« Cloudy Forecasts | Main | Smarter Gas Tax III »

May 23, 2005

I Must Be Dense

Seems like there's been a rash of anti-density columns in Seattle of late. First there was last week's Mossback column in the Seattle Weekly (which I discussed here). Then, on Saturday,  P-I columnist Joel Connelly got into the action with this chestnut in a piece about Seattle's struggling middle class:

Are working families going to move into the higher buildings and downtown condos championed by Mayor Nickels? Not likely. The new living space seems intended for affluent empty nesters.

Granting Connelly his due:  that may well be right.  But if so, it's exactly the sort of thing that would help middle-class families who are being squeezed by high housing prices.

The developers who are planning to build some of the downtown residential high rises are probably hoping, very much, that they will be in demand by empty nesters -- folks who'd like to downsize from the single-family homes where they raised their kids, and are looking for a slightly less expensive and more manageable abode.  In fact, for the developers, it would be a dream come true if that happened, since some empty nesters would have a fair bit of cash on hand if they sold their homes.

But what happens when a lot of people sell their single-family homes?  Well, if the number of single family homes on the market goes up, then their price should go down -- or, at a minimum, not rise quite so quickly. 

Which goes to the heart of the matter:  all else being equal, building more housing tends to make housing less expensive.  And one reason that housing prices are rising so quickly is because there's just not enough of it to meet the current demand. Of course, the supply of single-family homes with yards within city limits is pretty much fixed, which means that just about the only way to build more housing is to build a) small accessory dwelling units (also called grandma flats), b) townhouses, or c) multifamily housing, such as apartments or condos.  (Well, you could also cover Lake Union with houseboats, but let's not get into that here...)

This is all pretty basic stuff, but apparently it's easy to lose sight of. 

In fact, it seems to me that some folks who are so critical of increasing density are confusing cause with effect.  They see the cost of housing going up; they see new condos being built, and proposals to build even more; and they figure the new construction is causing the price increases.  That's sort of silly, when you think about it:  the pressure for high-rises, new apartments and condos, etc., is an effect of high housing prices, not their cause. In fact--and at the risk of anthropomorphising an abstraction--new condo construction may be an example of the market's invisible hand trying to bring housing supply into line with demand.

In terms of affordability, if there's one hidden danger with the new construction, it's this:  if you build intersting neighborhoods with abundant housing, nice amenities and a good mixture of stores and services, you may also be creating the kinds of places where people really want to live.  The sort of neighborhoods that people are willing to pay a premium to be a part of.  So if you do too good a job of creating nice places to live throughout the city, then people will start migrating to Seattle for its high quality of life. 

Which is, in many ways, a nice sort of problem for a city to have.

Posted by ClarkWD | Permalink


TrackBack URL for this entry:

Listed below are links to weblogs that reference I Must Be Dense:

» New development not the cause of high housing prices. from City Comforts Blog
The (interesting) comments on this post at Matt Yglesias were so all over the place, mixing up so many issues, that it's nice to see that someone thinks clearly and inteligently about the dynamics of urban housing and neighborhoods and Sprawl. ...it se... [Read More]

Tracked on May 25, 2005 12:04:37 PM


Good post.
Why no trackbacks?

Posted by: David Sucher | May 24, 2005 5:51:17 PM

While there are many good reasons to support increasing density in Seattle, making housing more affordable by bringing supply more into line with demand isn’t one of them.

The market based supply/demand thought experiment posed in “I Must Be Dense” is fatally flawed from the beginning as it rests on the unachievable condition of “all else being equal.” If all else had been equal, we would all be marveling at the great housing affordability achieved in Belltown in recent years as a huge number of new condo units came on line. But back in reality, the buildings got higher, and so did the prices.

Seattle’s high quality of life (good jobs, beautiful setting, amenities) will keep housing demand ahead of all realistically plausible housing supply, no matter how densely we grow. People will continue to move here as long as there is a high quality of life.

But let’s assume for a moment that I’m wrong. Imagine that we were able to build so many new condo units in such a short period of time that housing prices in Seattle came down. What then? Many condo developers would face huge losses, and no new condos would be built until it once again was deemed to be a profitable enterprise. Developers would wait for demand to again exceed supply.

Within a market context, the best that density offers Seattle’s affordable housing crisis is a temporary reprieve from a structural problem. This is not a compelling argument for density. Worse, it would give developers a windfall through conversion of the commons (air-space) into private development rights, while squandering a precious opportunity to build social equity in the form of permanently affordable housing.

But there is a way that density can become a long-term ally of affordable housing and help keep our city a great place where all of us can afford to live. First, allow density bonuses for developers that will build a certain number of affordable homes within their projects. Then permanently preserve the affordability of those homes through a community land trust http://www.homesteadclt.org or other similar device. This retains the affordability of those homes as a commons benefiting us all.

If we are to have the truly diverse, thriving, socially just city that we desire, we must create community friendly rules that govern a portion of our housing and other basic building blocks of our society. Simply allowing the market to set the pricing of all our housing will not get us there, no matter what the density.

Posted by: Sheldon Cooper | May 25, 2005 9:17:31 AM

David --
Sorry about the lack of trackbacks. I keep forgetting to click that little box. Should be fixed now.

Posted by: Clark Williams-Derry | May 25, 2005 9:44:11 AM

I think you bring up some good points, but I'm not sure I can respond well to all of them -- even though this is the internet, I don't want to spout opinions that I haven't thought through or don't know a lot about.

But a couple of responses. First, I think community land trusts are nifty. You go, boy!

Second, you and David Sucher, in this post:
both point to a core problem -- that maintaining and even increasing the supply of affordable housing is a long-term structural problem, especially in a city with a reputation for having a high (and hopefully rising) quality of life. So I think you're right: providing decent housing for the truly needy is something that the market, by itself, doesn't do all that well -- just as the market, by itself, doesn't do a good job of narrowing income and wealth inequalities.

Third, my original post was specifically directed at Joel Connelly's contention that dense development -- such as the proposed South Lake Union projects -- is driving out the city's middle class. Which, no matter how I think about it, seems somewhere between backwards and wacky. It may have all sorts of other effects, intended and unintended -- including, possibly, decreasing the supply of low-income housing close to downtown. But increasing the cost of middle-income housing citywide doesn't seem to me to be one of those effects.

Fourth, it doesn't follow that increasing the supply of housing in Belltown should decrease the cost of housing in Belltown. First off, there's the housing bubble (or "froth" in Alan Greenspan's term), which is making it hard to figure out what's real and what's not in the housing market. And second, housing markets are regional (and, obviously, complex); increasing the supply of high-value housing close to downtown can siphon off the demand for housing farther away from downtown. There are 2 risks, of course -- 1) that rising prices downtown will force the "affordable" housing to the outskirts of town, where jobs are scarcer, transportation costs are higher, and folks pay for cheaper housing in part by spending more time & money on tranportation. And 2) that places like Belltown will attract extra people to the Seattle area from outside the region, which, all else being equal, will increase housing costs more generally throughout King County.

I'm in the middle of a book on smart growth and affordable housing -- by a bunch of academics who all seem to disagree with one another. If I learn anything that might be useful, I'll try to post on it.

Posted by: Clark Williams-Derry | May 25, 2005 10:54:16 AM

Having lived in Seattle (1970-1996) and taken my share of advantage of aged decrepit low-income housing, it seems to me that the 'young turks' are complaining about the end of a market failure AND the end of regulatory misadventure.

The market failure started with the suburban exodus and the Boeing bust c 1970 that left many attractive buildings underpriced on the sales or rental markets.

The regulatory failure is exemplified by the South Lake Union mess. In the 50s and 60s the city decided that Lake Union would be a polluted industrial lake, and that south of Lake Union would be a busted district, best used for freeways, parking etc. In actual fact, the commercial laundries, newspaper presses, and rail-served distribution industries soon left the area. By the mid-70s you could hardly give away warehouse space there.

It was perfectly foreseeable that this bonanza of underpriced real estate and buildings would eventually come to an end.

Almost by definition, low-income housing must be subsidized, and, while it may be appropriate that developers pay a large part of the subsidy, having them pay in the form of overbuilding and high vacancy rates that depress market pricing is arguably not the best way. It is, however, (in spite of the inefficiency) a way that developers can understand. An odd comment on the American version of 'human nature'.

In any case, in the mid-90s we had a Commons proposal that would have stabilized South Lake Union at a lower density than is envisioned today. Seattle 'leftists' and used car dealers bitterly opposed and defeated this proposal, leaving the fate of South Lake Union in limbo until a rising tide of market forces would create a wave high enough to overcome previous opposition.

I personally find this interesting because I lived on the edge of this for so long. I imagine that most Seattleites will, as in the mid-90s, extend the most cursory inspection and vote for the most 'attractive' proposal that is offered.

From a safe distance, it's all good clean fun.

Posted by: serial catowner | May 25, 2005 11:08:24 AM

The Belltown Anomaly:

Maybe some of us have forgotten that for many years the housing prices in the Regrade were artificially depressed by the three-story limitation on development. The land had become too valuable relative to the possible income from a three-story development to allow new building.

This is one way to preserve low-income (and low-quality) housing, but it is a political house of cards.

When the market would support six-story development years before it is allowed to occur, it should come as no surprise that building six-story buildings does not result in a vacancy rate that limits price increases.

Posted by: serial catowner | May 25, 2005 11:20:35 AM

Three story limitation on development/
When was that?

Posted by: David Sucher | May 25, 2005 12:02:48 PM

I think this ran right through until the 90s. Older than time. I don't really know when it began. I think this was publicly debatd in the 80s if you want to try searching the papers for it.

It was actually visually pretty obvious, in 1985 the Regrade was almost a homogeneous mass of three story buildings from the 20s-30s.

Posted by: serial catowner | May 25, 2005 2:29:41 PM

Hey Clark,

The Stranger blogged you at their new blog Slog. Now I'm out of words that end in -og.


Posted by: Michael | May 25, 2005 3:47:24 PM

It's true that the Regrade was lowrise until relatively recently but you might want to check to see if it was zoning; I am pretty sure it was not.

Posted by: David Sucher | May 25, 2005 4:46:00 PM

If I remember correctly from the public comment meeting I went to last year, there was a zoned height restriction of 85 feet in parts of the Regrade, though the limit in other parts was 200+.

Posted by: Michael | May 25, 2005 5:15:53 PM

Well, as tempting as it is to spend an afternoon trying to get a straight answer from DCLU.....

Zoning maps would show, but where you find the historical ones online I do not know.

Posted by: serial catowner | May 26, 2005 4:59:27 AM

I think Michael is correct: low zoning has not been the issue in the non-development of the Regrade. Seattle politics being what it is, do you really think that lines on a map from a City Council would have stopped development there? i.e. the area would have been up-zoned had that been an issue.

Posted by: David Sucher | May 26, 2005 8:13:59 AM

Well, in what is esentially a matter of fact, wouldn't it be better to check the facts?

In practical terms, until the boom of the 90s Seattle was full of stuff that made no sense unless you knew about the lines on the map. You would also need to know about the redlining, and I can guarantee you that was alive in 1975 when I bought a home in a 'black' neighborhood.

Settle politics wasn't always like it is today. That's why former mayors and the city's chief hearings officer went into property development after they were in office, not vice versa.

Posted by: serial catowner | May 26, 2005 4:06:20 PM

I was trying to be polite, Scott.

Posted by: David Sucher | May 26, 2005 6:51:02 PM