Countering Conspiracy Theories About Luxury Housing Ownership

Another “report” has emerged about housing in Seattle and the Seattle Times has a story about its claims that somehow less than two thousand pricey units are somehow destroying the whole housing economy in the city and making life hard for poor people. It’s nonsense. I caught wind of the 51 page analysis of just 8 buildings with expensive units and send the following response to reporters I thought might write about it. Fortunately, the Times wrote a pretty balanced story.

The Perils of Bad Data and Bad Narratives in the Seattle Housing Story

A forthcoming report claims, based on looking at 8 multifamily buildings, that the selling price and ownership patterns in those buildings in Seattle will “worsen economic inequality.”

This is false.

What worsens economic inequality in Seattle is inflation caused by lack of housing supply.Housing is hard to build in Seattle. Most builders say it takes as long as five years to complete a project (and the City admits it can take 3 years). When housing is scarce prices go up and higher prices consume a greater share of the earnings of people with less money.

Using a sample of 8 buildings doesn’t tell us very much about the whole housing economy in Seattle. There are plenty of sources, including the US Census, that look at what’s happening with housing, and the Seattle Times and other outlets report on that data frequently. There is no way to generalize about the housing economy, especially from 8 buildings selected because of high priced units.

The 1,600 units are less than 1 percent of the more than 168,000 (US Census) multifamily units in the city, and less than half of 1 percent of the total units of housing in the city (334,000).Our previous look at charges that housing was being purchased and taken off the market would require more than 1,400 units to be purchased and vacatedto have an impact of a 1 percent increase in housing prices. Since then there is a lot more housing. These units have very little impact on housing prices, no matter who owns them.

The report cites “global hidden wealth” as the source of the money for this housing and this implication is conspiratorial, unsubstantiated, and xenophobic. Along with being racist, this is what the King County Assessor said about trying to regulate ownership:

Lastly, I don’t believe this proposal addresses the problem we are collectively seeking to fix: affordable housing. The luxury home market is not driving our affordability crisis. It is simple supply and demand of housing priced for working people and seniors that is driving skyrocketing prices.

Featured image is from local retailer of fun novelty items, Archie McPhee. They sell this tin foil hat and say this about it: “Works against aliens, government plots, men in black, giant ape cultists, the electric company, the circus clown collective, cyber-narcissists, grumpy psychics and nosy neighbors.” I wonder if it works against shadowy foreign buyers of real estate?

Who Supports Rent Control? The City of Seattle

Recently the 32nd Democratic legislative district organization passed a resolution supporting rent control. Here’s an image of the wordy document. The advocates and Sawant noted that it was “endorsed without opposition.” Local Democrats who have a big impact on the upcoming election are falling in line to support rent control But remember, that the City’s official position is in support of the removal of preemption.

Small Businesses Rise Up in West Seattle

A new group has formed in West Seattle to try and steer the outcome of the City Council race there between Lisa Herbold and Phillip Tavel. Four years ago, Herbold won her place on the Council with a few dozen votes. I’ve said before, Councimember Sawant is a performance artist, while Herbold actually gets things done. The problem is that what Herbold gets done is usually what Sawant talks about doing. Take impact fees, for example. Herbold is the Councilmember that has demanded them, pushing the Council outside the usual process to add even more costs to housing production and ultimately to the price. Builders aren’t the only ones tired of Herbold’s use of her office.

In a press release the new group, District 1 Neighbors for Small Business, announced its latest push to change the balance of power at City Hall by replacing Lisa Herbold.

We are a local voice for owners, managers or representatives of local, small business eager for a change in leadership on Seattle City Council. The issues, myriad, are well covered: homelessness, drug activity, shoplifting, theft, petty crime, escalating disorder. While opinion and fervor run high on the issues, solutions have been absent, despite declarations of emergencies and ten-year plans. It is clear that something is broken. It is clear that we need to elect new leadership to City Council.

The group goes on to list some of the issues, all emphasis is theirs.

• Lisa Herbold and the City Council are failing to address chronic and systemic issues of public safety. They have been unsupportive of our Seattle Police Department. The money being spent on services for the homeless, the mentally distressed and the drug addicted is having little impact on neighborhood disorder, petty crime and escalating incidents of violence enacted on our citizens and our employees. Where is the accountability?
• Lisa Herbold, Kshama Sawant and our City Council recently passed a wildly unpopular “Head Tax” without a spending  plan. They then cynically tried to blame our business community when  they were forced to repeal the tax. Why can’t they collaborate with business, rather than treat us as an endless revenue stream (or worse)? Kshama and Lisa are currently planning their next version of an unpopular and divise tax on jobs. We can’t afford another four years of Lisa Herbold and Kshama Sawant.
• When business owners absorbed a FOUR HUNDRED PERCENT increase in their business license fee in 2017. Lisa Herbold told us that the money was specifically to pay for “… the hiring of 200 additional police officers by 2020 …” We have not seen these 200 additional officers, and we just absorbed an additional six percent increase on our business license fees for 2020. Where are the cops? Where did the money goto pay for those police officers?

All of this is not surprising. Herbold has been a continuous supporter of the idea that what will solve housing issues isn’t more housing, but more money. Again and again she’s been a champion for policies that make it more difficult to build anything in Seattle. The same, clearly is true for other small businesses trying to meet customer demand under a growing burden of regulations.

An email from two small business owners from the group described some of these overreaching rules and regulations passed over the last 4 years while Herbold has been in office.

• Increased business license fees.
• Sugar tax.
• B and O tax increases.
• Awning fees.
• Signage fees.
• Secured scheduling mandates.
• Paid Family leave.
• $15 minimum wage increases.
• Increased health insurance fees.
• Increased property taxes (passed on to tenants)

They go on to say,

It seems as if the City Council looks to businesses to fund everything. Pet projects or projects that have absolutely no plan! They think we (businesses) are rich and look to us as an ever-flowing revenue stream. None of them have ever run a business nor have they signed an employee’s paycheck. They forget that businesses in Seattle are the live blood of this city and already provide 60% of the annual budget. Yet they keep piling on more fees to run a business in Seattle. It’s not surprising to see many businesses big and small leaving Seattle and setting up shop in Bellevue, White Center, Burien, etc.

This is the same think I hear from builders, developers, and landlords all across the city. Will anything change if Tavel is elected? I’ve suggested that we need more than one election to fix the problems that have been created. One new Councilmember can’t make or repeal laws; it takes at least 6 to ensure anything can happen, and there aren’t going to be that many who truly support business. The business community needs to make culture change a priority, investing in ideas, research, and building an understanding of the messages that can shift the electorate away from the bleating of the socialist mob, and toward policy that actually helps people.

One thing is for sure, District 1 Neighbors for Small Business has already won. They’ve mobilized small businesses to take a very specific direction and action to shift who represents (or doesn’t) their interests. It’s a hopeful sign and one that I hope we can learn from and build on.

What Will Happen With Rent Control?

I don’t debate rent control any more. There was a time when we argued about rent control with Councilmembers and its socialist backers. But the argument has morphed into something different that a debate about policy; this is religious at this point. And that characterization is probably unfair to religious zealots. Anyone should have known that the rent control scheme is as intractable as the belief of people who oppose vaccination, especially when I asked the audience at the big debate in 2015 whether they’d support more lower priced housing if it meant more developers would make money building that cheaper housing. There was a resounding, “No!” I said then, let the record show that socialists would rather have more expensive and scarce housing than let anyone make money building it. It was another version of Margaret Thatcher’s indictment of socialism: Socialists “would rather the poor were poorer provided the rich were less rich.” But what will happen over the next year with this latest proposal?

Sawant is All Alone 

She is. But that’s how leadership works, especially because, “in the land of the blind, they one eyed man is king.” The paucity if anyone with a coherent vision for the city means even one bad idea is stronger than no idea at all. Some people think that because the proposal is being called, in the press, Sawant’s proposal, that somehow she’s isolated and there won’t be support for whatever her scheme entails. If you’re one of those people you’re wrong and either you’re just hopeful or you haven’t been paying attention. Of the things you don’t like that you attribute to Sawant none of them were done by her; from minimum wage to the “head tax” the Council and Mayor took her ideas and made them law. Sawant was the person who wanted $150 in annual taxes on jobs and rallied people around the idea. But it was the Council and Mayor that allowed the legislation for half that to come alive and pass initially. Remember, the Mayor signed it into law! Do you remember that? Probably not. Whatever Sawant proposes will turn into a 9-0 vote by the Council in favor of something.

But it’s illegal

Yes, rent control is illegal — for now. But the City Council and Mayor and the City itself are in favor of rent control and repealing the state’s preemption of rent control for local jurisdictions. Whatever they pass of Sawant’s proposal will be prospective on that repeal or some state legislation. The City’s legislative arm are probably going to coalesce around a proposal for a statewide imposition of rent control rather than a simple preemption appeal. Why? Because “that’s what they did in Oregon” and yes, some landlords are starting to support that idea. Why would landlords support this? Because the predictability of having the state dictate the increases would be irresistible. Remember, landlords and most business people crave predictability more than anything else. Knowing that the cap is high, say 10 percent increases per year, would sound fine. And having the program dictated by Olympia, some people think, would mean the City of Seattle couldn’t make it worse. That’s false too. Even with state approval of the Mulitfamly Tax Exemption (MFTE) program, the City has managed to blatantly violate state law and their own ordinance to limit rent increases.

That Orion kid will save us!

The election will yield little benefit for the housing problem in Seattle. As I’ve said before, this election will not be a watershed moment for Seattle on housing or business or creating a pro-growth or even business friendly environment. All of the candidates are deeply compromised. Press them. If rent control was not illegal would you support it? Call it, “rent stabilization.” Would you support that if the legislature repealed the prohibition? The state’s preemption is the political hiding place for candidates and elected officials who don’t openly embrace rent control. Just ask Senator Pedersen what he thinks about the issue. Yes, the Chamber and others (maybe even you!) are spending money on these candidates. But they’re politicians and that means they’ll turn toward the mob shouting at them long before they’ll worry about making the business community upset. Just look at the last five years.

What’s likely? Statewide rent control. 

Watch for legislature to deliver on it’s promise to “do something” about rent control during the next session. The legislature has become more hostile toward business and is run largely by legislators from Seattle and the Puget Sound. What about the moderates? It’s going be an impeachment circus nationally, and all forms of Democrats are going to feel the need to shore up their progressive credentials. The pressure on moderates to give on this one, especially if they hear from landlords saying they’d rather have the state do rent control than Seattle, gives them a way out.

Why is statewide rent control a terrible idea?

Why is this deadly? Have you ever seen a law pass in Olympia that gets repealed when it doesn’t work? How about a tax? When the law gets passed, it never goes away. And while the limits on rents might be tolerable now, how long would that restraint last? We know that proponents, when rent control fails to lower prices, claim, “we didn’t do enough rent control!” The very fact that the measure would emerge as some kind of “compromise” assures that it will be deemed illegitimate by more radical elements of the socialist movement. And remember, the goal of rent control isn’t really to lower prices, it’s to put the government in control of private rental properties. When rent control fails along with all the other bad interventions, the claim is that the housing market doesn’t work: housing is a right! That means people should be able to rent anywhere, at anytime, for as long as they want even if they can’t pay or violate leases.

We’ll have a statewide election! 

Some people think that the legislature will put the measure on the ballot. That might be part of the compromise. So think of this, a presidential election year with an impeachment proceeding against a very unpopular President who is on the ballot (maybe) and a measure to “help poor tenants.” How do you think that election will turn out? There will be many angry progressive voters out next year, and if there is a rent control measure on the ballot it is almost certain to pass. And don’t look for the business community (like the pointless Seattle Chamber of Commerce) to rally around defending landlords. Remember, Amazon and other tech companies lined up to support bad tenant landlord legislation. So did the Mariners! This will cost millions of dollars to oppose and it will pass anyway, getting the state rent control and burnishing the reputation of landlord advocates as greedy corporatists.

It’s bigger than rent control now

And here’s the thing: beating rent control is necessary but not sufficient to counter the destruction of our housing economy. Sadly, not very many people understand or care about this. Would an Oregon style rent control measure destroy private housing as we know it next year? Of course not. But gradually, taken together with a raft of other horrible policies and things like Mandatory Inclusionary Zoning (what the City called MHA), will mean higher costs, taller and wider barriers of entry into the housing market for smaller businesses, and rising prices. What will be left is a longer and longer entitlement process that only large scale developers with huge assets to absorb and giant landlords that can afford lots of lawyers and management companies. This all will ensure higher prices for consumers of all incomes and a widening gap between the pain felt by the poor and the rich. I’ve already laid out the broad effort we need to fully fund and implement as soon as possible. The last link leads to part one and you can also read parts two and three. Read all three!

Poor Ol’ Laocoon

Yep. I’m bringing him up again. He warned the leaders of Troy to leave that damn wooden horse on the beach. They wouldn’t listen. I’m warning everyone again. We gain nothing from engaging the public policy process without a steady and sustained response based on data and correcting the bad information being repeated over and over again by politicians and the press. Second, we need real proposals that actually solve the problem and help real people. And finally, we need a sustained public engagement effort that leverages what people already know and believe, that when housing is scarce it gets expensive and is the greatest threat to fairness and ultimately to poor people. Anything short of this kind of comprehensive effort will lead to a worsening of the housing economy. We still have a chance; we can start by leaving that horse on the beach.

Featured image is one of the handful other illustrations of the Laocoön story on a fresco in the Casa del Menandro, Pompeii (Wikimedia CC BY-SA 3.0). From Ancient World Magazine. 

 

 

In Seattle, The Fun(ding) Never Ends, But the Ride Does

Oh well, that was great while it lasted. As of the end of this year, Lime will no longer have car share in Seattle. I got an email telling me so. The little Audi cars scattered across the city will start to disappear starting next month then will be gone. Lime will keep its bike share business. And, another car share program, Reach, another car share program, also did itself in not too long ago. We still have Car2Go in the city, but it is more expensive than reach. How long before I get an email saying they’re shutting down too? I’m not looking forward to it. And as if that wasn’t enough, the geniuses at City Hall now want to hit ride share services with additional per ride tax to pay for what? Inefficient non-profit housing. This was the same week that people did a “climate strike.” Nobody, of course, can see the irony if not hypocrisy here.

I wrote back to Lime. Here’s what I said:

This is a disaster. It’s bad news.

What has been the major motivator in my consideration of getting rid of my personal vehicle? Car share programs.

Yes, it is CAR share. And yes there are emissions associated with your cars; but I think they support living without a car and thus can contribute, over all to fewer cars on the road and fewer emissions.

I’d love to know why this is ending. Car share is transformative. It means the convenience of access without having to own. That saves money. And if people can live in dense, urban neighborhoods without a car and without commuting every day, it also saves our planet.

I wish you’d reconsider this move.

Roger–

Charlie Pride is one of the all time greats of country music. If you aren’t already, you ought to watch Ken Burns documentary playing and streaming at PBS. Another reason I mourn the lost of the LimePod is that they had access to Sirius satellite radio which features three great country stations, including Willie Nelson’s Willie’s Roadhouse. Every trip had the potential to discover a new old country song. Most of the Car2Go cars have the service as well.