This Thursday the Seattle City Council’s Planning Land Use and Sustainability (PLUS) Committee will meet to hear recommendations about how to finalize last year’s emergency small-lot legislation. The Department of Planning and Development will present several months worth of work on moving ahead on legislation. One important point that needs to be made in these discussions is the effect job creation has on housing price and how allowing single-family home construction can help make Seattle affordable.

Over at Seattle Bubble, Tim Ellis does a great job of summing up first quarter reports on housing supply and price in Seattle and the region. Housing prices are going up and Ellis quotes J. Lennox Scott, chairman and CEO of John L. Scott, Inc., who says that he “attributes surging sales and prices to several factors, including positive job growth, historically low interest rates and fewer homes being listed.”

Supply of new homes isn’t keeping up with demand, and that certainly will lead to higher prices. Other factors cited by Sanjay Bhatt in his article quoted by Ellis are:

Some sellers are waiting for prices to climb higher before listing their homes. Others still owe more on their homes than they’re worth.

A third group of sellers is unwilling to interrupt the cash flow they receive from renting out their homes at high rates.

But more jobs are coming. The Business Insider says that Amazon is going on a “hiring binge,” as it ramps up its sales force. New jobs are great news for the ailing economy, but with low inventories where will new workers relocating to Seattle live? The good news about more jobs might end up blunted by low housing supply that could lead to surging prices.

The City Council continues to put its attention on what it calls “workforce” housing, units of rental housing priced at 60 to 80 percent of Area Median Income. The truth is that the market is already producing lots of rental housing at this price point. Small, affordable apartments are the most obvious example. Keeping that choice for new workers is going to be an important part of Seattle’s housing solution.

But many of the new workers will want a detached single-family home. The conventional wisdom is that new single-family homes are very expensive in Seattle, even smaller more energy efficient homes. Some argue that single-family homes are beyond the reach of most young, new workers.

While a new single-family home priced at $665,000, for example, might seem out of reach, let’s think it through for a moment.

House Price:               $665,000
Loan:                           $562,500 (10 percent down, 30 years)
Monthly Payment:    $     3,176

For a home at this price, a family with a household income of about $125,000 would be paying roughly 30 percent of their monthly income on housing costs. Not every household earns this kind of money, but many professionals moving into the city to work at Amazon will have two median level incomes (Real Area Median Income in Seattle is about $64,000 per year) could afford a new single-family home at this price.

And as I pointed out last week, a Passive House designed by Dwell, sold for about $100,000 less than this hypothetical $665,000. That’s an innovative, super energy efficient house that under the same loan scenario described above, would be even more affordable.

Seattle needs a strong supply of housing priced for people who earn a lot less than Real Area Median Income, and often that housing needs subsidy from grants, low interest bonds, and tax credits. But the market, if it’s allowed to, can also provide choices—and home ownership—for people who earn median incomes. And just as important these homes should be in Seattle where access to transit and jobs makes living here more sustainable than in suburban sprawl. Let the Council know what you think.

 

WHEN				Thursday, March 14, 2013, 9:30 a.m.
ADDRESS				Council Chambers    Seattle City Hall, Floor 2 600 Fourth Avenue Seattle
CONTACT				Richard Conlin, Chair richard.conlin@seattle.gov 206-684-8805
ADDITIONAL INFORMATION				Visiting City Hall