Insignia Towers (SounderBruce/Wikimedia)

The Mayoral Primary inspired more discussion between growth advocates and renters’ advocates. Renters’ advocates wonder why market urbanists* didn’t rally to Nikkita Oliver. Market urbanists wonder why Oliver didn’t embrace developers who can address the affordability crisis.

There are also some attempts to bridge this gap and form common cause against NIMBYs that oppose both density and public housing: Galen Herz’s essay is an outstanding example of this genre. Although I can’t endorse everything he recommends, it’s a useful starting point to not be outraged that other people are inspired by different issues than you are.

Nevertheless, it is common rhetoric that current policy is “just” resulting in “luxury” units, doing nothing to address the housing shortage. Leaving aside its factual validity, this assessment is philosophically bankrupt.

Instead, construction of market-rate units, provided it’s a large net increase on density on the site, has significant positive public policy impacts. For one thing, today’s fancy apartments are tomorrow’s “naturally occurring” affordable housing. That doesn’t solve the problem today, but it does prevent us from continually having to solve it in the future.

Moreover, there are two possible outcomes to blocking such housing. The market urbanist prediction is that would-be residents will instead enter the market for existing housing, thus driving up rents for current residents. Everyone agrees that this would be bad. For market skeptics, the alternative must be that would-be residents are living outside the city instead.

Even that outcome is bad. First, rents in the suburbs matter. Second, encouraging people to live farther from work is not good for congestion, productivity, or the environment. Affluent residents build the tax base to fund the city’s progressive dreams. Most importantly, the central rationale for subsidizing housing is to be inclusive and not deny people the opportunity to live here. Artificially limiting units fundamentally undercuts the entire philosophical foundation of progressive intervention in the housing market.

* Throughout this essay, “market urbanists” do not refer to people that believe that all housing problems can be addressed through the free market. This rhetorical position seems to be more common in the imagination of renters’ advocates than among actual people in the debate.

63 Replies to “But “Luxury” Housing is Good”

  1. What is clear, though, is that zoning policy encourages the construction of luxury housing, whether it be huge houses or huge apartments.

    Where apartments are allowed, the city has required they be large — there are various “residential density” limits. To quote the official documents, they are

    Measured in dwelling units per square foot of lot area, e.g. 1/1200. In the NC zones,

    In other words, building a gigantic apartment is perfectly legal. But building a lot of small apartments is not.

    Of course, very few places in the city actually allow apartments. Where houses exist, the situation is similar, if not worse. In most of the city, you can tear down a small house and put up a giant one, but you can’t put up two (or more) small houses. In other words, building a gigantic house is perfectly legal. But building a lot of small houses is not.

    1. Where houses exist, the situation is similar, if not worse. In most of the city, you can tear down a small house and put up a giant one, but you can’t put up two (or more) small houses.

      Yes. You can support a policy that incentivizes tearing down a small, 100 year old house and replacing it with a million+ 4000 square foot mansion while criminalizing the construction of a building with the same footprint and 8 500 square foot apartments, or you can credibly claim to care about affordable housing, but please choose only one.

      1. Yes, and it is really bad in areas that have a lot of space for development. My neighborhood (Pinehurst) is a great example. It used to be farmland, so there are a lot of small houses on very big lots. Now that housing prices have gone up, people are buying the huge lots, and subdividing. This is good, except they subdivide to 7200 square feet, which is ridiculously large. Since construction is relatively cheap, the developers build as much house as they can. The result is a handful of huge houses. So you have three huge houses, instead of a six modest houses, or a dozen row houses, let alone a small apartment building.

        The whole thing is ridiculous and not at all in keeping with the (blue collar) nature of the neighborhood. This is not an expensive place, with grand views, great parks or wonderful amenities. We don’t even have sidewalks on most of the streets. This is the place where people move to, when they can’t afford to live some place nicer (and closer). Yet they are building these luxury houses, because that is essentially all they can build. Apartments would be great, but if they really wanted to build something in keeping with what the neighborhood looked like twenty years ago, they would allow small lot houses or row houses.

    2. It’s been a long time since Seattle mandated density in “units per square foot of lot area”. I did a google search for the exact phrase “Measured in dwelling units per square foot of lot area” and only one result came up: which is a March 2002 version of Seattle’s Commercial Zoning Summary. The current version (published January 2016) can be found at This latest version reflects the fact that density limits in commercial zones are measured by height limits and FAR ratios, with bonus density awarded for mixed-use developments.

      1. @kpt – the doc you link to is for low-rise zones, which by intent look to limit density. NC or commercial or SM or downtown zones are all without unit density limits. HALA increases the FAR and allowable height in these zones thereby allowing more units, but there is nothing in the zoning regulations for these zones that necessitate a minimum unit size other than the SEDU director’s rule.

      2. Yes, Low Rise. Here are some numbers in terms of acreage*:

        Lowrise: 3,716
        Midrise: 229
        Highrise: 49

        Call me crazy, but I think Lowrise is kind of important.

        Then there is parking. Where is it required, it is based on the number of units. If you build a lot of small (more affordable) units, you have to add more parking than if you build a handful of. large (luxury) apartments.

        but there is nothing in the zoning regulations for these zones that necessitate a minimum unit size other than the SEDU director’s rule.

        Which basically applies to every apartment! You can’t build a really tiny set of units, or the SEDU rules start to apply. You are basically saying there is nothing in the statutes about minimum unit size, other than the regulations that require a minimum unit size.

        This is just one of many rules that allow luxury housing, but make building affordable housing more expensive, or illegal.


      3. Depending on the definition, lowrise tops out at 4-7 stories. That’s where most of our neighbrhood buildings come from (e.g., Bellevue Ave and the Summit area), and they can hold a lot of people. So lowrise in itself isn’t bad. Space-wasting design is bad, like a freestanding fast-food restaurant with surface parking around it or a one-story strip mall.

  2. What do you tell the folks who are getting pushed out now (e.g., the folks who lived in Ballard near the locks who got renovicted)?
    Do we know (stats?) how many affordable, albeit crappy apartments were demolished for the new housing?

    I think, “wait a year or two for the price to come down” may make from a policy sense, but if you have to run for office on that, well, don’t be surprised if the pitchforks and torches crowd comes for you.

    On a somewhat unrelated note, are you going to devote any space to Erica’s article on Rainer Beach station empty lots?

    1. It’s not “wait year or two” but “wait twenty or thirty years”. My building was built in 2000 so it’s lower than the brand-new stuff but not dramatically lower. It seems to have been built just before the wave of granite countertops, stainless-steel appliances, and fake balconies. Earlier I lived in two 1950s buildings. When I was younger I would not have because they were too ugly, but now I’ve learned to enjoy the nostalgia and low prices in the secure belief that they’re not being built like that anymore and will soon be gone. And one of the buildings, a block from Harborview, is gone now. (Elvis supposedly stayed in it for the film “It Happened at the World’s Fair. It had a central pool but that was bricked over by the time I was there.) And I learned that some 1950s designs are smart and should be revived, like outdoor walkways instead of hallways. Less enclosed space means less expense.

    2. Do we know (stats?) how many affordable, albeit crappy apartments were demolished for the new housing?

      I recall seeing a statistic of about a 12:1 new unit:demolished unit ratio in the current Seattle environment, with probably a fair amount of the demolished housing being vacant prior to demolition. I feel like maybe I saw that here? A bit of googling isn’t helping.

      1. Do we know (stats?) how many affordable, albeit crappy apartments were demolished for the new housing?

        I wrote about this a while back. The ratios are poor when the zoning envelope doesn’t allow a lot more scale, fairly common in the more prosperous parts of the Eastside. Cheap apartments are replaced by a similar number of townhomes or single family. But the ratio is much better with larger redevelopment. Looking only at 8+ developments, Sightline found a 84:1 ratio in Seattle.

    3. I saw 12:1 too. That’s well within the range of beneficial.2:1 or 3:1 is arguably worth it for an old space-inefficient building. 4:1 and above is clearly worth it.

    4. Beyond the numbers, I think it’s worth considering why those old apartments were relatively affordable in the first place. If they’re renting for significantly less than other nearby units, it’s probably because they’re in worse condition. Seems likely to me that this is intentional in many cases: the landlord saw that the existing building was undersized compared to current zoning and market conditions, and made a conscious decision to allow the building to deteriorate (stopping all non-essential maintenance) until a developer would make a good offer to redevelop the property.

      I think we need to view the units on the very low end of the market rate scale as being temporary and unsustainable in nature. The units are cheap because they are in poor condition. At some point that must be fixed; either they’re renovated so that the building can last another few decades, or they’re torn down entirely. Either way, they won’t command low rents forever.

    5. They’re cheaper because the buildings are old, unfashionable, and unrenovated, but also because they’re smaller buildings (4-8 units instead of 60+units) which are less expensive to build, they were built in an era when labor was cheaper and regulations were less, they have long been paid off, they were financed by their owners or by local loans rather than Wall Street investors wanting return-on-investment in 19 years and ongoing high dividends, and a mom n pop owner can afford to own them — somebody who has a commitment to the community and may be lenient on rents.

      We need to legalize small buildings again so that homeowners can convert their houses or two adjacent lots. Wall Street investors aren’t interested in small fry, but we don’t need them, local developers who are being outbid for the biggest and most central parcels will take on the lower-profit work, and that’s good for homeowners, renters, and the community.

      1. Some of your points are spot on, but smaller buildings (4-8 units) will not equate to more affordable units. Some of the biggest determinants in the rent are land costs, upfront development costs (thinking design fees, design review costs , permitting fees, etc) and the costs of safer, more energy efficient construction (building codes require fire sprinklers throughout, seismic resistance, elevators for accessibility, robust insulation and high performance windows [Seattle’s energy code is one of the more demanding in the country], etc). That does not include parking, which may not be required by land use code, but many financiers require and/or SEPA will necessitate. This is all to say that there are a number of costs that must be amortized in new buildings, that older, smaller buildings never had to deal with.

      2. Some of your points are spot on, but smaller buildings (4-8 units) will not equate to more affordable units.


        Some of the biggest determinants in the rent are land costs, upfront development costs (thinking design fees, design review costs , permitting fees, etc) and the costs of safer, more energy efficient construction (building codes require fire sprinklers throughout, seismic resistance, elevators for accessibility, robust insulation and high performance windows [Seattle’s energy code is one of the more demanding in the country], etc).

        Land costs are high because so little land is allowed for development. Building codes also apply to houses. Design reviews are expensive, but that is what needs to be changed. Why do you need to do a design review for an apartment when it is the same size as a house?

        Put it this way. In my neighborhood, it is common for them to buy up land, subdivide it, and then put up huge houses. The houses sit on lots that are 7200 square feet. They sell for roughly a million. There is no reason why you couldn’t build an apartment building with 8 units on the same plot of land. It would cost more to build (more bathrooms and kitchens) but not that much more. If you sold each unit for 200 grand, you would gross more than 600 grand. The difference between building one of those luxury houses and an eight unit apartment is less than that, which means the developer would actually make money. The rent equivalent of a 200 grand condo in an eight unit apartment building is relatively low, especially since smaller apartment buildings tend to have lower rents than bigger buildings (

        This is all to say that there are a number of costs that must be amortized in new buildings, that older, smaller buildings never had to deal with.

        Yes, because the zoning laws are so restrictive! They require things for a small apartment, that they don’t require for houses.

        Besides, even if your premise is correct; even if building new smaller apartment buildings would be expensive, they would still be built. The existence of new units would put downward pressure on all apartments. Eventually you reach a point where it just isn’t profitable to build new places. The cost of construction is too high, and the rent is too low. But since converting a house to an apartment is really cheap, at the point in which it isn’t worth doing that, you have a lot of cheap apartments in this city. We are nowhere near that, because our regulations are too strict.

      3. Small buildings are intrinsically less expensive because they can be wood-framed and don’t need as much structure to keep the building up.

    6. What do you tell the folks who are getting pushed out now

      I would apologize for the city’s ridiculously restrictive zoning laws. They have made things worse.

      In a true free market, they would build apartments all over the city. Cheap old houses (or empty lots) would have new, and often cheap apartments. But right now, there is only a small sliver of land where they allow apartments to be built, and often, this is where there already are apartments. An empty lot, or a small house on a big lot, is way more profitable for developers. Even a cheap apartment building makes a fair amount of money. But a small house on a big lot makes very little, and would be replaced by an apartment, except that in most cases, that would be illegal. Making matters worse, when apartments are allowed, the law doesn’t encourage density, but discourages it.

      But even with such ridiculously restrictive rules, for the most part, developers are adding density. There is nothing stopping a developer from say, replacing a dozen low cost units with half a dozen luxury units. But that is rare, if not unheard of. Developers may charge more for the new places, but they still added more units. The only reason they can charge more is because there is so little competition. They aren’t even worried about basement apartments or backyard cottages, because the rules governing those are so restrictive, hardly anyone builds them.

      Which is not to say that cheap apartments in very nice areas would necessarily exist, even if the zoning laws were sensible. It is just that they could move a couple miles, and find a place more affordable. Right now, rents are going way up because of high demand, and low supply. If they stopped developers from replacing the old places (and thus limited an increase in density) then developers would simply raise the price on those cheap, old units. You can find plenty of dumpy, ugly apartments in Manhattan — but they are all expensive. Because New York — like just about all U. S. cities — has ridiculously restrictive development laws. That is why The Rent Is Too Damn High (to cite the book of the same name).

    7. Those crappy apartments are cheap BECAUSE their owners knew a teardown was coming, and so knew that replacing the counter tops or doing a renovation simply wouldn’t have been worth the time or money.

      I’m curious. What are your thoughts on public housing?

    8. “In a true free market, they would build apartments all over the city. Cheap old houses (or empty lots) would have new, and often cheap apartments.”

      The problem is there’s a pent-up backlog of demand. If we had been building housing to match demand for the last twenty years like Dallas and Houston did, there would be more of it now and it would be generally cheaper. But because we didn’t and let this bottleneck become a crisis, there’s a huge wave of demand to be met before things equalize, which means a curve of rising prices until things stabilize, and then go down in the next recession or ovebuilding crash. Then we’ll be in a better and more stable position.

  3. It’s astonishing the number of people I’ve encountered who seem to be laboring under the delusion that if you don’t build “luxury” housing, rich people will just stop coming here. It’s a model of human behavior that’s just bizarre–“I was going to take this great, high-paying job in my field in the great city of Seattle, but I’d have to rent a unit that’s more than 10 years old and may not have granite countertops, so I guess I’ll turn down the job” isn’t a thing very many people are ever going to to say to themselves.

    1. I agree, but it is also reasonable to assume that what is driving the high cost of housing in Seattle is wealthy (or high income) people, who are buying (or renting) up everything. Except if that was the case, we would see *decreasing* density. You would see 60 unit apartment buildings gutted, and replaced with 20 unit ones. Each apartment would be huge. This sort of thing is happening in high end cities, but is pretty much unheard of here. I really can’t think of a single example in Seattle where this has happened. It is the opposite, People are clamoring for more places to live, but the law makes it very difficult to meet the needs of the masses. Even Apodments are now illegal, for heaven’s sake. The rich aren’t pushing out the middle class, the needs of the middle class are simply not being met because the law doesn’t allow developers to meet them. (And by “developers” I include those who would love to convert houses into apartments)

    2. It’s the next level below those people: not the ones who can buy multiple units and combine them into one, but the ones who can pay top dollar but can’t (or don’t want to) get two adjacent ones. Landlords keep raising rents until they run out of ever-richer people willing to sign a lease, then they start lowering rents until the units are filled. Right now there’s such a pool of six-figure salaries that they don’t have to bother with the mid five-figures. But once all those six-figures have units, and as they move up into a bigger/newer/better unit or house and vacate their current one, then rents will no longer be able to go up faster than inflation.

    1. No. This is a much-abused and ill-thought out metaphor in this context, thoughtlessly trying to tag a position you oppose with a long-maligned term without doing the work to show the analytics are actually analogous.

      Since we’re mostly talking about the rental market here, it really is the case that the overwhelmingly vast majority of rental market participants want one unit, and no more. (unlike wealth, which people gleefully accumulate endlessly). So you build rich people storage units, and rich people really will stop storing themselves in non-rich people storage units.

      The mechanisms and assumptions implied by trickle-down theory were complex and empirically unsound; since the late 70’s rich people have for a variety of complex reasons gotten very good at hoarding the benefits of economic growth. They still generally only rent one apartment at a time.

      1. djw,

        “Rich people” don’t rent “one apartment at a time”. What they live in may be called an “apartment” as in New York, but they make sure to own it.

      2. For the purposes of this conversation, we’re talking about young, highly compensated individuals, many of whom work in tech. Many of them do indeed rent. (More of them might buy, if any of the new multi-family construction in Seattle was condo, but that’s a different question).

      3. That’s a difference in terminology. Apartments are descendants of hotels, and the term also refers to a semi self-contained living quarters in a mansion or castle. New York uses it for both rented and owned apartments. Co-op in New York is a century-old arrangement where the residents own the building together, and include 4000 sq ft lixury apartments. Condo is a 1970s term where the resident owns his unit and a share in the common areas; it’s used in New York for new buildings built as such.

        The working rich generally want one apartment. The non-working rich (those who don’t have to work) are the ones buying up trophy units in New York and Vancouver, but there hasn’t been much evidence they’re doing it here.

      4. Many of these people have significantly negative net worth (because of student loans). From what I’ve seen, many of them spend the first few years of their careers paying down student debt before really considering residential purchasing.

      5. That’s true but there are still people who would buy. For-sale inventory used to remain on the market for six months average, but since 2008 it has been down to 30 days or less, and almost everything is getting multiple offers above the asking price. So all these tech workers can’t buy because everything is snapped up immerdiately by someone else. If there were more condos, they would buy them. If there were more apartments, there would be less competition for each unit, which would ease the price pressures.

        The vacancy rate is also low. When I used to get apartments in the early 2000s, you just looked for “For Rent” signs, viewed a place, and called the landlord back a couple days or a week later and it was still open. The low vacancy rate has made that much harder: people now often have to sign on the spot or someone else will, or they show up to view and someone has just rented it. That competition gives landlords freedom to escalate rents, knowing that a high-income person will probably come along in a day or two.

      6. “Young highly compensated individuals” aren’t necessarily rich. In fact, they rarely are rich. They have a generous cash flow, but they usually don’t have much accumulated wealth. And, “yes”, such people do in fact often rent when they first come to a new city.

        However, they almost always buy within a few years unless they are contractors. Owning a home and accumulating equity is one of the most important means by which to ensure solvency in retirement. A retiree might not want to live in Belltown, but if that retiree has a condo or owned “apartment” there it can become a very nice dwelling in a cheaper city.

  4. I’m sorry, but the City has been discovered. Unless there is a tech crash of post-Y2K proportions that lasts, the pressure on low-income people is not going to relent. It’s a cruel reality, but it is the reality. For a couple of decades after the end of the Miserable Seattle Summer©, living in Seattle was a relative bargain. No longer; the secret is out. The city has become a global destination for wealthy people.

    No, it’s not Paris; it’s not Nice; it’s not even San Francisco. Yet. But given that climate change is probably going to make places like Florida where millions currently live unlivable, the pressures on Puget Sound will be immense.

    The city will certainly have to grow, but people who cannot generate an income of at least $7,000 per month will soon be priced out of the entire Sound Transit service area. This is the simplest reality of economics. The people who come with all that money will never agree to be taxed enough to build housing cheap enough for all the people with less value-to-add who want to live or even stay in the Central Puget Sound region.

    I know its brutal, but it is, unfortunately, true. I expect the same forces occurring in Portland will do the same to my wife and me before too long.

    1. > people who cannot generate an income of at least $7,000 per month will soon be priced out of the entire Sound Transit service area. This is the simplest reality of economics.

      Where is that number coming from? I disagree that $7,000/mo rents are inevitable or that average people will soon be completely priced out of the Sound Transit service area (which spans multiple counties). Analyses of the housing market in Seattle are already suggesting that rents for one bedroom apartments are too expensive for an average person making the median income to afford.

      I see a couple trends increasing for lower income people in the near future: sharing larger apartments and houses, moving to outlying areas with longer commutes (Shoreline, Renton, Burien, etc) and leaving the Seattle area for areas with lower costs of living. All of these trends, to say nothing of the many new housing projects under construction in central Seattle, will help moderate housing prices in the city and the greater Puget Sound region. This isn’t to argue that rents will come down dramatically or that the housing market will collapse, but there are limits to what the market can sustain, and I don’t think average people will simply accept housing costs they can’t afford.

      1. I thought what he meant is that anyone who makes less than $7,000/month won’t be able to affor rents in the entire Puget Sound region, and will have to move. This would mean moving several counties away (and presumably, if one doesn’t want a long commute, one would also have to try to find a job in the cheaper city or county.

      2. It’s not just people being unwilling to spend 50% of their incomes on rent, it’s that landlords won’t let them. Fairly recent units require 3X the rent in income to be eligible for a lease. And they also limit sharing. I had a smallish studio and when I wanted to live with somebody I had to move because the manager said the unit was too small for two people, never mind if they considered it large enough.

      3. Richard, I’ll concede that 33% of $7,000 is a more reasonable market rate rent, but I still disagree with your argument that average people will be priced out of the Sound Transit service area. Markets are dynamic. Average people will be unwilling or unable to pay rents they can’t afford. For some, that may mean moving outside of the service area. For others, it may mean accepting a more modest living space or leaving the Puget Sound region. Meanwhile, high prices encourage builders to add luxury housing, gradually relieving pressure from the low end of the market. Just as prices are constantly in flux, so are the market trends that drive them.

    2. It’s probably true that Seattle will never be a cheap city again, and it may well be true that it will not, in our lifetimes, ever be as “cheap” again as it is today. But this kind of cynical fatalism is worse than useless. Public policy can and will have a large impact on how costly the city will be in the future–we can make it relatively less costly and more affordable, and we can do so by pursuing policies that have many auxilliary benefits. The cause of pro-housing supply policies are clearly picking up steam. There’s no good reason to just give up.

      1. Yeah, unfortunately I can’t envision any scenario that gets rents back down to a meaningfully lower % of income here in the next 10-20 years.

        If job growth slows down we will see outside capital dry up, and that money is funding the vast majority of today’s MFH development. Those investors will move into the next hot market.

        All we can do is try to slow the rate of increase and bring it back closer to inflation.

      2. djw,

        The point is that the people coming have more money on average than the people already living in and around Seattle. Whether it’s because they’re tech geniuses, wealthy retirees from California, or Chinese investors, they have more money. The folks in the expensive SFH zones and the new arrivals will form a political bloc which resists taxation for low-income housing.

        Again, it’s not nice. But it is reality.

        Most of them with vote Democratic because they don’t like the bluenosed theocracy the Republicans want, but they will vote for Democrats who don’t want to tax them to pay for low-income housing. And, ipso facto the Democrats who will be elected to the City Council will be sure that those voters are made happy.

      3. The folks in the expensive SFH zones and the new arrivals will form a political bloc which resists taxation for low-income housing.

        Happily, this is not the only significant public policy lever we have for impacting just how expensive housing in Seattle becomes. “Encourage, rather than demonize new “luxury” development” is an important step, as is reforming single family zoning (which has strong plurality support, and nearly every mayoral candidate claimed to support). If you fixate on finding the revenue for public housing on an epic scale, it’s easy to be fatalistic, but that’s not the only tool we’ve got.

      4. So the great “majority-renter” utopia will not arise: the increase will consist of High Net Worth renters who will side with SF homeowners on housing affordability. That’s depressing. But at least they won’t be as strongly against upzoning SF areas, and that’s the biggest problem because of the gigantic distortion in the current situation: all the new residents have to squeeze into a third of the residential land while existing SF homeowners are grandfathered with their yards and no apartments on their block.

      5. The point is that the people coming have more money on average than the people already living in and around Seattle.

        Yet that has very little to do with the increase in rent. As I said up above ( that really isn’t the dynamic. Put it this way — why did the city bother to outlaw Apodments? No one wealthier than average wants to share a kitchen. The market would simply stop building those apartments for the peasants, and start building the luxury apartments that the city zoning code helps make much more profitable. Yet that isn’t the case. There are very few instances where density actually decreases. Instead it is a case where developers keep begging for more density, and then pretty much build every last unit they can.

        The folks in the expensive SFH zones and the new arrivals will form a political bloc which resists taxation for low-income housing.

        I seriously doubt it. I can’t think of any *city* that has gone through that transition. Wealthy suburbs, sure, but not a city. Rent in Manhattan and the Bay Area is extremely expensive, yet they are still liberal as all get out.

        The danger is the status quo, and wealth has little to do with it. There is the sense — and no offense, but comments like yours feed into it — that the zoning rules are not the problem. As long as people opposed to changing the zoning rules believe that changing them won’t help the poor and middle class, we will be stuck with really high rents. The city (as it has many times before) will pay a lot for income housing (because we are liberals). But we will buy less, and the middle class will struggle, because market rate housing is artificially held high.

      6. “The point is that the people coming have more money on average than the people already living in and around Seattle”

        “Yet that has very little to do with the increase in rent”

        But it does. They can only raise rents if there are enough high-income people to rent them. Part of the increase is greater competition for units, but part of it is because some tenants have higher salaries now and the landlords want that money. The people with the higher salary say “OK”, while the people with the unchanged salary say, “I can’t” or “It’s not worth it” or the landlord says “You’re not eligible” or “We want only upper-income people here.”

        If the people with higher salaries had unchanged salaries, then the first factor for the increase (more tenant competition) would be present but the second factor (higher salaries) would be absent. That would put a ceiling on what the pool of tenants would tolerate or can afford, and that would prevent rents from rising higher than that.

    3. The main reason rent is so high is because of zoning. The same is true for the other cities you mentioned (New York and the Bay Area). That is the basis of Matthew Yglesias’s book (The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think). Of course he looked at high end cities when doing his research.

      Besides, we aren’t like the cities you mentioned. No one has “discovered” Seattle. It is still the podunk, rain all the time city it always was. Oh, and now we have to deal with smoke — it is hard to imagine that making this city more desirable as global warming kicks in. If you can handle some smoke, just move to California, at least it is nice in the winter.

      Like California, there are places only a few miles out, where rent (and housing prices) are ridiculously high. I can see how someone would want to live in Ballard, for example, with its views, proximity to water, nice parks and great streets for walking. But Pinehurst? We don’t have any of that — we don’t even have sidewalks. Yet houses go for a fortune here, because they simply aren’t meeting the demand (there aren’t enough units).

      People haven’t “discovered Pinehurst” and said “Yes, that is the place I want to move to — goodbye Michigan”, What has happened here is simple — Amazon is booming. There are lots of jobs here, and folks are moving here for that reason. As long as employment is high, the demand will be high.

      But Amazon is only so big, and we (as a city) will only have so much demand (from Amazon or other companies). There is no reason why we can’t meet the demand, if we simply change the zoning rules. To do so would require changing the mindset of a populous that considers itself progressive. Because it is far too easy for progressives (and I consider myself one, just for the record) to assume that the source of the problem is “them”. They are the enemy. But to quote the great progressive Walt Kelly, “We have met the enemy and he is us.”

  5. “Even that outcome is bad.” Bad for productivity and congestion, yes. But, not having affluent people diluting the polity is good for those who professionally advocate for the not-that-affluent.

    1. Bad for productivity and congestion, yes.

      Also bad for the (kind of important) goal of not cooking the planet to a crisp.

  6. Confirming Martin’s post, consider that “newness” is an expensive trait in housing. Consider what the market would be like with different degrees of new supply; the less provided, the higher the prices will be. The housing market is very atomistic, with many actors on both the demand and supply sides. Over time, almost all of us shift through housing types and between renter and owner. There is plenty of competition.

    1. In the past there were a wide variety of housing types. Large-lot houses, small-lot houses, small inexpensive 4-8 unit apartment buildings, dingbats with an open parking space below, 2+ BR apartments for families, 1 BR and studio apartments for singles and couples, and at the very bottom SRO hotels with short-term leases. Zoning eliminated the SROs in the 70s, and last year micro-apartments under 250 sq ft which had ambiguous status were banned. 4-8 unit buildings are not allowed in single-family areas, and the setback and parking requirements in lowrise areas make them unfeasible, and they can’t compete with large-building developers near the arterials near transit.

      So in thirty years when 2017 buildings are as old as 1977 buildings are now, the prewar buildings will be “charming” and expensive, the postwar junk will be run down and gone, and the only thing else will be these 1990s+ breadboxes and a few townhouses, plus whatever future zoning allows. These newer buildings will come down in price but not necessarily to the level that 1970s apartments are now or were ten years ago. And if housing doesn’t keep up with the population increase (1 unit for every 8-12 jobs), then junkers will remain very expensive like they are in San Francisco.

  7. The world norm is for wealthier people to live closer to urban downtowns. The historical norm is also this. The central city disinvestment starting with WWII and continued through the 2000’s in the US. Since the the 2008 recession, a reversal has been in developing, correcting a bit more significantly in hot real estate markets. It’s happening in not only Seattle and San Francisco, but also to a lesser extent in places like Atlanta and Chicago.

    This is a bigger problem than just within the City of Seattle. It’s a regional marketplace problem. Actually, the City benefits from it as the average resident lives in more expensive housing and the City gets new employment space. That raises property taxes.

    The places where Seattle seems to be shortsighted are these:

    1. The City seems much more focused on uzoning than on vacant land. There are many sites that could be developed that today are unkempt weeds!

    2. The City seems to ignore the system requirements to house more people. The creation of more congestion by taking travel lanes and slowing traffic speeds creates safer streets, but adds travel time for not only drivers but also buses. This creates an even more powerful economic force in the marketplace to live closer to the hub. A 30-minute driving commute distance or a one-hour commute distance is rapidly shrinking. This makes centrality even more expensive!

    3. There is a missing dimension of time in the discussion. The dimension is in my mind more of a serious short-term issue than it is a long-term one. Waiting is not an option when rents are due once a month. Authors that say that the marketplace will ultimately fix things is missing the issue. It’s like saying that we will have enough food in 20 years when people need food today! That’s bluntly a capitalistic cop-out!

    What to change?

    1. Encourage the division of existing structures into two units more than the replacement of a current structure into two new ones.

    2. Prioritize developing vacant land. Make it easier and quicker to develop a vacant lot more than one where people are currently living. Today the latter seems to be easier.

    3. Define housing absorption requirements by districts but not small neighborhood areas. We have to create a new geographical unit that today has 40k to 80k, and not either a small area or citywide. Our planning system ignores this basic building block. Using this could actually benefit transit, as routes serve large districts and not just one or two stops. With a larger district, target absorption could be set and the discussion would shift from not on my block fear to what’s best for my district.

    4. Reprioritize well-built manufactured housing. Why are we building so many new units one stud at a time? Once a slab is laid with the right electrical, water and sewer, a new townhouse unit could be assembled in a few weeks if it was more pre-built. There are even methods to pre-manufacture good-quality higher-rise apartments. Our permitting process could be more favorable to modern manufactured techniques.

    5. Are there specific non-residential areas that could be repurposed for much more housing? We tend to think of areas as either suitable or not suitable for residential. However, non-residential areas are less and less noxious for potential residences. This is true for one-story warehouse buildings all over the southern half of Seattle. MLK south of Rainier Beach? First Avenue or Fourth Avenue south of the rail overpasses? West Marginal Way?

    6. There is nothing wrong with development fees if they apply to benefitting immediate areas and include non-residential buildings. My new ST3 taxes are paying extra for a tunnel in SLU so sone corporation doesn’t have to kick in extra for it! Higher property taxes increase rents too, and we seem to overlook how adding property taxes increase our housing costs. SLU owners will probably even get mitigation subsidies during construction!

    I don’t mean to step on the toes of long-believed values which add housing costs, but a reality check is needed.

    1. The reversal has reversed again ($) Richard Florida, a die-hard urbanist, says suburban growth has overtaken city growth again in the nationwide average. My previous comments on it. (Was it really only a week ago? Seems like longer.)

      1, 3, 4. Yes.

      2. There isn’t much vacant land. If you mean parking lots downtown and in Rainier Valley, one solution that has been suggested is a land tax. Right now taxes are very low if the land is underused and waiting for housing prices to reach a certain level. Raising it to where it would be if the land were built out would spur development.

      5. The industrial areas are the only space left. The city council is wary about rezoning them, as I am too, because developers will immediately outbid the companies and drive them out. Then we’d lose the benefits and resilience of a balanced and diverse economy, we wouldn’t have the local-manufacturing or agricultural space available if we need it in the future (e.g., if overseas shipping is cut off due to war or climate or oil prices), and the companies will have to move to the suburbs where it’s harder for workers to get to them or they’ll have to move out of Pugetopolis or close. Other cities that have done wholesale conversion of industrial districts had the industries completely gone already. Seattle is one of the few cities that still has viable productive industry and space for start-ups (as Starbucks and Costco were three decades ago). So we need to think carefully, and convert it a little bit at a time, starting with the spaces least viable for current and future industry. In the primary election somebody said the Port is using less of its land as business has gone down, and it will go down further when the Panama Canal is enlarged and larger ports on the east coast are built, so that may yield surplus land. But at the same time we don’t want to drive away Port business by taking land it could potentially use.

      South of Rainier Beach my Save Our Valley friend and I drove through a week ago, and he said several of the businesses were lost due to light rail construction, and have been replaced, and now I think there’s development offers happening although I’m uncertain about that.

      6. I’m not sure. Rents and condo prices follow the vacancy rate, not the tax rate. They’ve been accelerating faster than tax increases for for over a decade. We could add linkage fees and rents probably wouldn’t budge, it would just depress the land value for the owner. As if that’s going to change the project from “obscenely profitable” to less than ‘astoundingly profitable”. However, developers and owners aren’t the problem. The reason for the housing shortage and escalating rents is wildly-excessive zoning restrictions. The Deep-Bore Tunnel was decided before Amazon began its expansion in SLU: it was a replacement for an existing highway so that North Seattle drivers could get to the airport without going through I-5 traffic.

  8. “With that in mind, there are only 2 solutions to stem the tide of gentrification. The first solution is widespread liberalization of zoning. This is particularly needed in already desirable locations where incumbent residents have effectively depopulated their neighborhoods over several decades. The only other solution is to eradicate rich people altogether …”

    From the Market Urbanism blog, It sounds like some people think that just building will solve all the problems, a position I have seen elsewhere from folks who call themselves YIMBYs. The pro-housing side has some mindless folks, as well as the anti-housing folks. .

    I’m pro-housing, not anti-housing. But, no, just building luxury housing will not solve all the problems. Mike Orr is on target, if housing can come into the market at various price levels, then they can start to filter at various levels.

    1. I think you’re arguing against a straw man. Nobody is suggesting that “just building luxury housing will not solve all the problems.” What we are suggesting is that building luxury housing, at least where the total unit count on that land goes up, is better than not building it. If you build five new fancy apartments for people who can afford them, that’s five fewer families with average incomes in less-fancy apartments who have to leave town to make room for those with higher incomes because there aren’t enough apartments for everyone.

      The market can’t solve all our problems. At the bottom end of the income scale there will always be a need for subsidized housing. That being said, there aren’t enough subsidized units for more than a small fraction of the population. The vast majority of us have to find our housing on the private market. That will still be the case even if we double funding for subsidized housing. For that reason we can’t simply dismiss the private market as irrelevant. Whatever we can do to remove unnecessary barriers to market-rate housing production seems like a good thing overall.

      The goal should be to get to a state of abundant housing, where there’s enough for everyone and nobody has to leave just because someone with more money came to town. We can’t get there if we continue to place severe limits on the amount of housing that can be built on most of the land in the city.

      1. And I of course meant to remove the word “not” from the quoted section so that it would instead read:

        Nobody is suggesting that “just building luxury housing will solve all the problems.”

        An edit button would be nice.

    2. What Eric said (or what he meant to say). That really is a straw man argument, and a common one. So common that Mike addressed it, in this article:

      “market urbanists” do not refer to people that believe that all housing problems can be addressed through the free market.

      No one is suggesting that a change in zoning will solve the housing problems of this (or any other city). What we are saying is that it will make the situation better. You will still need housing levies.

      A good analogy is food prices. A relatively free market has enabled the U. S. (and other counties) to produce food at a relatively cheap price. But not cheap enough for everyone, so we have food stamps. But if public policy was forcing wheat to prices so high that a Wonder Bread loaf cost $20, then it wouldn’t be good for the populace as a whole, nor the food stamp recipients. We need both cheaper market rate housing as well as subsidies, and the best way to get cheaper market rate housing is to liberalize the zoning code.

  9. “Affluent residents build the tax base to fund the city’s progressive dreams.”

    Especially after Citizens United, people rich beyond affluent to obscene can bribe legislators to enact any kind of dreams they feel like. Any ideas, Martin about where else the rest of us can reliably fund our own dreams? Just in case people you’re referring to see a scary movie before bedtime?

    Meantime, I’ve got a good measure as to dream content of the ruling class. When they take the loud, public, and well-financed lead in a nationwide political campaign to bring back a strong, capable, and clean labor union movement. While finally and firmly contradicting these last three decades’ least examined falsehood:

    That the skilled manufacturing economy that let today’s students’ grandparents afford both a home and the college tuition that puts their present grandchildren in debt for life…is irreparably gone forever. Gimme a quote, Martin, and name somebody of any income bracket dreaming like this:

    That a thousand who used to be human machine components ’til it killed them, can now design and CNC (Computer Numeric Control) a home-affording number of components, from jet aircraft parts to works of art. Since these are non flying toy models …with today’s early computer career start, middle school. Third model, aircraft part? Sixth grade. Cost of 3D printers now approaching office machines.

    Too bad the Dreamers who grew up learning and passing along the skills that made so much housing Affordable couldn’t Afford to live their last days thre. New Nordic Heritage Museum on Market Street might pass along a saga or two. But truly, mdnative, wouldn’t move back to Ballard now. Waking nightmares worst kind of all.

    Mark Dublin

  10. I’m on the market urbanist side of these issues, but two recent anecdotes have stretched my ability to stay there. The first was a good friend who recently sold his Anhalt 2-BR condo in Capitol Hill. It’s everything an urbanist should desire, walkable and classic. It was too expensive for working people at over $600,000, and it lacked the amenities richer people want (parking, in-unit laundry, fiber). So even in this hot market he got exactly one offer, which he accepted, from a Bellevue couple who wanted an occasional space to sleep when they go out partying or to the theatre in the city.

    Second, I was chatting with an Insignia resident and was asking why he bought the place. He said, “I’m from Dallas and my daughter lives a few blocks away in Capitol Hill. I decided I was tired of looking for hotels when I visit her 3-4 times per year, so I just bought the place figuring it’d be a good investment.”

    I’m hoping these are exceptions rather than rules, but if the market gets so overheated that new units become second properties for the wealthy rather than primary residences, then new units aren’t necessarily freeing up space or taking away competitive pressure from lower-priced units to create ‘natural affordability’.

    1. I think these anecdotes are completely aligned with market urbanism and are not “exceptions.”

      Both of these anecdotes seem to driven by factors that would happen with or without production of so-called luxury housing, especially with the second one with its discussion of investment. These investors, according to market urbanism, would still be in the market anyway, so there would still be that competitive pressure on older units. In fact, a market urbanist might argue that there would be even more investors, because investors know that there won’t be any new supply of units being built to drive down prices.

      To me, this gets to our incoherent approach to housing policy where we simultaneously want housing units to be an investment (be stable or better yet therefore appreciate) and also be affordable (be stable or better yet get cheaper). Those are mutually exclusive goals.

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