I wrote at Forbes about my first take at a 5 to 7 minute presentation at a housing conference in San Francisco. I’ve been traveling and on the move, so I didn’t have an opportunity to post this yesterday, but this is more or less what I said at the conference. The organizers wanted me to give people an update and sense of what is happening in Seattle. This was my second take. 

In 1989 the Washington State Legislature passed the Growth Management Act (GMA) a comprehensive reform to state planning and land use law that mandated that future growth would take place in urban areas and investment in infrastructure would follow. The GMA was an effort to staunch the flow of population and housing into sprawling acres of single-family homes subsidized by miles of highways. Seattle, like all urban areas, was required to develop a comprehensive plan. Seattle’s idea was Urban Villages – a compromise with single-family neighbors who, to this day, occupy about 65 percent of land in Seattle. New growth would flow into areas already zoned for density, and like a microcosm of the state’s plan, so would infrastructure and amenities. Single-family zones would remain untouched. 

Through the 1990s neighborhoods were given resources to discuss how –not whether – growth would happen and they developed neighborhood level plans. This made the process a success, turning many angry neighbors who folded their arms into advocates for their neighborhoods, pushing for amenities and improvements while accepting growth and development. And the City kept its promise, allocating and prioritizing resources to Urban Villages. But this all ended with the election of a new Mayor and the recession in 2001. The process disbanded, and growth slowing, neighbors and the City disconnected, and a top down approach followed. 

With the Great Recession of 2008 and subsequent recovery, something happened that we’re still living with today: the formation of an unusual axis between single-family neighbors benefiting from increases in housing prices because of housing scarcity, and socialists emboldened by the financial crisis of 2008 who viewed market rate housing as a corporate venture intended solely to profit from selling a necessity. What these groups share is a relentless opposition to the production of market rate housing. 

The neighbors oppose new housing because they fear change that will affect the value of their investment, knowing that more supply would mean lower prices. They don’t say this, but instead offer a litany of red herrings: Parking, design, construction noise, view blockage, loss of tree canopy, loss of bird habitat, the size of units (too big or too small), traffic, building materials, fenestration, and many others are all reasons to slow and stop new construction. 

The socialists oppose new housing because any increase in production will result in more profits –and they’ve made it clear that they oppose new profitable housing ventures even if they result in lower prices. As Margaret Thatcher once said of socialists, they’d rather that the poor were poorer provided the rich were less rich. Seattle’s socialists argue that housing is a human right, ignoring, of course that if rights are scarce, they will be expensive too That is, in a socialist paradise in which there are fewer housing units than people that need them, high prices set by an impersonal supply and demand dynamic will be replaced with rationing from a political and centralized bureaucracy, a perfect example of Hayek’s Road to Serfdom. 

When the economy began to boom in 2011, so did demand for and construction of housing. Since then and now, these two groups have been successful in suppressing many things that worked: small-lot infill development in single-family neighborhoods, microhousing, reducing the density of and blocking small retail use in Seattle’s efficient low-rise zones, challenging back yard cottages, and limiting the City’s tax exemption program to incentivize rent restricted housing. All of these had the effect of reducing single-family housing in single-family zones, killing higher density microhousing that allowed lower rents in multifamily zones, and reducing participation from market rate developers in a program that created thousands of rent restricted units in market rate buildings at a 20 percent inclusion rate, a program called Multifamily Tax Exemption or MFTE.  

Finally, the City has begun an aggressive effort to tax housing – which will slow production and raise prices – to funnel money from the market into the production of non-profit housing through Mandatory Inclusionary Zoning. This policy is so obviously inflationary that one can only slap one’s forehead in disbelief that it is being offered as a “solution” to the problem of price. It’s the classic technique of burning down the village to save it. 

All this culminated earlier this year with a failed effort to tax jobs too, in order send more money to non-profit housing developers. 

What’s wrong and what’s the solution? All of us have to remember that the proper formulation is not, “We need more affordable housing,” but “We need more housing so that it is affordable.” 

We simply must push for dramatic and sustained deregulation of the housing market, and keep only those regulations that preserve or improve health and safety. For households that don’t have enough income to pay rents that off set the costs of land, construction, financing and operation of housing, we should provide direct cash assistance for rent, provide tax abatement in exchange for rent restrictions, and only for high utilizers of social safety net programs, capital investment in new construction of non-profit housing. 

There are a lot of good ideas about how to make cities more affordable and accessible to people of all levels of income. But unless and until we tackle these two powerful groups, the intellectual effort is wasted. We need to invest in conditioning the discourse to appeal to people’s innate understanding of fairness and scarcity and push back on single-family neighbors who are truly the ones who profit from scarcity and socialists sentimentality and utopianism.  We’re either in this to solve the problem or make people happy – we can’t do both.