I pointed out yesterday in my post about the Seattle Way that here in Seattle we haven’t been very smart about housing policy. That’s mostly because we rely on data that has no relationship to the housing market place or the way people actually build, finance, and buy housing products. If we look at data that is used by people who invest money in housing, especially data gathered from the Dupre + Scott Apartment Survey, we’d see a far different version of reality that the one being promulgated by the media and members of the City Council. In the real world, rents go up and down over time, and in real Seattle’s housing market, prices haven’t been skyrocketing. Furthermore, Seattle is right in the middle of rent increases compared to 60 other cities in our region.

First, Dupre + Scott reiterate in their latest newsletter what they said in a previous post on “skyrocketing” rents:

We’ll tell you that rents didn’t really increase that much. At least not “increase” in the way that is being bantered about today.

Part of the reason rents aren’t going up as fast as it may seem is attributable to what Dupre + Scott calls the “skew of the new,”

New units rent for more because… well, because they are brand new. And they typically have more amenities than older properties. The One bedroom rent premium chart below shows that’s true all around the region. Region-wide, apartments built after 2011 rent for a 54% premium compared to properties built before 2012.

When we remove new construction from the calculation of the rate of increase is about 6.2 percent compared to 8.4 percent with new construction included.

The latest numbers from the Dupre + Scott survey also continue to validate a fact and an going trend in Seattle as well, that while rents are cyclical over time, expenses generally aren’t and they’ve been increasing at a faster rate than rental incomes have.

Both of these are very satisfying pieces of data for those of us who believe that City Councilmembers and others in the community are using bad data and individual stories of hardship to fan anti-growth and anti-development fears among people in the community. Yes, rents have been increasing over time, but not any faster than they have in the past when rents go up. Then, after a period rents go down. Rents change. But expenses to operate housing steadily track up.

But there’s more. How do we deal with the problem of new construction and renovation which, when factored in with prices for all housing, increase the rate of increase. That is, if some housing products go up in price because they are fixed up or are new, how can we compare apples to apples. We can’t compare an older, down rent unit to a brand new one that didn’t exist before. And it doesn’t make sense to say that prices are skyrocketing if only a portion of the market is producing more expensive units. You wouldn’t say the average price of your groceries is $1000 if what was in your cart was saltines, peanut butter, and caviar.

Fortunately, there’s an easy solution. All you have to do is look at how much rent changed in the same properties over the past year. That will eliminate distortion from new units that came into the market in between the two surveys. This “same store” analysis is the real measure of rent change.

Here’s the really fantastic chart showing “same store” analysis for Seattle compared to other cities in the Puget Sound:

Out of 66 cities in the region Seattle’s rent increases over the 12 month period were the 32nd highest with increase of 6.2 percent. Bellevue, Redmond, and Kent all had increases greater than Seattle’s in the same period.

All of this data isn’t to say that the rent increases in Seattle have not been significant. Dupre + Scott uses that term over and over again. The question is are rents “skyrocketing?” Their answer is that they aren’t if “skyrocketing” means dramatic and uncharacteristic increases given all the other factors. The truth is, as we always repeat ad nausea is that rents go up and down based largely on supply and demand. There is nowhere to hide for the people pushing bad policy when we look at the facts; if rents are really “skyrocketing” the answer is more housing, if they aren’t then we need to calm down and decide how we keep ahead of demand with more supply so they don’t.

But, as Dupre + Scott points out, doesn’t make a very interesting headline, does it?