Time for a Plan to Increase Housing Supply

It seems these days that almost everyone has a petition; whether it is the minimum wage, issues related to health insurance, or even one urging that USA Team goalie Tim Howard be appointed Secretary of Defense, you almost can’t go a day on the internet without being asked to sign on to something. What about more housing in Seattle?

Usually, petitions are a way of trying to persuade elected officials to do something. Petitions can be an organizing tool born out of frustration with a political process that is stuck, or moving in the wrong direction. A petition is a way of saying, “you’re misreading the situation. We need something different, and lots of people agree”

When it comes to housing in Seattle there is no question that people feel like prices are going up. Stories about the length of time it takes to find an apartment are everywhere. Often, it isn’t even so much the price as the feeling that prices will go up, and lead to price outs.

But the Seattle City Council seems to be stuck, or maybe even going in reverse on housing. We know that they’ve discussed the issue a lot over the years. All that discussion hasn’t lead to a comprehensive plan to expand the supply of housing of all kinds throughout the city. Instead, as you’ve seen cataloged here, the Council has actually taken housing capacity off the table. Councilmember Tim Burgess said 250 new single-family homes were “not meaningful.”

The Council was poised to enact legislation written by Department of Planning and Development staff that would have essentially ended the innovation of microhousing in Seattle, a housing product that I get calls about from around the Country asking, “how did Seattle make micros work, because we need them here.”

And as if that wasn’t enough, the DPD produced legislation at the request of Councilmember Clark that would essentially downzone the low-rise zones in our city, removing thousands of potential units from the supply chain at a time when demand for housing in those areas—Capitol Hill, for example—is exploding.

Also, incentive zoning is being discussed yet again. We’ve pointed out again, and again, that incentive zoning is a tax on something we want more of, housing, and increasing that tax will limit supply, and increase the costs of housing, costs that end up being paid by renters.

So when the Council hears people complain about housing price, they say they want to do something, but their actions simply make the problem worse, reducing supply, increasing prices and the complaints about price. Rinse and repeat.

Many of us are frustrated and we’ve decided to take our message directly to the community. The video trailer posted above is for a longer video that will be promoted with banner ads and pre-roll ads (those things that pop up before your funny cat video will play). Our call to action is for people to sign a petition if they agree that we need a housing plan to expand housing supply. We’ll go live with the full video tomorrow, but you can watch it on the petition page. We’re looking forward to more discussion and debate. But we’re really hoping the Council will stop taking actions that make things for housing worse, develop a plan in collaboration with everyone involved, then implement that plan and hold itself accountable for progress.

 

Keep it Simple: Housing Supply and Demand

If you are a fan of The Office, you remember the advice that Michael Scott gave to Dwight Schrute when it came to closing a deal? Michael told Dwight to “K.I.S.S.; Keep It Simple Stupid.” Michael Scott certainly wasn’t the sharpest tool in the shed, but he was on to something when he realized the best ways to accomplish a task usually involved the simplest methods. This acronym, silly as it may be, is a cousin to another principle dating back over 200 years ago. The 19th century metaphysician Sir William Hamilton is credited with coining the term Occam’s Razor. Like the K.I.S.S. acronym, Occam’s Razor promotes simplicity over complexity. It is the principle that in the absence of certainty, the simplest hypothesis or the hypothesis with the fewest assumptions ought to be selected.

When it comes to housing, the good news is that are some simple answers. Slate‘s Reihan Salam recently wrote about San Francisco’s housing affordability conundrum (to put it lightly), tying astronomical prices to San Francisco’s stagnant housing supply in the face of incredibly high demand. Take it away, Mr. Salam:

Perhaps you believe, as many otherwise intelligent people do, that the law of supply and demand is somehow inapplicable to the housing market. Consider the following. While San Francisco’s housing stock grew by 8.8 percent between 2000 and 2010, for an average annual growth rate just under 0.9 percent, the average annual growth rate of the housing stock in inner Tokyo was 2 percent. The shocking result is that while rents have been rising rapidly in San Francisco, they’ve been falling, albeit slightly, in Tokyo.

Any traded good (like housing) exists in a market; in a free market, the price of that good is set by the demand from consumers for that good, as well as the supply of that good. If demand goes up and supply is held constant, the price of the good goes up. If the supply stays constant but demand drops (how many VHS’s could you buy today if you walked into a thrift store with $10?) then cost drops. If demand goes up and supply increases to keep pace with demand, costs will likely remain steady.

This principle applies to housing costs. It just does. And yet, many people remain skeptical that this relationship exists. I am not sure why this is the case, though I suspect it may have something to do with the inherent simplicity of the supply/demand relationship.

The housing issue is complex, so the answer for housing affordability must be complex! It couldn’t possibly be explained by such a simple concept! In point of fact, the housing issue is complex. An individual making 60% or less of the AMI may not be able to rely on the market to produce affordable housing. Government intervention is a part of the answer, including the housing levy and targeted subsidies for construction and tax abatement. But at the end of the day, unless we are ready to accept major tax hikes, the government will never have the capital to build enough affordable housing to actually make a dent in housing prices. The bulk of the solution will be market-driven.

This discussion is, of course, relevant to Seattle. Anyone looking for a new apartment or considering purchasing a home in Seattle right now is acutely aware of how crazy the market is. Seattle rents jumped 4.1% in the second quarter of 2014 alone. “But,” you ask, “isn’t Seattle going through a construction boom?” Yes, it is. But remember, supply is only half of the equation.

The fact is, demand for Seattle living has not just matched supply, it’s blown past it. This explains the faulty logic by those who claim all the new, expensive apartments are driving prices up. They’re simply correlating what they see: Lots of construction and price increase all at once. In point of fact, the construction boom is the only thing keeping housing prices from spinning off into their own San Francisco-like universe.

Both cities are highly attractive places where lots and lots of people want to live (read: demand). Yet neither is willing to sacrifice an ounce of “character” or “view protection” to allow enough new housing to meet that demand (read: supply). Even still, San Francisco, a city with 200,000 more people than Seattle, is building less new housing than we are. Is it any wonder they are, as Reihan Salam puts it, “America’s largest gated community”?

Seattle is currently on the same path, making similar mistakes San Francisco made decades ago. But it is not too late for a course correction. With the right policies in place, we can remain an incredibly vibrant, attractive city and provide housing at more reasonable prices for our citizens.  I, for one, am grateful for Seattle’s growth and its attractiveness to the country and the world. Let’s celebrate that we don’t have a shrinking population like Cleveland and Detroit. And let’s work hard to be more welcoming to the newcomers who bring life, wealth and culture to our communities.

Discourse over housing and growth should be based on facts

A version of this post appears as an article in the Master Builder Magazine, a regular publication of the Master Builders Association. It continues along the theme started with this mornings post by Nick Etheredge.

Here’s a sampling of the dialogue going on in Seattle about new housing and growth in the city.

“Such statements [from the Design Review Board] are banal, amateurish, agenda driven and ignorant.”

“We have had a history of people in the development sector who look for ways to misuse or stretch well-intended regulations for their own financial gain. And what that does is paint everyone else doing development as conniving, rude and rapacious.”

“Seattle Speaks Up is nothing more than a small group of bullies and cowards who hide behind anonymity and abuse the “Seattle Process” to protect their own narrow self-interests.”

“These are monstrosities, they ruin neighborhoods, [and] they literally destroy the value of the houses next door,”

“If, on the other hand, your complaint is that the new home will lower the value of your existing home, then you don’t have a case because that position is highly speculative. Speculation is for stock traders and entrepreneurs, not city/government policy.”

The conversation about growth and new housing has taken a brutal rhetorical turn. Lots of negative and angry words are hurled about on the Internet everyday. And builders tell me that, sometimes, they worry about their physical safety, worried that neighbors angry about the project might assault them.

Can’t we just stick to the facts? About six years ago the Puget Sound Partnership, a group dedicated to cleaning up the Puget Sound, issued recommendations that cities in the region should favor dense, compact development. Scientific data pointed, they said, to density as one of the best solutions to preventing further pollution in the Sound. Dense development means less surface water runoff that winds up in the region’s lakes, streams, and rivers that connect with the sound.

Here’s what I said then about the report’s implications for growth in Seattle.

This call for density comes at a time when our region is considering how to accommodate the 1.7 million people the Puget Sound Regional Council projects will be arriving in coming decades. The Sightline Institute’s 2007 Cascadia Scorecard puts our region 57 years away from achieving the important goal of 62 percent of the region’s people living in compact, transit-friendly neighborhoods.

Have we taken this scientific data to heart? Have policy makers in Seattle embraced the idea that if we are to grow sustainably and protect the sound, then we need more housing in smaller spaces?

Here’s a question a Seattle councilmember had about sinks in microhousing units:

It is our understanding that the private bathrooms attached to sleeping rooms in microhousing projects are often comprised of just a toilet and a shower. Has DPD considered requiring these bathrooms to include a sink as well, which would increase the number of sinks in each sleeping room to two? Please provide a summary of the Department’s rationale for either pursuing or not pursuing such a requirement.

That’s right, the Councilmember was worried about how many sinks are in microhousing units. He was responding to this concern at a public meeting by an opponent of microhouisng:

“Now when a person comes out of the bathroom and tries to wash their hands in their one sink, what happens if there is a head of lettuce in there?”

The reason the discourse has become so barbarous and pointed is that elected officials aren’t acting on the data, they are acting on the fears of current residents of our city. How does one respond to a red herring other than to dispute the facts? And when that doesn’t work, and the Council starts to mandate extra sinks, what then?

We’ve offered a document that we hope will start to shift the discussion towards solutions. Ideas for the Change: Seattle’s Housing Future, is a start at pulling together ideas that are tried and true, expanding programs that are already working, and proposing new ideas that should be tried.

Smart Growth Seattle doesn’t expect the fight to go away, and we intend to match the other side’s rhetoric with facts and with humor as needed. We’ll criticize officials and hold them accountable when they pander to NIMBYs and we’ll call out ideas that are antithetical to the principles of smart growth. But we also are ready with ideas when they’re ready to listen.

Microhousing Debate: Let’s Lower the Rhetoric

Hello Readers. My name is Nick Etheredge. I am a new contributor to Smart Growth Seattle. In a future post I will tell you more about myself and how I ended up writing for, and teaming with, Roger Valdez and SGS. In short, I am a Seattleite who loves cities in general and Seattle in specific. Like all of you, I want our great city to be the best version of itself it can be. Roger, myself, and the rest of the SGS team share a vision of what “the best version of Seattle” looks like and I will be using this blog to throw my hat into the ring, as Roger has done for awhile.

For now, I’d like to respond to this microhousing post by Erica Barnett of Publicola with a simple challenge for all of us taking part in this debate. The challenge is this: Let’s lower the rhetoric. In a time of rapid growth, like the one Seattle is currently experiencing, it is to be expected that some nerves will be frayed. Growth means change. Change (for some) is scary. Development is perhaps the hot-button issue in our city today, and microhousing seems to have taken center stage as the poster child of new development. And unfortunately, it has brought out our ugly side.

When I read Erica’s post, in which she responds to the comments coming from a few microhousing opponents, I was alarmed by the utter vitriol displayed by the neighbors (the term “carpetbaggers” was bandied about). As Erica alludes to, these people had no intention of having a meaningful, constructive, or respectful discussion of the issue. Their disdain for the product has morphed into a disdain for the people living there. This ugliness has reared its head before.

That is why I am challenging all of us, on both sides of the argument, to put aside the rhetoric, put down the pitchforks, and let our cooler heads prevail. More light and less heat. This is not a call to universal agreement with the other side. Like Roger, I believe the housing issue has a correct answer, which is to allow new supply of housing (of all kinds in all neighborhoods) to meet the very high demand from all those who wish to live here. I believe housing is a social justice issue and that ensuring everyone, at all income levels, can find proper shelter is critical if we are to champion ourselves as a sustainable, equitable city. But I understand that some people have a different viewpoint. As such, I am ready to have a respectful, constructive debate with those with whom I disagree.

Let’s show the country that Seattle is a place where evenly highly contentious issues are handled with dignity and class; that we can place reason above emotion. That we can be reminded that whatever our position, we are all Seattleites working to make this great city the best version of itself. I believe an issue as critical as housing is worthy of a constructive debate. So let’s hold ourselves to a higher standard. How I Met Your Mother‘s Barney Stinson spent nine years accepting all kinds of challenges. Let’s accept this one.

Vacancies Down, Prices Up

A Friday picture post. Here’s the full story at the Seattle Times; when there is a lack of supply, prices (rents) go up. Message to Council: we need more housing.