This is a second of what will be three posts about the current state of the debate in housing in Seattle. I may add one more about where things might go and if there is any hope we can rescue the debate and policy direction. And I lied. The third post is going to cover the politics. The last post covered how sloppy and lazy analysis of housing prices leads to bad outcomes. This post is more in the spirit of The Road to Serfdom and how unit count becomes the measure of the crisis and it’s resolution. 

As we saw last time, we do have a measure of scarcity of housing: it’s called price. When price goes up, that means there isn’t much housing compared to the number of people who want and need it. But the idea that we ought to hurry up and build lots of housing is a controversial one and some think building more might even raises prices higher. This strange self-imposed fantasy ends up turning what is an obvious solution to rising prices, into a wrenching debate over affordability – essentially how people feel about prices. And what ends up happening is a “solution” that becomes about turning a crank to grind out a programmed number of units, an approach that ignores economics and the people who are living in our city and the ones that want to.

Here’s how I described this shift in a post a long time ago on Publicola, about incentive zoning,

Actual people in the housing market can get frustrated with the price of housing options relative to other important things like location, floor plan, windows, and parking. As people work through their options, they often say, “It’s just too expensive here.” But what policy makers hear is, “new housing development is not affordable.” Since we have only our arbitrary measure of affordability—housing cost to income ratios—that’s what they grab hold of. Their brains put together the solution, “Let’s lower the price of housing for some units in some neighborhoods and we’ll be able to achieve affordability in the city.

Affordability becomes about the number of people who are paying something other than 30 percent of their gross income on housing. We hear about the cost burdened households who pay more, but the implication is that there are some that pay too little. If we follow those breadcrumbs, we find our way back to the quantitative normative standard: everyone should be paying just about 30 percent of their gross monthly income for housing.

This standard shapes everything now with a twist. In order to account for local incomes, the Area Median Income (AMI) is applied. The common language of affordability is set: everyone speaks of people and households in terms of their percentage of AMI and the price of the unit in question. This now renders as, “That unit is affordable to a household earning 50 percent of AMI.” Again, the decision has been arbitrarily established that we should worry about people earning around 60 to 80 percent of AMI or less.

Using census data, the City establishes the next step: how many units do we need? Easy! Just figure out how many households, according to the United States Census, are paying some percentage, lets’ say about 50 percent, of their gross monthly income for housing. That number now represents the number of units we need in Seattle and becomes the driver of policy. Units. Units! More units!

There are a number of problems with this. First, remember those several thousand people who are homeless. They don’t pay rent. So they aren’t even part of this discussion. The discussion and the urgency about that issue are supplanted by a new sense of urgency about people who are paying too much rent (and too little). Now our affordability discussion is about units. Units at this price lost, units at that price being too expensive, and those units being priced about right but there aren’t enough. One big problem with this shift toward unit talk is that it displaces human experience in favor of a formula.

Now we’ve decided that the measure of the crisis and its end point are the production of a set number of units priced according to the number of households paying a percentage above the normative ratio of gross monthly income to monthly housing cost. Questions never asked or answered:

• Are the units, some 6000 demanded by the Mayor over a decade, going to be set-aside for those families currently paying the requisite amount of money for rent?
• What happens in the market if demand continues to rise and with it, the number of households who fit the need profile set by the City?
• Are the units created going to be distributed based on those who have been paying the biggest share of their income for the longest?
• Can newcomers get those units first? What happens to those households who set the standard of success who are still paying more than they should?

I could go on, but the conversion of high prices in the market to a standard of affordability that drives a planning target for unit count is complete. No more questions please. The end game is cranking out a set number of units priced just so. Will this solve the “crisis” of affordability? Is that even part of the question or of the end game here? It isn’t. What is? Politics and money. I’ll cover that in the next post.

Read Part 3. The Price of Love: Housing, Economics, Politics, Money, and Being Loved