Microsoft Köln, RheinauArtOffice, Rheinauhafen Köln-3603

Before (lightly) criticizing Microsoft’s specific choices, it is important to say that their investment in local affordable housing is generous, one that their investors would probably not prefer, and that we are fortunate that that a global company is directing a disproportionate amount of its surplus to its home county.

With a total $750m commitment to the cause, the latest $65m allocation includes

$40 million into a fund operated by Urban Housing Ventures, a privately funded company focused on creating affordable apartments. UHV will use the funds to reduce the rent for 40% of units in three apartment buildings to middle-income levels.

UHV says the novel model allows investors such as itself to purchase apartment buildings and then lower the rents on some of the units without losing financial viability. The reduced rent allows buildings to operate at lower vacancy and turnover rates, offsetting some of the costs of converting the units, according to UHV.

Monica Nickelsburg, Geekwire

Obviously, someone is going to live in these subsidized units and greatly appreciate the opportunity. But that public good is going to be partially offset by removing those units from the market-rate supply, putting upward pressure on those rents and aggravating costs for everyone not in the affordable housing system.

This is still a positive development: in effect, there is a transfer of wealth from some people who can afford higher rents, and Microsoft, to people who can’t. But spending that $40m to actually add to overall housing supply (which, to be clear, Microsoft is also doing at massive scale) would have fewer downsides.

In a blog post on the subject, Microsoft’s Jane Bloom argued that building new housing “takes years to accomplish and doesn’t address the region’s immediate shortage.” The real villain here is, of course, process delays that make it clear that local governments don’t actually consider affordability to be an emergency.

53 Replies to “To solve the housing crisis, build more housing”

  1. Good post, Martin. But villain-wise, the coveted Snidely Whiplash Award goes to fifty years of bi-partisan consensus that for the working majority of our people, lifelong debt should be as good a deal as wages.

    Exactly like public transportation, the way to make housing affordable is to educate, train and hire us, at wages that’ll let us AFFORD living quarters worthy of the name “Home.” Source of ($)?

    When we finally get vaccines that’ll let us work and live to tell about it, I seriously doubt our country will persist in being too DIVIDED (Media’s mantra, not mine) to come together politically on the same order of Recovery that cured the Crash of ’29.

    This swiftly-approaching winter, however, could mean that luck is with us for some short-term disaster relief. From what I can see, across the spectrum of Extremism right now, armed violence would rather bully and intimidate than fight.

    Freeing up the National Guard to treat my neighbors’ involuntary tent-camps down by Capitol Lake the same as if an earthquake was the culprit. Bring in building materials, and assemble the residents to be trained to build themselves places to live.

    Since the [TOPIC] here is houses and not streetcars, I wonder if some vacated Boeing aircraft shops can also Employ us to build mobile homes instead. At wages that’ll let us AFFORD to buy cash-down what we make.

    As well as the trade school education that’ll make OUR late-life care affordable to our kids.

    Mark Dublin

    1. Mark,

      There might be another way instead of trailers or mobile homes. There are companies that build modular homes in a factory & then assemble them on site & you’ll never know they’re modular. one such company is http://www.westchestermodularhomes.com located outside NYC.

      Although these are on the luxury side, it’s the idea that counts.

      1. Thanks, Sean. Once again, I’m dating myself into lifetime Cancelation.

        https://en.wikipedia.org/wiki/Airstream

        The 24′ Airstream we had was a dream to own, sleep in, and pull, all three. Your car’s steering wheel gave you perfect control of it on the road.

        But for mobile home design, and also highway buses, here’s a salient I’d really like to see the industry set out on:

        The NON-LUXURY Rebellion! Restoring the right to quality at prices a skilled and well-motivated worker can afford.

        Luxury’s got same character-flaw as Dominance: the attention you should be putting into your design and performance, you’re wasting on what other people think about you.

        Making you into the exact kind of sucker that P.T. Barnum said was born one-a-minute. Being Americans, we’re better than that.

        Mark Dublin

        Mark Dublin

  2. Any TOD happening near their Link station? Any upcoming upzoning?

    I know the brand new parking structure is already crumbling; and there’s a pedestrian bridge connecting Microsoft offices. But I wish there was a bit more housing going on, like at the Spring district station.

    1. There’s gobs of new apartments built and more in the pipe from the old Group Health campus all the way up to Crossroads. The old Sears site on 148th is slated for new apartments. I wouldn’t be surprised to see Kroger cash in and sell the Fred Meyer site across the street. Maybe with a QFC on the ground floor.

      1. That’s great, but it’s near the Overlake station, I am asking about the next stop. Microsoft owns a lot of land in that area

      2. If this is a passive-aggressive way to ask if Msft it using its own land for housing development like Google & Facebook are in Silicon Valley, the answer is no. Msft’s campus redevelopment plan should add ~1MM sq ft of office space and orient the campus towards the Link station rather than away from 520 as it is now, but I do not believe there are any plans for housing or even a hotel.

        If you are looking for something north of the big Esterra Park project which is immediately adjacent to Msft’s campus, I’d point you to the proposed redevelopment of the Avalon Eaves Redmond Campus. Last I saw was a plan to replace some of the 2-story garden apartments with two 7-story apartments with underground parking, for a 4x increase in housing density (217 units replacing 48). Similar redevelopment of the remaining Eaves campus and the other apartment complexes north of Msft should deliver similar increases in housing.

        The apartments west of Msft (west of 148th) are in Bellevue and I don’t think they are zoned to allow for such a large increase in density, so I would wager those will remain as-is; an upzone there would be great but that land is outside of either Bellevue or Redmond’s growth areas so might not happen for awhile.

        https://www.redmond.gov/DocumentCenter/View/9581/09-05-19-Design-Review-Board-Agenda-Item-Avalon-Redmond-Campus-Staff-Memo-PDF

    2. There are a large number of apartment buildings going up around the future Redmond Tech Station, actually. Plus more just around the corner, around future Overlake Village Station. I’m not sure how retail there will be.

      1. AJ writes:

        “I’d point you to the proposed redevelopment of the Avalon Eaves Redmond Campus. Last I saw was a plan to replace some of the 2-story garden apartments with two 7-story apartments with underground parking, for a 4x increase in housing density (217 units replacing 48). Similar redevelopment of the remaining Eaves campus and the other apartment complexes north of Msft should deliver similar increases in housing.”

        This development proves the point I am trying to make about AFFORDABLE housing. Does anyone really think the new 217 units with underground parking in a seven story building with all new appliances and an elevator will be more affordable than the existing units? No, of course not. Although the total number of units will increase from 48 to 217, the actual number of “affordable” units — for this area — will go from 48 to 0. My guess is not one existing tenant will be able to afford to live in one of the new units.

        When a city upzones property it incentivizes new construction to take advantage of that upzoning. If this property had not been upzoned it really wouldn’t have been profitable for a developer to replace the older, existing units with new units. Whenever you have an upzone, and there is no vacant land available, of course developers seek to develop the oldest and least expensive existing development because that property is cheaper to buy and tear down, and new construction is always the least affordable.

        [I also find it interesting that Bellevue and Redmond are not relaxing their parking requirements for these new developments (the Hines development will have 1500 onsite stalls), which tells me they don’t think these new high end owners/tenants in the new units will take transit].

        Of course builders and developers want upzones, and want to upzone the older and least properties. The mantra that you can solve the affordable housing issue by just building more units plays directly into their desires, except what you are really doing is destroying existing affordable housing.

        Some have argued that in 20 years these new units will be — relatively — affordable, and I suppose that will be true unless there is another upzone, but I find it ironic that those posting that on this blog are being forced to live farther and farther south, where existing affordable housing still exists, for now.

        We are not building affordable housing, we are destroying it, which is fine if you understand and agree with that strategy.

      2. A 4x increase in housing helps create more chairs: https://www.sightline.org/2018/03/14/infographic-the-mean-musical-chairs-of-rising-rent-and-home-prices/

        “If this property had not been upzoned it really wouldn’t have been profitable for a developer to replace the older, existing units with new units.” No. Given this location, a developer would just renovate the property to create 48 units of luxury housing. 217 units, luxury or not, is a better outcome.

        The high parking requirements in Bellevue are very unfortunate. I recall that Amazon is asking to build less than required, which suggests the tenant is more forward looking than the city.

      1. DT Redmond has been almost totally transformed but keep in mind that DT Bellevue has a skyline, Redmond doesn’t. Bellevue added a bunch of true high rise towers that are condos or a mix of office/residential right before the crash in 2008. It took many years for those units to sell and some projects were reborn after the recovery. If the economy continues to prosper the Bel-Red and Wilburton areas will dwarf what’s now DT Redmond. Redmond is close to being built out (except for the industrial area west of the slough) and other than the MS campus it’s not much of a jobs center.

      2. I wouldn’t call Redmond ‘built out.’ I’d say downtown Redmond is only halfway through redevelopment and SE Redmond has almost no redevelopment today; both of those neighborhoods should be uniformly 4~7 stories once ‘built out’. For Overlake, most of the major parcels have specific plans but are still being realized.

        But yes, Redmond will have less people and certainly less jobs than Overlake or Bellevue. Redmond’s recent comp plan has DT Redmond at ~10K jobs and not quiet growing to 15K, while Overlake has ~25K and growing to ~40K. So at 10K jobs, DT Redmond is comparable to Northgate (when the mall was open) or downtown Everett, but clearly a fraction of a major jobs center like U District/Bellevue/Tacoma, let alone Seattle’s downtown.

        Page 70 was a handy reference to put the various job centers to scale:
        https://www.psrc.org/sites/default/files/centers_monitoring.pdf

  3. public good is going to be partially offset by removing those units from the market-rate supply, putting upward pressure on those rents

    But the number of units removed is offset by a reduced demand. If people move into a nicer place than they were previously occupying then any increased rent cost for higher end housing is matched by a reduced demand and lower rent at the more affordable end of the scale.

    Of course reducing rent to “middle income level” means a handout to those with a median household income of $95k for King County. Back of the napkin says that equates to a subsidized rent of $2,500/mo.

    1. But the point is, it doesn’t actually change anything in the short run. If you don’t win the lottery, your life is just the same. There are the same number of available units. You are still competing with the same number of people, except that the average wealth of those people has increased.

      In certain environments, I could see how that could increase apartment development. The average wealth of those looking for apartments have increased, so building apartments would be more attractive than ever. There could be marginal property that isn’t worth developing, but now would be.

      I doubt that would be the case, though. The big thing that is lacking is available land. Most new apartments rent out just fine. We are nowhere near the point where development has stopped because rent is too low. There just isn’t enough land to develop.

      This is a generous offer, and it will make lives better for plenty of people. But it won’t dramatically change housing in the region — not without a lot more supply, or a lot less demand.

  4. Twelve years ago, our economy went hurtling pedal-down toward toward the Crash named “2008”, with a WAMU loan officer a the wheel yelling “Woo Hoo!” and triumphantly waving Liar Loan papers.

    Can anybody help me the name of the respected Seattle financial commentator who gave the disease its proper description: “The metric of our economy has become the minute-to-minute price of a house!”

    Talk about total lack of class. At least previous panics gave left us things a either a gold earring or a tulip bulb in return for our life-savings. So help me out, my fellow transiteers, LRT, BRT, and B-I-K-E alike.

    The next time that Fare Inspector has to remind me how much trouble my ORCA-tapsent-mindedness is causing that poor Private Corporation(tm)….could I please be daydreaming about speed, streetcars and scenery instead of house-prices?

    Mark Dublin

  5. Nice post.
    Let’s ask our transit agencies to help. Any ST2 or ST3 commuter parking not constructed could be zeroed out; the land could be used for apartments next to frequent transit; the funding could be used for transit service frequency. Some ST2 parking is already committed (e.g., South Bellevue, Redmond Technology Center). Some might be changed if the ST Board acted quickly (e.g., Shoreline north and south, 130th Avenue NE in Bel-Red). All the ST3 parking could be reset. Seattle and King County have been slow at Northgate. King County will consider the Shoreline Park-and-Ride. King County is considering zoning changes in Skyway.

  6. I’m still not sold on the “public good” here. It is clearly a private good for individuals lucky enough to love there under subsidized rent. But, what’s the benefit for others with similar incomes who don’t win the housing lottery? For them, it’s arguably a negative because, by decreasing the amount of market rate housing, it contributes to higher prices for everyone else.

    1. asdf2, to my mind, the chief determinant of The Public Good, Housing included, is to see to it that everybody physically, mentally, and educationally Able can Earn the Income that’ll give them the Authority to finally make a Market truly Free.

      If radical animal lovers can brush up on their genetics, incidentally Market-forces can be Liberated to cleanse human diets when cows, pigs, sheep and chickens can be bred to fanged savagery that’ll also bring an end to human overpopulation. Rendering every bistro-car completely vegetarian.

      [TOPICALITY maybe shaky]. But a few STB presentations back, mezzanines in the same picture as trains turned loose enough fury to take a chance as follows.

      https://en.wikipedia.org/wiki/Paolo_Soleri

      In 1970, this man created “Arcosanti”, an “arcology” that was in fact a major city on pillars like the legs of a spider. Forget whether or not it could walk. Though the Venetians did presage him with canal-bridges that were also commercial city blocks, if not whole neighborhoods.

      So if we can forgive its buildings for being on a mezzanine, and if the structure containing it is big enough, the spider-legs supporting all that housing could also board and de-board a lot of Transit passengers who are also station residents.

      Seattle Times columnist I referenced? Whatever the decade, who could it be but “Woo Hoo!” whistle-blower John Talton?

      Mark Dublin

    2. It’s a step in the right direction. We should do this and a lot more. This may catalyze more, as subsidized housing becomes more common and accepted and corporations support it. We mustn’t let the perfect be the enemy of the good. Helping a few people is better than helping nobody. But the goal needs to be housing for everybody that they can afford.

    3. asdf raises an important issue about how narrow and deep the subsidy is on a housing. housing is clearly a private good consumed by individual households. he asks: is it also a public good? Martin used the term affordable. that should be distinct from low income housing. low income housing is sometimes public housing or sometimes provided by non-profits. sometimes the subsidy is tied to the unit rather than the household. sometimes housing is tied to services. subsidy tied to the household can be vouchers or certificates. in our market economy, all increases in housing supply can help as they shift the supply curve out and rents are lower than they would be otherwise.

  7. Building housing is not something that can just be willed. There are many factors including site acquisition, zoning, site plan review, financing, length of time to build and so on. Throwing money at it is not the only solution. Time is a big factor, as the article notes.

    I really wish to topic was more action-driven:

    – Add accessory units quickly. (Seattle has pre-approved designs available.)
    – inspect construction and issue permits faster.
    – Expedite design reviews of low-income or any residential buildings.
    – Tax vacant land at a higher rate.
    – Promote elements of faster and less-expensive off-site housing pre-construction.

    I’m sure there are many more.

      1. Rezoning is just about as vague as affordable housing is. There are many sub-issues. For example, allowing ADUs is not rezoning per se but it is changing zoning definitions to promote density.

        Many places around American keep zoning very tight, so any apartment proposal has to go through a rezoning. In contrast, Seattle seems to offer instead hundreds of acres at denser zoning — but the site design review process is where the system gets bogged down in restrictions . The amount of new projects just beginning near Judkins Park alone demonstrates how it’s taken years for the market to catch up with the zoning. So rezoning is much less of a restrictive issue here.

        A housing shortage is like most other shortages. It is a moment in time. For example, if Boeing goes through with big job reductions and another company isn’t poised to reemploy those people, we could have a regional oversupply if housing in only a few years. If Amazon left, we’d have no housing shortage.

      2. Rezoning is vague, but the assumption is that you are upzoning — you are allowing more units in a give space (i. e. density) than was allowed before. In that regard, allowing more ADUs definitely falls into that category.

        I see your point, though, the devil is often in the details. You can legalize ADUs, but have a bunch of very expensive limitations, and very few will be built. The point is, changing the zoning rules can improve things substantially. Personally, I think Portland, Oregon has the right idea, and cities around the Northwest should just follow their lead.

        There are other regulations that make it difficult. For example design reviews can greatly increase the cost of development.

        Financing is another issue. Companies sometimes have financing problems, which stall projects. Government financing — or construction — is an alternative. There are a bunch of things that the government can do, but it starts by admitting there is a supply problem, and that we need more housing.

        There is a strange, anti-development ethos in the region. It is pretty common to hear people complain about developers, as if they are telemarketers, or Wall Street gamblers. I think it born from a mix of nostalgia and misplaced environmentalism. Without a doubt a greenfield development is bad for the environment. But replacing a house in the middle of the city with a dozen apartments is the opposite. At worse it is ugly — but beauty is in the eye of the beholder.

        Developers build homes. We need more homes — it makes sense to work with them to build them.

      3. Yeah I would include more liberal ADU regulations under the umbrella of ‘up-zoning.’ In neighborhoods not well served by transit, better ADU regulations is just as important as trying to upzone for rowhouses or whatnot. For example, Kirkland recently allowing 2 ADUs per lot was a solid upzone for a neighborhood like Finn Hill.

        I would add anti-capitalism and a general aversion to white-collar profit making to the mix of why the PNW and other lefty cities oppose developers. Some people think developers should make zero economic profit because they don’t understand / reject the idea the ‘bearing risk’ is an important part of the development process.

    1. Eliminating zoning is the biggest hurdle and not something that takes time/money (except that it is political suicide for career politicians).

      1. It depends on the area. In Seattle, politicians are way too afraid. They see people with signs and making a ruckus at the meetings, and think that represents the general populous. However, once they actually vote, those type of candidates rarely win.

        I don’t think there was a big political price paid for the city council members in either Portland or Minneapolis when the made radical changes to the zoning laws.

      2. Portland and Minneapolis should be celebrated, but I would also point to cities like San Diego where the mayor is explicitly pro-development and pro-towers.

      3. I don’t see a general call to generally eliminate zoning. That would indeed be political suicide.

        I think that the arcane zoning rules of having only one legal kitchen and one keyed entry per single-family lot could be revisited without much political cost. Such overly restrictive rules stemmed from a reaction to court rulings that threw out race-based zoning and have less and less relevance as fewer and fewer households have large numbers of children and more people are needing to house extended families, resident caregivers or AirBNB guests. In fact, many newly-constructed upper-class homes have two kitchens and separated accessory units where allowed elsewhere. Look at videos of $2M+ new homes in Las Vegas and you will see that almost every one has a separate accessory unit on the premises.

      1. San Diego had a population of 1.43 million in 2018. Bellevue just increased its height limit 140′, above the existing height limit of 137 feet. https://en.wikipedia.org/wiki/List_of_tallest_buildings_in_Bellevue,_Washington#:~:text=Tallest%20completed%20buildings%20%20%20%20Rank%20,%20%202017%20%2010%20more%20rows%20

        Considering the area in San Diego is along the the highway and next to a sports arena I would agree a 30′ height limit, or three stories, seems low.

      2. San Diego height limits are uniquely affected by having airports close to Downtown. When I’ve flown into San Diego, I first am a grateful that the plane wing didn’t hit a building — then find myself pushing my foot on an imaginary brake to help the plane come to a stop!

      3. Most local cities I am aware of allow ADU’s. The real issues with ADU’s are:

        1. Whether to allow greater house to lot area ratios for an ADU so the ADU does not count against the maximum GFA to lot area ratio allowed for the house/garage. Generally in expensive areas each sf in the main residence is worth much more than in an ADU.

        2. Whether to require the property owner to live in the main residence or ADU if renting out one of them. This prevents the property from become an absentee rental property, which changes a single family neighborhood’s character.

        3. Minimum/maximum size. If affordable housing is the goal you want smaller ADU’s. If you are the master builders assoc. and mainly just want to allow two houses on one lot then you want bigger GFA limits.

        4. Number of tenants allowed in the ADU per sf.

        5. Whether offsite parking is required, which usually has to do whether transit is available (none on Mercer Island), and whether onsite parking must be covered, a big issue in suburban cities and neighborhoods.

        6. Rental rules, such as whether criminal background checks are allowed, and whether the property owner has to accept the first application. Owners of ADU’s who live right next door are very, very picky about whom they rent to. School teachers yes, homeless no. Seattle especially has onerous landlord/tenant regulations which incentivize owners to not build an ADU.

        7. Whether an ADU can be outside the allowed footprint or within yard setbacks, and whether it counts against maximum impervious surface limits.

        8. Whether an ADU can have the same height limits as the main house.

        9. Whether an ADU/DADU can be used as an Airbnb. On Mercer Island minimum rental periods are 30 days, although many still rent on Airbnb although the city is set to enforce this rule. Seattle also limits Airbnb’s to two per owner since they remove long term rental housing from the market.

        There isn’t a legal option to relax or exempt ADU’s from building codes that apply to houses, and those codes get tougher every year, especially new green building standards.

        Although model cities like Mercer Island require very little permitting for an ADU, an ADU still has to go through all the building permitting for any structure someone will live in, like electrical, plumbing, heating, insulation, fire codes, disabled access, and so on. Just about impossible to build a brand new DADU 500 sf or so for less than $1000 sf because building a small house is not profitable for builders, especially if the appliances and finishing’s are low end.

        Finally an ADU costs more in utilities and insurance. Most cities charge water and sewer rates based on water line diameter, and adding an ADU requires the larger lines and usually doubles the monthly fee, even if the ADU is not being used. Rental liability and fire insurance is also high because it is a rental. If you are in Seattle (or under an eviction moratorium) it can be very, very difficult to evict an abusive or non-paying tenant.

        On Mercer Island at least ADU’s and DADU’s are quite expensive, at least $2000/month for a small unit. ADU size is limited from 220 sf to 900 sf.

        ADU’s and DADU’s depend on the neighborhood. Although Mercer Island is considered to have a model ADU program, and does not require onsite parking or a separate permit for an ADU, and grants some smaller lots additional GFAR (gross floor area to lot area ratio) for an ADU there are only 238 ADU/DADU’s out of 7000 or so residential lots, most with very large lot area minimums — 8400 sf to 15,000 sf on Mercer Island.

        Builders don’t like building ADU’s, most families on Mercer Island don’t want someone renting next to them, they don’t need the additional rental income, they prefer the extra yard area to a DADU, and the houses are large enough to incorporate a separate living area for a relative or nanny within the main house without formally creating an ADU/DADU.

        A house on MI can have more than one kitchen. Very few builders on Mercer Island building a house on spec will include a DADU or ADU because of the extra cost, and they can be more of a negative than positive when selling. Ironically it turned out as many ADU’s are remodeled out of existence as created as older houses with ADU’s are replaced with new, larger houses without.

        The key for DADU’s is areas where property owners need the rental income to afford to live there, except in Seattle where the owner does not have to live onsite it has created an absentee landlord situation and professional landlord trusts. The rub however is the upfront cost to build and permit an ADU or DADU, compared to just renting out a room in the house.

      4. @Al S.
        “San Diego height limits are uniquely affected by having airports close to Downtown.”

        That is indeed the case, SD’s Stadium District being no exception.

        Your comment made me chuckle. My spouse and I typically go down to SD once or twice a year for vacations and I’ve had those same reactions flying into SD Intl. On two occasions in recent years we’ve been put into “go-arounds” while attempting to land there, which is a maneuver that will certainly get one’s pulse rate up. (In both instances the pilots simply came in going too fast.) On other landings, I too have been hitting that imaginary brake pedal. :)

  8. Here is a pretty ‘granular” report on apartment rent and vacancy in the region from 2019. http://www.dylansimon.com/wp-content/uploads/2019/10/2019-Rent-and-Vacancy-Market-Study-Dylan-Simon.pdf During 2020 there has been a decline in rents for high end urban apartments, but pretty stable rents and vacancies in mid to low end apartments.

    In 2019 and 2020 there was very modest population growth in the King Co. region, and yet sale prices — especially for single family homes — has skyrocketed, and increased even more during the pandemic. Meanwhile high end urban rents have declined. So what’s going on?

    Four reasons given for this are: 1. Millennials renting in urban areas have aged and are ready for a family and single family house, and the pandemic accelerated that along with historic low interest rates; 2. increased crime and lack of retail/street vibrancy in urban areas have encouraged those who can afford to to locate somewhere else (after all, density without any street vibrancy and unsafe streets is pretty much just density, the first half of Urbanism); 3. an overbuilt apartment market in part due to warranties on new condo construction that were modified in 2019; and 4. working from home has resulted in a desire for more space, and workers no longer need to be near transit or urban work offices if they won’t have to commute.

    Some could be due to the economic effects of the pandemic on high end renters, but that would not explain the steep increases in sales prices for single family homes. What we are seeing is more of a shift in housing desires.

    Personally I can’t explain the extreme price increases in single family homes during the pandemic. Where are the buyers getting the money? For example, my brother– in– law bought a fixer upper across from the locks in Magnolia seven years ago that at the time I (as a cosigner on the loan) thought was overpriced, but got tired of the crime and homelessness, and sold it last week in three days after a bidding war for twice what he paid for it and no inspection clause. IMO the price paid just did not make sense to me (although I was happy for him). But when I see the prices being paid on the eastside they are even harder to justify. Why such an extreme increase in prices during a pandemic when population has grown very little over the last 2 years?

    What I find a little disingenuous and somewhat ironic about the affordable housing plans is Metro just shifted transit service to south Seattle because it is a disadvantaged community that needs better transit, but most of the calls for upzoning and greater density are for expensive white residential neighborhoods.

    Not surprisingly ARCH will tell you the two most important factors for affordable housing are: 1. the cost of the underlying land; and 2. the cost of construction. Obviously the location for greater density to create more affordable housing is south Seattle and the Rainier Valley, which could really use the economic stimulus from development, except white progressive urbanists don’t want to live in the Rainier Valley. Plus unlike areas like Sammamish or Mercer Island the Rainier Valley and south Seattle have good transit, better than areas in the north now.

    They want to live in the wealthy white residential neighborhoods, with some greater retail vibrancy. Think Capitol Hill meets Issaquah. The progressive white Urbanists would rather move to outlying areas like Olympia than live in the Rainier Valley because of safety, especially for women, but would never admit that, and the number one, two and three requirements for Urbanism are safe streets, although I am not sure Urbanists understand that.

    A great rub for affordable housing is often land prices are low where the streets are less safe.

    If a small, fairly new DADU costs $600k in Seattle do you really think anything in the Spring District will be under $1 million if not subsidized? The land is expensive, the region is expensive, surrounding units are expensive, and the new construction will be high end and expensive, and some think East Link will be the bees knees. It won’t be “affordable”. The more units that are built in Bellevue the less affordable they become, and the more existing, older, more affordable multi-family housing is replaced with new, unaffordable development.

    I can understand the point of TOD, even if it is just to try and support the costs of ST, and the pandemic and working from home don’t eliminate the need or desire to live in TOD. At least there is transit to complement the “affordable housing” in TOD, although nothing about East Link is about affordable housing (and Bellevue’s onsite parking requirements are not buying the charade that wealthy residents will give up their cars because there is a train). But if the area is expensive, and the older surrounding rental units are not affordable, neither will brand new construction in a TOD.

    I have always thought Seattle’s residential neighborhoods were Seattle’s crown jewel. I wasn’t surprised that no one on this blog commented that if they could live in any neighborhood they would live in downtown Seattle, even though one would think downtown Seattle would/should be the hub for Urban living, like downtown San Francisco.

    The fact Urbanists are so intent are upzoning wealthy white residential neighborhoods (because 96% of Urbanists are white) and not downtown Seattle or South Seattle/Rainier Valley makes me wonder what the real goals of Urbanism and upzoning are, which for the Master Builder’s Assoc. is to buy single family houses in expensive residential areas and upzone them, and for Urbanists
    is to afford to live in an unaffordable neighborhood, because unaffordable neighborhoods are unaffordable for a reason, except the residents don’t want the density because there is no benefit to the existing residents from density or affordable housing. Rich people have political juice, don’t read Urbanism and transit blogs, and when it comes to their homes and neighborhoods will fight.

    Let me know when nonsubsidized rental and housing prices in this region begin to fall. Or just stay where they are, which is in the atmosphere.

    1. I can’t explain the extreme price increases in single family homes during the pandemic.

      Number one is the artificially low interest rates. Why not lock in 3% money on an investment that’s sky rocketing. If you’re trading rent for a mortgage payment you’re building equity and likely move into being able to itemize on your income tax.

      Two is a record high stock market which has many people flush with cash that they’d like to turn into hard assets.

      I think what’s really accelerated the price increase is shrinking inventory. Prices have been on a steady climb in King County for several years. This has prompted most people who were thinking about selling, doing so. And now with Covid people don’t really want to be moving out of their home or have a stream of real estate agents bringing in a bunch of people. I think inventory in Pierce, King and Snohomish counties is at around a 3 week supply. But it’s actually much tighter than that because the houses that are staying on the market for more than a couple of weeks are either very expensive luxury homes (like water front) or they are in such bad shape they aren’t move in ready but still priced as if they are hoping to rope in a desperate buyer.

      1. The market is also surprisingly tiny. Not many people are selling there homes. I think the pandemic has a lot do do with this. There are plenty of people who are interested in “cashing out”. They intend to sell their house (which is paid off) and move to either an apartment, or a house in the cheaper town or city (like Mount Vernon, Bellingham, or Sequim). Interest rates are low, so there are lots of new potential buyers — this would be a great time to sell …

        If there wasn’t a pandemic. Folks just don’t want to deal with it. Too much risk, and too much hassle.

        All of these things combine to make houses a lot more expensive. Maybe your ideal is to buy a condo in Belltown, and enjoy the great restaurants, clubs and nightlife there. Well, the restaurants and clubs are closed, and there ain’t no nightlife. Even just normal urban apartment life is gone. I used to frequent a bar that is on the first floor of an apartment building. A lot of the folks who live in the apartment would come down, and watch a game. Those days are gone. There is a grocery store across the street — very convenient. Now everyone just orders their food. The apartment is right on a major bus line — that everyone is afraid to use. All of the nice things that made urban apartment living enjoyable are gone. Might as well hunker down in a roomier place.

        All of these things are happening at once. Houses are more attractive, interest rates are low, people are reluctant to sell their houses, and yes, there has been an influx of relatively wealthy and/or high income people into the area.

        It will be interesting to see what happens in the future. It is possible there will be a housing crash, but I doubt it.

    2. Software developer salaries have exploded in recent years. It’s not uncommon for a developer right out of college to be making $250k/year or even more. If they’re not straight out of school, they might have been making that much for some years now, and have quite a bit saved up for a house.

      1. Do you have any citation for this?

        Looking at a few sources I might consider, I see much lower average numbers.

        Glassdoor: 106k
        https://www.glassdoor.com/Salaries/seattle-software-engineer-salary-SRCH_IL.0,7_IM781_KO8,25.htm

        Payscale: 107k
        https://www.payscale.com/research/US/Job=Software_Engineer/Salary/81bde469/Seattle-WA

        The closest I have found to your number is this:

        Levels: 199k
        https://www.levels.fyi/Salaries/Software-Engineer/Greater-Seattle-Area/

        However if you look at relevant entry levels for the big players the numbers are smaller even for Levels:
        Microsoft level 60: 147k
        Amazon level 4: 175k

        and these would be the higher end options for an entry level.

        I certainly am willing to believe that all the sources I cited are wrong, but I would really love to see where you have found this information as I just cannot find it myself.

        To be sure, I am also not implying that even 106k is a small number. It is not. But it is important to be outraged about the correct information, IMHO.

        Thank you very much in advance.

      2. Even at $106k it’s pretty amazing that not only is someone straight out of college with only a bachelors degree can command above the median income of a very wealthy region. Add to that the fact that young people are staying single longer and you have a population moving in that can afford to pay $3k/mo and wants to be the single occupant. Not too surprising people making less than the median income are getting priced out.

    3. “Fight?”, Daniel? Back home in Detroit, what anybody with an income really did was Flee. 53 years after 1967, thanks to climate change their latest flight-address is in the Russian Arctic, but only ’til Lapland will let them in.

      Skin color? The fugitives’ wealthier are, still discussing whether you can be white and Polish at the same time, but not very loud. In 1920’s Michigan, Proud or just optimistic, a lot of The Boys wore sheets with eye-holes. Even if their dads’ uniforms had been Union Army Blue.

      Not points in President Obama’s favor that he didn’t have current Attorney General Bob Barr lock up the Republican Governor for poisoning Flint’s drinking water as a budget item. Substitute Richard Snyder’s name for Hillary’s, and “Throw Away The Key!”

      But mainly, at the steering wheel of a green 1970’s Plymouth with a lighted “Taxi” sign on the roof, I swiftly lost all sympathy for crime.

      Up-close and personal, around four one afternoon, I stood by while the help I’d summoned dealt with a man who’d just lost his eye to a piece of re-bar.

      In the hand of somebody whom I’d seen same time the day before, break into my cab with it while I was upstairs having coffee with a lady friend. Yesterday on NPR, incidentally, Seattle BLM’s top attorney called vandals and looters “Bozos who make MY job a (girl dog!)”

      So I carry some eye-witness testimony as to what happens to a city when its manufacturers decide its workers don’t need pay. There and here, then and now, the culprit is what’s REALLY been Defunded: The ability of our workers, both genders, all professions, all trades, all first-languages and all colors to earn a living.

      And that universal Debt-trapping Degree-Demand? Our Constitution’s ban on a Nobility title needs some Enforcement priority. You demand it? Prove your machines need it.

      You and I certainly handle our duty as active citizens with equal intensity, not to mention word-count. Our pooooor proof-readers!

      We part company on one major item. My own opinion on What’s What, I’ll always claim for my own, and FIGHT for it to the best of my ability and endurance. But I’ll never demand obedience on the grounds that since everybody knows that everybody that counts also thinks like me, the World had better just shut up and fall in line.

      Above all, though, the age-category where I’d place you puts you in the company of the intelligent, capable young worker who restored my wi-fi from her desk in Kingston. The one where a “Ratchet” is a Jamaican switchblade from Germany, not a wrench from True Value Automotive. All of you are the reason that all 330 million of us are only as DIVIDED as we feel like being.

      My nurse still tells me that if I make you show Symptom One, she’ll have my Provider’s veterinarian put me to sleep. But Island Crust DOES have Caffe d’Arte! Which if it dares to even think about a mezzanine, the Ballard Drawbridge Terminal had also better have.

      We’re all just getting started. COVIDIA, you’ve made your point! Push it any farther and I’ll call Indeed! to get you Impacted into orbit!

      Mark Dublin

    4. “white progressive urbanists don’t want to live in the Rainier Valley”

      At least three STB staff have lived in Rainier Valley or the Central District over the past ten years. Who do you think is in all those new apartments and townhouses along MLK, 23rd, etc? White, progressive, at least semi urbanists. If there were a wholesale reversal, it would be the same as a second white flight, which isn’t happening. Hundreds of thousands of people are making different individual choices, and while there’s a trickle toward the suburbs and larger units as you have noted, it’s not a flood. Most development occurs in wealthy white areas because that’s where the largest demand is, as it was in the 2010s and 00s and 90s. That doesn’t mean there are zero yuppies who want to or are willing to live in Rainier Valley. Some of them specifically prefer the multicultural environment.

    5. I’d hesitate to draw any long-term conclusions from what we’re seeing during this pandemic period. Rents have gone down quite a bit, yes. A big reason for this is that lots of people are out of work (and therefore not able to afford as much rent). For those who still have jobs, many of them have gone to work-from-home status so being close to downtown Seattle is less important than having a dedicated home office space. It’s therefore perfectly understandable that you’d see a lot of people signing their next lease in a cheaper suburb (or another metro area entirely) where they can afford an extra room to work from, and rents in Seattle declining a bit due to reduced demand. Will most of these folks move back once the office buildings reopen and commute times matter again? Too early to tell of course, but I’d bet on yes.

      If a small, fairly new DADU costs $600k in Seattle do you really think anything in the Spring District will be under $1 million if not subsidized?

      As you point out, the main pieces of housing cost come from land costs and construction costs. I’ve seen several sources give a ballpark of $300k for DADU construction costs in the Seattle area at this time. If a new one sells for $600k that implies the land it sits on is also worth about $300k. Not much a local government can do about construction costs, but there is a big thing they can do about land costs: change the zoning so that people can divide the land into more affordable bits.

      If the cheapest home in a neighborhood is going for $1 million, despite construction costs for a modest-sized dwelling being a third of that, that means your local government is requiring people to buy more than half a million dollars worth of land just for the right to live in that neighborhood. Let people split a $500k lot four ways and you’ve reduced the minimum cost to build a home on that block by $375k. Don’t tell me that wouldn’t make a big difference for affordability.

    1. Yeah, you can find a lot of that information on the Wikipedia page for the county (and individual cities). It doesn’t have individual years though — just decades and an estimate for the current number.

  9. Many thanks for the charts, Daniel. Couple points, though, among many possible more.

    One, for sheer national survival, I really do think calculus should have to wait ’til your ORCA card can enroll you in Lake Washington Tech or Highline. Precision machining is a lot better math-instructor than test-score intimidation.

    For a country with the power and presence of ours, making History boring should be a variety of treason punishable by a frontline combat tour in a country whose history we just screwed up. And for Violence By Public Administration?

    I’ve I was ST’s CEO right now, first thing I’d do when Sweden gives me asylum will be to text Corrections and have them fill my job with somebody whose performance really needs some straightening out!

    Major concentration from pre-school to hospice care? What chattel slavery did to the United States and after 400 years, what do we do about it?

    Somebody into charts, check out which paint-color represents the percentage of mentally-ill pregnant women whom two male police officers feel justified in shooting seven times because she’s suddenly waving a couple of knives. Her mental condition? Well known at the time.

    A male cab-robber of close acquaintance once addressed me with a butcher knife a foot long. A thief with a re-bar could have cost me an eye, if I’d been the homeless wretch he went for the next day.

    But I really would like an optical rainbow comparing Charleena Lyles and Briona Taylor with women of same description with their counterparts with bluer eyes and blonder hair.

    Paralytic liberalism, maybe, but to me, sworn police officers who’d do that will sooner or later cost the lives of the ones I know, all of whom won’t. The “shade” they throw on their own profession, doesn’t wash out.

    For us Jews out of old Austria-Hungary, exclusion was more like this. The reason my mother’s dad became a dentist was because one, the mother of his fiercely-headstrong young bride-to-be made her girl’s “hand” conditional on him getting a job starting with “Dr.”

    And two, in the days when US medicine thought germs were for French sissies with over-active olfactories, the “atmosphere” of the work-space carried one real benefit: it was the only US profession that’d ever take a Jew. “Rule the World by banking will ya? Start ya drill and take a deep breath!”

    Residential exclusion? Just like back in Kiev, Budapest, and Vienna, streetcars always assured us a ride to work. And for country-club comparison, read a lot of John Cheever. The clubs that wouldn’t let us in all charged outrageous dues for terrible food whose proof of taste was it didn’t have any.

    And in the days when Acts went World-Viral without a tweet in sight, see how much of Hollywood, like all of it, got its start in those Clubs of the Excluded. Pretty sure Sam Goldwyn was from Minsk. Which is still in Belarus, which Sam G. couldn’t have gotten out of fast enough.

    Race prejudice right now? Whatever the ethnicity that medical school finally my people in with, for so many dark-skinned “patient’s” chances with armed authority, tertiary syphilis looks like a mild cold by comparison.

    And google up “Compromise of 1877”. The South agreed to come back in the Union. The North thanked them by letting them keep slavery. Renamed each State’s “Department of Corrections”.

    Also check out the math as to the number of subsequent years ’til the next “free” election south of Mason Dixon. Lynching’s got by far the biggest and darkest racial %-marker . By lethality and terror, COVIDIA’s a sniffle.

    But if my country WAS a country club, however aggravating a couple hundred years of real bad “Acts” for entertainment, all our names are still on all the Club’s own papers. Speaking of which… Uh-oh!

    Health Department says if we don’t contribute to help society “spray” for the prejudice, Animal Control says they’re gonna shut us down. Like Vaudeville ever coulda handled ZOOM? I need a Schweppe’s tonic water on ice!

    Mark Dublin

  10. “It’s not uncommon for a developer right out of college to be making $250k/year or even more.”

    As someone who works in the tech industry, I would say that’s on the high end, but possible. A large chunk of the pay often comes in the form of stock, so if the stock shoots up, your actual income can far exceed what’s printed in the offer letter.

    It also varies a lot from company to company. Facebook, Google, and Amazon all pay considerably more than Microsoft does.

  11. Just building is not enough. We need to lower the cost of building. The most it costs to build the more it costs to rent or sell.

    1. If the cost of building is high, less will be built. The rents are as high as people are willing to pay.

      But I agree–if there are fewer homes built, only those who are willing to pay more can afford those.

  12. Good insight Ott. The question is how to create affordable housing without public subsidies. There are two key fundamentals:

    1. New construction that must meet new codes is always the least affordable.

    2. The cost of the land is the main factor, because 1. obviously it is a huge part of the total cost of the project; and 2. the cost of the land determines the price of the neighborhood which determines how high end the construction is, because there is more profit the more expensive the new housing is. A new condo or apartment is going to have a much higher end build in The Spring District than Rainier Valley.

    I have a post on The Urbanist on this right now, and why creating enterprise zones for disadvantaged communities that use upzoning to entice development is the most common tool. The two issues there are:

    1. Making sure you don’t gentrify the existing low income residents out (e.g. The Central District).

    2. The reluctance of white urbanists to live in Black communities, which can lead to gentrification (e.g. lower Harlem).

    What you never, ever do is upzone wealthy low density neighborhoods if affordable housing is the goal because the first properties torn down are the older, more affordable, least expensive properties, which are then replaced with new construction those tenants could never afford, and developers shun disadvantaged communities if they can upzone wealthy neighborhoods.

    What we are really seeing from The Urbanists is a desire to live in a wealthy, white residential neighborhood they can’t afford, and some like the Master Builders Assoc. pawning off upzoning on well meaning but naive residents who don’t want to move to the Rainier Valley or Burien, but are going to have to anyway if they they think upzoning the wealthy neighborhoods will create affordable housing, and don’t want to live in a predominantly nonwhite neighborhood.

    The other option is rent control, but for reasons I don’t understand (well, I do) progressives in this region won’t go there.

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