Last week we did a rerun of Ol’ Dan Bertolet’s post on workforce housing. Today, a year and a week later, here’s a rerun of my best Galileo post. I remember when I wrote this on a cold, dark morning. At that point we had maybe a dozen posts up. I had watched a documentary on Galileo and I couldn’t help draw the parallel between the people running the City of Seattle and the Catholic Church. If you’d asked me then, in 2014, if I thought in 2020 we’d have made progress on convincing people that yes, indeed, prices do go up and down based on supply and demand, I think I would have said, “Yes.” But it may take a few more hundred years after all. Enjoy!

I’ve been on a Galileo kick lately. Galileo was the Italian astronomer who, using his telescope, argued in favor of the crazy idea advanced by fellow astronomer Copernicus that the Sun, not the Earth, is the center of the solar system. Both men faced lots of skepticism. “C’mon, Galileo,” even the most friendly church official said, “the Earth moves? It feels pretty firm to me!” The establishment’s resistance to the notion was so strong Galileo found himself in a church prison forced to recant. Legend has it that after he was tortured, as he walked away he muttered, “Eppur si muove!” or “And yet it moves.”

Many of us feel the Galileo sensation when arguing in favor of increased housing supply to stabilize or lower housing prices. The resistance takes the form of outright denial, “it doesn’t work like that, housing is more complicated,” (Housing is not bananas!)  to the mild, “sure, more housing will help keep prices from rising, but they’ll never go down.”

Behold the Seattle Times article of last month headlined Seattle-area apartment rents may stabilize, even dip in 2014:

Developers have about 14,140 apartment units under construction and will deliver more than 9,700 in 2014, Cain estimates. Even if job growth remains steady, he said, the swelling supply will spur more competition for tenants and slow rent hikes.

It’s already starting to happen in Seattle’s Ballard neighborhood, which saw a massive buildup of new apartments.

The submarket had the biggest increase in vacancies in the fourth quarter, nearly 2 percentage points, though the overall vacancy rate is still below 5 percent — considered a tipping point in the balance of power between tenants and landlords.

Rents in Ballard still rose, Apartment Insights reports.

The article points out that rents will likely drop in the Seattle because of increased supply. Yes, right there the Seattle Times printed those words: “rents will likely drop.” Is this the result of legalized marijuana impacting journalism? No. It’s simply a boring real estate story describing what people in the industry already know, when vacancies go up, rents go down. I don’t speak Italian but Google Translate says, “Eppure si cadono!” Prices do fall when supply goes up. Will your landlord knock on your door and hand you a notice lowering your rent? Probably not, but overall rents do go down as vacancies increase.

Things are shifting in Ballard but probably not as much as they have in other neighborhoods. That isn’t surprising considering the ways that Seattle’s approach to land use makes it harder and more costly to build housing of all types. And yes, the City Council is looking at changing the LR3 Zone in Ballard to limit density there. This is exactly the wrong time to do that since, as the article points out, there is a shift in the “balance of power between tenants and landlords.” Isn’t that why Seattle voters cast ballots for Sawant, to sock it to The Man? Well the best way to do that is to let him build more housing! 

I’ve been writing about how increasing housing supply would help lower housing prices since at least 2011.

We can keep larding up our code with all kinds of limits to the supply of new housing. Lower supply, increasing or steady demand, and then you have “unaffordable housing.” Why is this basic and iron clad rule of economics so hard to understand. I’m a philosophy major! Even I get this.

I have plenty of hair on my head, but I won’t for long if the City Council can’t get their basic economics straight. … If the people don’t come, and we have an over supply of housing, SHAZAM, we’ve just solved our affordable housing “crisis.”

I’m no Galileo, but we’ve got to stop hedging about what will happen to our housing market if we allow more building. If prices drop too low, and developers stop building, then would be the time to kick in real incentives to do so, not fees and tolls we call currently call incentive zoning. The most efficient and economical way to build more housing in a compact place is taller, more densely populated buildings. As we create more jobs and win more Super Bowls, more people will want to move here to join us in building the future of our city. All those wonderful people moving here will need lots of great housing options. Let’s make that easier to do.

Image of Galileo from Wikipedia Commons.