.

    2. “no one ever looks at the region as a whole. Seattle is blind to anything on the east side of the lake.”

      Some urbanists have a complete lack of interest in anything outside the municipal boundaries and imagine it’s all a cul-de-sac stereotype, but that doesn’t really matter because the people who do influence policy aren’t so blind. Before the 1980s many suburbs assumed they would escape “big-city problems”, but that proved false in the late 80s when they realized they couldn’t escape poverty, homelessness, crime, decay, mental health issues, etc. A tiny hamlet like Medina can avoid some of these problems but a large suburb like Bellevue or Kirkland or Burien can’t. They realized in the late 80s that their future would be more like Seattle’s, and thus that the cities need to work together to solve common problems. The mayors and city councils don’t believe they’re in an island, even if there’s a cultural difference between indy-shopping Seattlites and big-box shopping suburbanites, such that Claudia Balducci calls her role in regional-urban meetings “the Suburban ‘Splainer” (explainer).

      1. Many outspoken urbanists have that attitude. Have you seen the “White Suburban Folk” sticker all over the eastside? (http://imgur.com/2Oh8Dnz) Given that Seattle is itself such a white bread city this is just stupid hatred.

        I don’t believe there’s a difference between most “indy-shopping Seattleites and big-box shopping suburbanites” and I would submit that your statement itself reinforces the stereotype.

        There are plenty of big-box stores in Seattle. There are plenty of malls in Seattle. Have you been to University Village? Northgate? Pine & 6th? And there are plenty of suburban neighborhoods in Seattle. West Seattle is a suburb by any measure. Magnolia. Ballard of ten years ago. And have you heard about http://www.savemadisonvalley.org?

        But I will agree–if I want the indy-shopping experience, I have to shop on the west side. And I’m going to claim that the reason for that isn’t that east siders refuse to support indy businesses. I’m going to claim it’s that east side businesses can only draw from west side customers whereas west side businesses can enjoy the support of east siders both staying around after work and coming into the city to support businesses.

        Now I know this is pollyannish and simplistic. It is true that if all the people on the east were to support small, independent businesses they would survive even if Seattle didn’t exist. The real problems come from the east side’s car-oriented culture, lack of parking, cul-de-sac neighborhoods, etc. But you can’t deny that there is a bias. And you can’t deny that many of the east side cities–Kirkland, Redmond, Bellevue at least–are doing their damnedest to develop a more urban culture in the cores of their cities.

        And so…when was the last time you had a drink, bought something, or walked in a park east of Lake Washington? Is it true that there’s really nothing there?

        People in Seattle are by and far no different from people on the east side.

      2. “I don’t believe there’s a difference between most “indy-shopping Seattleites and big-box shopping suburbanites” and I would submit that your statement itself reinforces the stereotype.”

        It was simplistic but I couldn’t think of a better way to describe the culture difference. By big-box stores I meant both the stores and driving and parking and setbacks. By indy stores I meant the stores and the small storefronts and lack of setbacks and walking or busing to them. I grew up in the suburbs and still go there once or twice a month; I have friends from there or who moved there, etc. My family always shopped at the department stores and discount department stores that were the percursors to the big-box stores. When I moved to Seattle and lived in the U-District for many years, I discovered that those stores didn’t exist here to the same extent, and if you wanted them you had to go to Northgate or up on Aurora, and some things were only in Southcenter. After a few years I realized I hadn’t needed those things more than once or twice a year. Part of that was shopping for an apartment vs shopping for a house and not having kids, but those too are differences between Seattle and the suburbs.

        I’ve also noticed that oftentimes the reason suburbanites shop at big-box stores is they’re the only thing available. Seattle grew out of a culture of small businesses that’s still strong, and of course Bellevue did too, but the new neighborhoods that were built after the mid 1960s spread at the same time the regional and national chains did, and since they had more money and were more ready to open in new neighborhoods, they became practically the only ones there.

      3. Mike, I agree the lack of choice is a strong influence. But it also tends to create a reinforcing feedback loop–the more we drive to stores, the less walk-in businesses can thrive. “Foot traffic” used to be a key consideration in a small business’ success.

    3. Wasn’t it a year or two ago that this blog had a survey of where its readers lived and a fairly healthy fraction (myself included) lived in the suburbs? For a variety of reasons, no suburb is ever likely to be as much a destination as the traditional core city. Two big ones:

      1. Geographic centrality.
      2. Historical location of major cultural amenities (don’t expect the Seattle Opera to relocate to Redmond any time soon).

      I only rarely visit the East Side myself (it’s something of a pain to get to from Bainbridge Island, and if I want to go to a big box store Silverdale is a far easier trip). Anti-Bellevue snobbishness has nothing to do with it. I bet most residents of Lynnwood and Federal Way visit Seattle more often than they do Bellevue, too.

      And how do you know where the individuals who slapped those stickers came from? For all anyone can tell, they could be bored suburban youth.

  4. Any thoughts on the idea of making middle/low income housing mandatory in any new development (as opposed to letting developers buy their way out)? Montgomery County, MD has done this for awhile. Of course, MoCo has limits on the amount you can increase rent as well (which unless the law changes or someone gets creative), so it might not be an exact comparison.

    1. I don’t see a problem with letting developers buy their way out. The problem is not where the low-income units are, it’s that they don’t exist. But “middle income”, we really need to assume that’s $55,000 now and may be $100,000 in the not-too-distant future, So if you’re willing to build that many units, then we’d finally make a serious dent in housing availability.

      1. But that’s my point, they don’t exist. There is no real rush to build low and middle income housing (and whether the buyout is too low is a related point). At least if you make it mandatory, there will be some income desegregation. While it is not a panacea or solves the problems, it is a start.

      2. By “buy their way out” I thought you meant contributing to a fund for affordable housing. That’s where Seattle is probably headed, with the developer’s choice of onside affordable units or contributing to a fund, and I don’t see a significant problem in it, even if “mandatory inclusionary zoning” (on-site affordable units) may be ideal. With current public-housing principles, a small building may be entirely affordable housing, but a large complex will be mixed affordable/market, public/private. If we have some of those around town (particularly in every neighborhood with urban-village services nearby), I’m not sure it’s a problem if the other buildings are fully market-rate. What we need is enough affordable housing, not necessarily in every building.

  5. True or False? A giant pool of money found Vancouver, BC, they up zoned, and housing became affordable.

    1. False: Vancouver BC didn’t up zone.

      50% of land in Vancouver is reserved for single-family detached homes. Seattle’s is 65%. Giant pool of money found the limited supply of detached homes and the few plots of land that permit building high-rises.

      1. Yes. There was a program on The 180 on CBC not too long ago lamenting the huge areas devoted to single family homes in Vancouver.

    2. Density advocates always have some excuse for why upzones don’t work, like, “not enough of the city was upzoned,” or, “sure, after the upzone, things are still expensive, but it would have been a lot worse without the upzone.”

      1. This shows Tokyo puts people first rather than existing landowners first. Tokyo also allows new housing at medieval scale (Paris scale), with streets that are designed for 95% pedestrians and only the occasional car (used for weekend drives every couple weeks). You can fit a lot of people into a small space with that.

      2. Does this mean you also favor the ability of state/federal governments to restrict the ability of municipalities to tax? That doesn’t seem to be the consensus on this site. But if you do, then I agree with you. If you don’t, then you are cherry-picking policy or being a hypocrite.

  6. Vancouver, and British Columbia, has rent control, something like 2% a year, I believe. This helps explain why the majority of new construction there is condos and not apt. towers as in Seattle.

    1. Seattle also has onerous developer regulations on condos that don’t apply to apartment buildings. According to my realtor friends, this is why the new Seattle towers are not condo buildings.

  7. I’m all for capital moving into housing, but we should be encouraging it to move where it will have the greatest impact – Multi-Family Housing. The number of units produced will be maximized, and the fact that many will be rentals means that when the bubble bursts the people who take the greatest hit will be developers and speculators. I have no problem with that, it’s part of the speculation game.

    But let’s do it right – make sure low income housing is included, require a mix of unit types (not just studios and one bedrooms for techies), and really up zone. 65 foot zoning is a waste – make it 85 or more.

  8. “If you can set aside the repeated swipes at neoliberalism (a frustratingly vague term)”

    Neoliberalism is not vague; that tweet is vacuous. The term may combine economic and cultural policies, but what other term is there for just the economic policies? They do matter. The Democrats in the 1960s were committed to eliminating poverty through entitlement programs, strong unions, civil rights, social equality, etc. I believe they were so scared by Nixon’s and especially Reagan’s success that they decided they’d better be more free-market and business-friendly to avoid being crushed. Whether it’s a combination of politicians changing their minds, new people who always believed this getting into power, or political opportunism, is secondar; for whatever reason most of its leaders gave up on unions, slashed entitlement programs, and supported deregulation. It was Clinton who repealed Glass-Steagal and cut welfare to a few-year limit. So neoliberalism in its economic aspects is conservatism-lite. So with one vote from conservatives and a half-vote from “neo”-liberals, that was enough to get these policies out the door.

    And needless to say, it was deregulation that made all these exotic investments legal, and allowed state banks to become national banks, and credit-card companies incorporated in the lowest-regulation state. The move to 401(k)’s brought ordinary Americans and their money into the stock market — generating profits to finance these real-estate schemes. Social Security would have added to it if Bush II’s proposal had succeeded.

    The Stranger series has a lot of good things in it. If we’re going to return to equality in the current situation, half or 2/3 of the population will need public housing. Not just those making less than $16,000 for a family of four.

    1. Fair enough. let me put it slightly differently: the way the term is used in online discourse, often as an epithet, is frustratingly vague.

  9. It’s good this is being discussed on a transit blog, because this is really a transit problem and not a housing problem. Everett should be a quick transit trip to downtown Seattle. If it were a 30 minute train trip each way then you’d see more folks willing to live up there and work down here.

    I realize I’m preaching to the choir here and there’s at this point no fast fix to this problem.

    1. It’s not only a transit problem. It’s certainly not a problem that can be solved simply with a point-to-point express train to Everett, which is the only sort of train to Everett that would be able to make the trip in 30 minutes.

      Look at the distribution and cost of housing in Everett (or Auburn, or Issaquah, or wherever) and tell me: what small collection of outlying cities can house enough people, with its current housing stock, that some small collection of express trains to these cities would solve housing problems? Trick question! A lot of the people living in these towns work in Bellevue, Redmond, Renton, Tukwila… or even SLU, which remains frustrating to get to from just about anywhere. We need a pretty large collection of stations, serving many destinations besides downtown, each accessible to more housing than it is today. That’s a housing problem and a transit problem.

    2. If you could make that trip in half an hour, you would wind up with huge values being placed on the what? both houses? within walking distance of the Everett Station.

      So, even with good transit, it winds up being a zoning and land use problem.

    3. Transit, land use, and housing can’t be separated because they affect each other. An ideal city would have a large area of 3-10 story average density (which could include some scattered single-family houses as long as they’re not dominant), and would add to that area or create more such areas as the population required. Imagine north Seattle from Fremont to UW and the Ship Canal to 65th like this: this would be like Chicago’s north side or Paris and it could hold a lot of people: it could probably absorb all of Seattle’s unmet demand, and if not you could put another one elsewhere such as Rainier Valley. Beyond this “city” would be areas for those who want larger houses and yards (the “suburbs”), but they’d be designed as streetcar suburbs; i.e., most of the houses would be within walking distance of a frequent transit stop and neighborhood retail. The rich would have more isolated houses beyond this (the “exurbs”), where they’d take full responsibility for their own transportation. Since this is imaginary, let’s say they’d all buy shares in a private P&R at the outer edge of the “streetcar suburbs”, and they’d be socially discouraged from driving in the city or suburbs except for things like transporting heavy loads. The crucial point is, only the rich would live in the outer area, everybody else could find an affordable place in the city or streetcar suburbs; nobody would be “stuck” in the exurbs with no car, the expense of maintaining a car, and nothing within walking distance,

      Pugetopolis is not anywhere near this; the only thing that’s “:city” is between Mercer Street, 15th Ave E, Weller Street, and 5th Ave W. Everything else like the U-District, Rainier Valley, 45th, and Lake City is small islands of density and linear (one block wide along one street), which is not large enough. (Although some UW students rarely have to leave the District, so that’s a success.) So the right answer is to upzone these potential urban centers. Barring that, we have to make do with the islands and suburbs.

      The first thing you notice about Link and ST Express in Snohomish and Pierce Counties is they take twice as long as driving (without traffic). From downtown Seattle it’s a 15 minute drive to Lynnwood, 30 minutes to Everett, 45 minutes to Tacoma, and 60 minutes to Olympia. STEX and projected Link take 30 minutes to Lynnwood, 60 minutes to Everett, 50 minutes to Tacoma (STEX), 70-75 minutes to Tacoma (Link), and 2 hours to Olympia (STEX or Sounder + Intercity Transit). So 30 minutes to Everett is just not in the cards given what we’re building. (40 minutes to Tacoma would be possible with substantial Sounder improvements.) If we contemplate a 30-minute train to Everett, wouldn’t the answer become to put the housing in Lake City and Lynnwood and Northgate nstead? It’s still an open question how well distant islands of TOD will succeed. They’ll probably be full because of the rising population, but it’s questionable whether a full set of services will emerge around them so that a lot of people don’t feel isolated, that they have to take a 20-minute train ride to get to anything besides their neighbors’ houses; e.g., the situation with The Landing now or city-proposed housing around Tacoma Dome Station later.

    4. What you are describing is called “sprawl”. Why would that ever be a thing we would want to encourage?

      1. It could be sprawl or it could be a series of semi-autonomous or self-supporting clusters radiating from a central core. If the regional plan necessitates long auto commutes, then yes, it is sprawl. If not, then we can call it something else–New Suburbanism!

        As described above, the system is different from the European version where the wealthy live near the city center and the poor live in bland suburbs full of large multi-story housing developments further from the city core and it is the poor who make the long commutes. That’s a model that we should hope to avoid (New Ghettoism?).

      2. Actually, there are many examples in Europe of distributed, yet compact, towns and small cities connected by transit (and roads, of course) to each other and to larger cities. I lived in such an area in the Netherlands (Hilversum, a city of about 100,000). Separated single-family (non-farm) houses are rare and in small enclaves of quite-wealthy folks. Upper-middle-class software engineers (and the like) live in (quite nice) connected houses – row housing or 3- or 4-plex

        The transit between these towns tends to be heavy rail – justified and largely paid for by high ridership. Light rail is relatively rare and the lines are on the order of 5-10 miles. Everett-to-Seattle would be heavy rail (and of course we already have such a line!).

        What makes all this happen is a combination of history and deliberate, consistent, and quite-restrictive land-use and transportation planning. I found a lot of the resulting “suburban” landscape kind of boring and uninspiring (particularly newer areas) – but no worse than newer American suburbs, and I could get on my bike and be out in the country in 10 minutes.

        Guy describes Paris and to some extent London and NYC. There are probably some fundamental economics that push in that direction. Amsterdam has some of this aspect too, and Seattle is apparently trending that way. I’m not sure we have to, but if we keep 65% SFO housing in Seattle, it will be impossible to avoid. And unless we adopt / continue region-wide and pretty-strict planning, and do it right, it will be hard to avoid.

  10. Good point above about Tokyo. We can cram a lot of fine housing in relatively small spaces. Unfortunately it takes some government action to assemble the land, a tool we do not have. Market forces do it as well but more slowly. Wish we had more governmental involvement in land assembly. Not sure taxes and required affordable units do as much as land assembly and then private capital development.

    1. All it takes is cities willing to pursue the best feasable policies. Some things like a foreigner’s tax or limiting houses to owner-occupied may be unconstitutional in the US, but cities have a lot of tools short of this. It’s the cities who decide zoning. Nothing is stopping Seattle from allowing Tokyo-like zones, or 60′ in all areas not zoned higher, or highrises around all Link stations à la New Westminster. Or it could purchase land for a neighborhood with alley-sized streets. Or it could eminent-domain it (although the housing would probably have to be all public, and based on the declared homelessness emergency, which should really be expanded to a housing emergency).

  11. Mudede and Moon’s argue that upzoning is part of the problem “Old 1950s apartments are being upgraded or torn down. … Seattle has demolished 7000 units of “naturally affordable” housing in the last few years.”

    This is short sighted hogwash.

    It is not upzoning that is raising rent by replacing “naturally affordable” units for more expensive ones. It is because 1) our upzoning is limited to existing higher density areas and 2) we are doing it half-arsed (or 1/3-arsed in this case).

    We almost never allow upzones in single family zones (2/3 of the city). This would get your most bang for your buck in terms of new rental units on the market while eliminating little to no “naturally affordable” housing. Even without tearing down a single building you could get a whole lot duplexes out of existing single family homes. Further, we have never allowed upzoning to match rental demand and, as a result, there are still more people willing and able to pay that highest end of rent than there are rental units for them.

    Had we upzoned all single family zones and doled out upzoning sufficient to meet demand, this may not have saved the cost of home ownership from international finance but it certainly would have led to lower rents.

    Why? You cant get blood from a stone. There are only so many people willing and able to pay the highest end of the rent. International finance is certainly not going to rent units as an investment.

    If Seattle liberalized its constraints on new building such that there is no scarcity, SOME of those new developments will have to charge less. SOME of the owners of the older buildings will not have the same financial incentive to tear down for a flashier building. Rents will be more reasonable (see Chicago with its liberal building policies and much more affordable rents – also much less preyed upon by international finance for it).

    1. “Mudede and Moon’s argue that upzoning is part of the problem “Old 1950s apartments are being upgraded or torn down. … Seattle has demolished 7000 units of “naturally affordable” housing in the last few years.” ”

      Their argument veers a bit into that but they get the larger factors more accurate. The idea that old buildings are more affordable is correct, but it’s relative, and it can be superceded by other factors. Actually, there’s a U-shaped curve. Buildings more than five years old start going down, and reach bottom with 1950s-60s era buildings. There’s a gap from 1945 and 1929 where no construction occurred because of the war and the Depression. Before that, well-maintained buildings start to rise in value again. It’s perhaps too soon to say whether this curve will always exist, with fifty years bei9ng the nadir of desirability, or whether the 1950s-60s was just universally bad. I used to hate dingbat-style or outdoor-walkway buildings with tacky features, but later I learned to appreciate their low cost and honest tackiness that is fortunately in the past. (Although I also learned that carports and outdoor walkways per se worthwhile and should be revived, due to their ow cost and low energy usage.) There’s also a new phenomenon that prewar buildings were built by their owners to last a century or more, while current buildings are only built to last thirty years until the investment is depreciated. That’s both a cause and effect of current ugliness and shoddiness: investors plan around the 20-year payback cycle, and they assume fashions will change sufficiently in thirty years to make a teardown/rebuild lucrative. So our current recent buildings may fall apart by 2040, and even if they don’t they may be reviled.

      What I most worry about is a climate disaster or earthquake taking out the electricity for several months. Many of the recent apartments and condos are not really designed to be habitable without electricity. They have windowless stairways, the stairs are in obscure locations because everybody is expected to use the elevator, and some have card-access front doors. If the water’s gone too people won’t be able to use their toilets. We are creating a precarious situation of electricity-dependent buildings, similar to car-dependent neighborhoods but possibly worse if it breaks down. And will those who bought condos that become uninhabitable just lose their investment?

      1. You misunderstand my post. I rambled. Please forgive.

        I do not disagree in the value of rents as it relates to building age.

        I do not disagree with Mudede and Moon that the way we have done upzoning the last decade or so has had the effect of reducing naturally affordable housing.

        I disagree with Mudede and Moon’s argument that removing naturally affordable units is a necessary effect of upzoning.

        Rather, I suggested it is how often, how much, and where we do our upzoning that is causing the problem.

    2. I agree in principle with the value of upzoning, but the parking problem throughout Ballard is horrendous. I have a good friend who owns and lives in half of a duplex on 90th, so my wife and I drive to see her when we visit Seattle. From Market on north, pretty much every residential street west of Greenwood is completely filled with parked cars. There is a single lane for traffic in which “meeting” cars have to do like a single-track railroad; somebody takes the “siding” in the gap in parked cars for a driveway or a pair of them adjacent to each other.

      You can’t upzone single-family neighborhoods which were built for one-car families but are now occupied by ones with three- or even four-cars. Not without pretty draconian off-street parking requirements for whatever is built new.

      Yes, it would be great if Seattle had more “no car” households like occur in New York, Boston, and San Francisco. But an inflection point has been passed; the cost of housing has reached the point at which only the top 10% of the income scale can afford to buy a stand-alone house within the Seattle City Limits. People with that level of income want to drive. It’s a bitter pill, but it’s true.

      1. A place has to be pretty sparsely populated to not have this issue. Pretty much anywhere that has free parking and a bit of activity around it has all the parking consumed.

        This is why places started charging for street parking.

      2. >> People with that level of income want to drive.

        So what? I drive, I own two cars, but if I want to drive to Ballard, I know it will be difficult. Big deal. If I decided to buy a place in Belltown I would still keep my car, because I use it for hiking. But I sure wouldn’t park it on the street, I would find a garage, just like people do in any big city. It really has little to do with transit, nor what the city was built for. There are still plenty of people in Manhattan (Manhattan!) that drive, it is just that no one expects the city to do anything to accommodate them. You are on your own. Really — even Seinfeld had episodes about parking (several, if memory serves).

      3. Parking demand really seems to expand to fill all available space, until you reach preposterous portions.

        There are 14 houses on my street, all SFH, and there are times every parking place is taken. The same is true at 30th and Madison in Portland, and there are many small apartment buildings.

        Tacoma had a terrible parking problem, and they finally started charging for parking about 4 years ago. It’s not as big a problem now as those using free street parking for storage have decided to park elsewhere.

        There are parking places in downtown Olympia that charge only $0.01 for their minimum price. Just doing that helps free up parking.

      4. >>Yes, it would be great if Seattle had more “no car” households like occur in New York, Boston, and San Francisco.

        How do you think those cities got their no car households? By being so dense it was a pain in the neck to own, drive, and park.

        Upzone it and the no car households will come.

        >>People with [top 10%] income want to drive.

        I am carless in town. It is super easier than driving. Uber. Uber. Uber.

        I prefer to be driven than dealing with #$%&@ traffic and parking.

        It is a generational thing. The only people I know under 40 who make good money who still prefer to drive are from a small town, the Midwest or the Southwest.

        Take the top 10%’s on-street parking away, and you will have even more using ride shares.

      5. From Market on north, pretty much every residential street west of Greenwood is completely filled with parked cars.

        This is a gross exaggeration. My partner’s house is on a street next to a popular bar between Greenwood and 15th, and relies on free street parking, and only about maybe 1 out of every 40 times does she have to walk more than a block (and never more than two blocks) for her taxpayer-provided free car storage.

        Second, even if you’re right, so what? The vast majority of single family neighborhoods in North Seattle come with sufficient free car storage that you rarely have to walk more than a block or so. Why is it imperative that all of them have that? If having other people provide free and convenient car storage adjacent to your home is really important to you, perhaps you should consider living in one of the 90% of neighborhoods that provide it, rather than one of the 10% that sometimes don’t. This certainly isn’t a problem we need public policy to solve for us. Neighborhoods with good walkability are in far shorter supply than neighborhoods with excess publicly subsidized car storage for homeowners.

        We live not far from Ballard. We know parking is terrible, so we walk, bike, bus, or uber when we go there. When we go to our favorite noodle place up in Bitter Lake, we drive, because parking is easy. The incentive structure Ballard’s situation provides seems like a better one for all sorts of reasons, and it certainly doesn’t seem to be hurting the economic viability of businesses there.

    3. Developers would choose lots near arterial streets first, not a lot in the middle of a one-lane street. They would build parking because it’s not near trunk transit. Lower down in Ballard, south of 65th, the multifamily building boom took off because the monorail was coming. Then it didn’t, but they kept building because the market was strong enough, but since there was no transit better than the D and 44 which regularly take an hour to get downtown or the U-District, the buildings weren’t viable without lots of parking. That’s a short-term transit decision that will have long negative effects, because not only do the buildings have lots of parking, but the people who moved into those buildings are more likely the type who drive everywhere.

      1. I don’t think the monorail had much to do with the Ballard boom. It had more to do with Ballard emerging as a very interesting place to live. Well, that and zoning (otherwise you would see a lot more growth in Fremont). Actually, there is plenty of growth in northeast Fremont (the east side of Bridge Way, close to Stone Way). Service there is nothing special. If transit was really driving development, you would see a lot more in Rainier Beach (which has both Link as well as great bus service) and Bitter Lake (which has the E, and in the future will have the NE 130th station). But in both cases, people don’t find those areas as attractive as Fremont, Ballard, Wallingford or Capitol Hill.

        As for the decision to add parking, a lot depends on whether it is mandated by law or not. If it isn’t, sometimes developers skip the parking. But often times it makes financial sense to add parking, regardless of how good the transit it. Even in really big cities, parking garages are often very profitable. One out of five people in Manhattan own a car, which means that there are around 300,000 privately owned cars on that tiny island. You can make good money storing those things, and I’m sure a lot of people do. If you are building a big apartment building anyway, might as well add the basement parking.

        Which is why parking requirements are worse when they are applied to the cheapest, smallest apartments. Requiring parking with an ADU is especially onerous. In many cases, creating a basement apartment is dirt cheap (the bedroom and bathroom is already there). With townhouses and duplexes, it is similar. You are taking up vital space. A huge proportion of the potential living space is taken up by parking.

        The city should just get rid of all the parking requirements and see what happens. Urbanists might whine when someone decides to build an apartment building and add parking, but chances are, there will be plenty of places without parking. There were when they allowed Apodments, for example. But I think the biggest change would be the smaller places (townhouses, duplexes, ADUs, etc.).

  12. After the first couple paragraphs I had to stop and pause, wondering who wrote such a great piece — Oh, it’s Frank, of course. Well done.

    But you ruined what was an otherwise excellent piece by implying — sorry, explicitly stating — that “Backyard cottages aren’t gonna cut it.”. How do you know? We don’t allow them! That’s like the folks complaining that upzoning doesn’t reduce rent. See all the new apartments going in, yet rent is still extremely expensive! Therefore, upzoning has no effect.

    Nonsense. Liberalizing the ADU laws would have a huge effect on rental prices because it would be an upzone. It would be a lot more dramatic than the so called “grand bargain”, which is a typical Seattle feel good symbolic gesture that will result in only a handful of new units. It is sad to think that the opponents of density (as well as the very speculators you and others have mentioned) have successfully changed the subject from the core achievement of HALA — allowing more affordable market rate housing.

    Just imagine, for a second, if we allowed any construction whatsoever within the city. What would people build? Of course you would have a lot more apartment buildings. But there are parts of the city zoned for six story apartments that aren’t building many right now. Rainier Beach and Bitter Lake have very little development. It just doesn’t make financial sense in many cases to spend the money building a big apartment. The same is often true of little apartments. People would quickly buy up the empty lots and small houses, mow them down and put up small apartment buildings. But pretty soon, you run out of those, and it doesn’t make sense to tear down a million dollar home to put up a 6 unit apartment building, and charge something affordable. That type of construction only makes sense when rents are sky high (they are in some neighborhoods, but they aren’t in others).

    But spend a few grand and add a cottage out back? Hell yes. How about converting that four bedroom house into four apartments? Again, dirt cheap. Landlords would quickly start buying up houses as soon as they went on the market and start renting them out. Even if we had a crash — even if rent prices dropped ridiculously low — it would still be worth adding a unit, because adding a small bungalow or adding a basement apartment is ridiculously cheap.

    As for Vancouver, you miss the big point. They are saturated! That is a success story. Rents in Vancouver have kept remarkably low over the years because they’ve allowed for ADUs. But now they are filled up. They have a lot more density, and need to move on and try and different tact. But we aren’t Vancouver. We aren’t Manhattan or Brooklyn, either. Our density is nowhere near those cities.

    Imagine for a second if we allowed row houses and short apartments the way that Brooklyn does. This would be a huge upzone for the city, and rental prices would quickly drop. The city could probably double in size quite quickly. But eventually (like Brooklyn) it gets filled up. At that point you need to worry more about other upzones. But until then (and it could take fifty years or longer) you grow in ways that are affordable. That means leveraging the bulk of our existing structures as well as the cheap land that is next to it. Adopt liberal ADU laws and that will happen.

    1. Thanks Ross. I’m all for liberalizing ADU development, but unless and until the owner occupancy requirement is lifted, I have a hard time seeing them take off. but that may be in the cards sooner than we think!

      1. Oh, I agree with you there. Maybe it is just the wording. When you say “ADUs won’t cut it”, that is like saying “new apartments aren’t cutting it”. It implies that people don’t want to build them, or that if they build them, it won’t make much difference. I disagree on both points.

        The reason we aren’t getting more ADUs is because the laws are too restrictive. Owner occupancy is just one (although probably the biggest reason) why we aren’t building them. Change the restrictions and you will see a lot more of them (as you saw in Vancouver). In a city like Seattle that will have a huge impact on affordability (as it did in Vancouver).

        Until, of course, you reach a saturation point, then we need to continue liberalizing zoning rules. Vancouver had remarkably low rents until recently, despite growing very quickly. They need to make changes, while we need (at a minimum) to adopt the rules that govern that city.

  13. I’m constantly amazed how the PNW snowed the country into thinking it was ecologically progressive when so much of its major cities are protectionist single-family-home neighborhoods whose residents drive everywhere.

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