Mark Routon is an experienced real estate broker and a student at Seattle Central College. He passionately believes that stable and affordable housing is a crucial need that must be met in order for any community to flourish. Last quarter, Mark was tasked with writing a research paper for his English class, and he took this opportunity to do an in-depth dive into the causes and solutions for Seattle’s housing crisis. This week Routon’s paper is featured here in three parts. 

A Nation of Renters

There are now more renting households in the United States than any time since 1965. According to the Pew Research Center, the number of renters increased by over 7.5 million between 2006-2016 (Fry, R., Geiger, A., & Cilluffo, A., 2017). The boom of the renter population correlated not only with the foreclosure crisis, but has run in parallel to the explosion of growth in cities since the beginning of the 2010s. This trend has been observed globally, with an increase amongst the British from around 800,000 renters in 2007 to over 1,800,000 by 2016, with the United Kingdom as a whole adding ~2,100,000 renters from 2010-2015. This represented a 22% increase in the share of the population renting. Denmark, Finland, Spain, Greece, and New Zealand all saw their renter shares climb by at least five percent from 2010-2015, with a total of 21 of the 30 most developed nations increasing their renter shares (Barabas, L., 2018).

This matters as renters are disproportionately hurt by decreases in housing affordability. For much of this last decade, cities like Melbourne, London, and Seattle have all seen the median rent increase far faster than the requisite incomes. The effects of this situation are varied, severe, and felt in some way by nearly everyone within the metro area of the epicenter.

The consequence that first comes to the minds of many people is displacement. Displacement is defined as the undesired change of residence from one’s rooted community. Oft cited causes of displacement are rent increases and/or rental housing stock being bought up for development. In nearly every city facing a crisis of housing affordability, their current zoning laws promote development in the areas with the most renters. Displacement is frequently considered to be the result of gentrification, the name for the socio-economic effects of capital investment in historically low-income areas. Those at most risk of losing their housing are the poorest, who, in the United States, also happen to be primarily people of color. Seattle’s predominantly (and historically) black Central District has seen large rent increases and the greatest racial demographic change in the past decade. Black Seattleites also happen to make up the highest percentage of households making less than 30% area median income (AMI), which, at its core, is the ramification of years of legal discrimination and a lack of resources (Beason, T., 2016). It’s hard to imagine the effect on the human psyche of losing one’s known community.

In conjunction with the moral argument, there is also an economic case for the prevention of the displacement low-income people. According to research conducted by the Philadelphia Federal Reserve, those driven from urban centers due to cost are likely to move into areas with less well-funded schools, worse public transportation, and lower access to economic mobility (Ding, L., Hwang, J., & Divringi, E., 2016). If they have to own a car because they can no longer take public transportation, that too decreases their real wages. As cities have become the global drivers of economic growth and innovation, displacement from their cores can lead to a perpetuation of poverty. No one can achieve economic mobility with a lack of access to opportunity.

Additionally, there are plenty of residents in any desirable city who contribute to an area’s vibrancy more than its direct economic output. Often those who breathe life and beauty into a culturally rich city are not the affluent; the archetype is not of the bloated artist. A lack of housing affordability either drives out those whose work isn’t based in traditional capitalist productivity, or it forces them to hold down low-wage, long hour jobs that suck away at creativity.

During the course of researching this paper, a number of interviews and surveys were conducted amongst various stakeholders in Seattle’s housing market. One of the questions involved the subject’s opinions of creating a more affordable Seattle. Many of those who possessed a negative disposition towards the concept had ideas rooted in a free market capitalist ideology. Their rationale was that living in one’s desired area is not a right; it is a privilege rooted in one’s economic output. In other words, in order to live where you please, you must produce the means.

What this logic misses are the indirect economic benefits of supporting a city’s lower-income population. An artist may not produce $100,000 of direct annual income, but a city with a strong arts culture is likely to also have a strong tourism sector as well. In Seattle, the tourism industry lead to $10.7 billion of economic impact in 2017 (Robinson, K., & Lusebrink, C, 2018). Additionally, the low-income disproportionately work in the service sectors of many economies. Thriving cities need people to work the restaurants, cafes, hotels, reception, and cleaning jobs. A city without services is like a blind racehorse: undesirable. When the low-income employees are faced with the choice of either living cost-burdened near their place of employment, or more affordably further away, no one wins. Living far away from work can increase stress levels, lead to worse health outcomes (which becomes an expensive strain upon the healthcare system), and lower real wages(the actual amount of disposable income after taxes and bills), meaning there is less money available for quality childcare, healthcare, healthy groceries, continuing education, and college funds. Living cost-burdened also raises the likelihood of receiving government subsidies of some sort, in turn increasing the tax bills upon the more affluent.

A jaw-dropping statistic from Patrick Sisson (2018) of Curbed highlights the problem:

“The Census Bureau found that, even with full-time employment, young adults [in the United States] earn, on average, $2,000 less in real dollars than their peers made in 1980. And the National Household Travel Survey found that driving has increased among lower-income millennials, who have often been pushed by housing costs to live farther from employment.” (para. 9)

The Middle Class

While it’s apparent that displacement is rough on lower-income citizens, as well as the community as a whole, it is actually the middle-class in many cities that experience the greatest displacement. In San Francisco, a city and culture that promotes strong programs for low-income people, the middle-class has largely been pushed out to the suburbs and exurbs. As the average rent for a studio apartment has climbed to $2,500, it only makes sense that the only people comfortably able to live near the heart of the city are the affluent and those with protected affordability (Erwett, A.M., 2018).

Many cities are finding that many of their middle-class workers are no longer residents. Mike Rosenberg (2018) of theSeattle Timeswrites, “Local cops, even the police chief of Bellevue [a suburb of Seattle], have had to move to cities outside where they serve. The share of commuters driving at least 90 minutes one-way has grown 70 percent this decade.”

This issue is global. In Sydney, Australia, considered either the world’s second or third least affordable housing market, a study from Sydney University showed that 20% of the city’s essential workers had moved outside the city between 2006-2016 due to unaffordability(Chancellor, J., 2018). These essential workers include police officers, firefighters, teachers, nurses, and ambulance drivers.As housing costs continue to rise, these trends will only intensify. More research needs to be done on how the increased commute times and the associated stress influences the efficacy of these essential employees, but it’s probably safe to assume that it doesn’t improve outcomes.

Most cities try to maintain a stock of affordable housing that can be accessed by these essential employees, but the demand far exceeds the supply. In Melbourne, Australia, one of the least affordable housing markets in the world, Catriona May (2017) of the University of Melbourne reports that the waiting list for public housing has soared to 40,000 people. That same trend is observed in Washington D.C., whereRoger Lewis (2013) of The Washington Post reported that 70,000 individuals are on the waitlist for one of 8,000 affordable units, with some having sat on the list for decades.

A lack of housing affordability also leads to poor social outcomes as well.According to Belinda Turffery (2010) of the UK based charity, Shelter, 21% of adults between 18-44 are delaying having children because of a lack of affordable housing. 22% of 18-34-year-olds live with their parents due to a lack of affordable housing, and 58% of those respondents say that it has harmed their social relationships. It’s likely that similar trends are observed in other countries and cities fighting an affordable housing crisis.

The Cost of Homelessness

The effects of economic growth without a similar increase in housing supply are not just limited to the renting class. The consequences extend to increases in the number of people experiencing homelessness. England has seen a 120% increase since 2012. There are now an estimated 12,300 homeless individuals in London (Crisis.org, 2018). There are 12,000+ people without a place to call home in King County, Washington, an estimated 25,000 in California’s Bay Area, over 78,000 people in New York and nearly 50,000 in Los Angeles County (Henry, M., et al.2018).

Not only are these numbers morally egregious, they are economically malfeasant. The City of Seattle committed $89.5m of its annual budget to fight homelessness. Mayor Durkan made this a permanent funding, meaning that the revenue needed to come from a secure source. In years prior, this revenue was from taxes and fees associated with new development, but as construction ebbs and flows, this wasn’t secure enough for the city to rely on. To make the funding permanent, the city cut $49m from the budgets of other departments; an important act, but one that may have unintended consequences (Adolph, C., & Walters, K., 2018). According to Heather Knight of the San Francisco Chronicle(2017), San Francisco planned to spend $275 million on homelessness in 2018, up from $241 million the year prior. The budget for 2019 is expected to reach almost $320 million. According to Monica Nicklesburg (2018), writing for Geekwire, Los Angeles is dedicating $1.2 billion of their budget to the cause as well.

Too Many Humans, Not Enough Housing

The basic economic principle of supply and demand states that when excess demand for a product or service meets an undersupply, prices soar through the roof. This can be observed quite clearly in Seattle and San Francisco, two cities that have boomed in the digital generation, but that also possess incredibly restrictive building policies. For example, from 2010 to 2018, Politicoreports that Seattleadded nearly 100,000 jobs, but barely 32,000 new homes and apartment units (Roberts, P., 2018). During that same time, the median cost of housing rose 93%. What was worth $337,500 in 2012 had nearly doubled to $651,000 by January 2018 (NWMLS, 2018). In San Francisco, the numbers are even scarier. From March of 2014 to September 2018, the median home price increased from an already whopping $838,000 to a ghastly $1,325,000 (Trulia, 2019).

According to the City of Seattle (2017), “From 2010 to 2015, the number of jobs in Seattle increased almost twice as fast as the number of homes. During that same period of time, [the] average rent for a one-bedroom apartment increased 35 percent.” TheSeattle Times’ Mike Rosenberg and Vernal Coleman (2019) reported that between 2010-2018, only 59,000 new units had been built in Seattle’s King County. Local experts estimate that 300,000+ homes are needed to meet the affordability demand. However, nearly 10,000 new housing units came on the market in 2018; that’s the largest single year increase in the city’s history. As a result, rents stabilized, and actually decreased on average. (Rosenberg, M., 2019). This is evidence that adding supply will lower prices.

This issue extends across the United States. According to Benjamin Schnieder (2018) of the urban policy website, CityLab, the construction of new homes was near a 60-year low in 2017, and only 900,000 homes were slated to begin construction in 2018. That’s 400,000 below what is required to match population growth.

Restrictive zoning policies have been pegged as the leading driver of a lack of new home development, nationally and abroad. A University of Washington study from 2008 showed that regulation in Seattle was responsible for an average of $200,000 of the price of any new home (Rhodes, E.,2008). Patrik Schumacher (2018), of The Adam Smith Institute, described the cause of London’s insane housing prices as the inability to build the best type of property for a particular piece of land. Working from a market-based heuristic, Schumacher advocates allowing for new development to be added to London’s protected Greenbelt, with the belief that an abundance of new, desirable land will drive overall building costs down. Without doing that, London allows for an artificial scarcity of land and thus less affordable housing. Roger Valdez, of the blog Seattle for Growth, said in an interview for this paper that permitting greater flexibility in the market is the only way the crisis can be solved. Citylab(2018) states, “Between 2000 and 2015… the U.S. produced 7.3 million fewer homes than it needed to keep up with demand and population growth.” The cause, not surprisingly, is restrictive zoning that prevents the necessary density.