Solve Transit Oriented Blight, and Affordability: Build More Apartments!

TOB or TOD: More apartments are part of the answer

Instead of presenting it like a Christmas present for Seattlites worried about housing affordability, The Seattle Times’ Eric Pryne indulges in some rather bizarre Christmas Day alarmism about the growing number of apartment buildings.

A year into the Seattle area’s biggest apartment-construction boom in decades, some analysts say it’s in danger of getting too big.

They’re starting to use the “O” word — overbuilt.

Overbuilt! Oh no! If it wasn’t so funny, it would be serious. The economics of this are simple, and Pryne covers them in his story. A developer he quotes points out that because of the possible glut of apartment buildings, “the higher rents developers are banking on may not materialize if wages remain stagnant.”

That’s called a drop in price, which means that if wages stay the same or even go a up a little bit then living in Seattle just becomes more affordable. That’s what we want, right?

But Pryne’s story adopts the view that is often taken by the Seattle City Council and others, that somehow building too many apartments will be a bad thing, even worrying that it might lead to “ghost towns.” It’s true that overbuilding might be a bad thing for developers, but that’s their problem. If they miscalculate, their loss is the city’s gain. More apartments than people wanting them means the prices for those units falls, making them more competitive housing options for people moving into the region.

And even more strange that the headline and subtitle of Pryne’s story–“Building boom for Seattle apartments may be overdone”–is the subtitle for it:

A year into the Seattle area’s biggest apartment-construction boom in decades, some analysts say it’s in danger of getting too big.

Now if the Seattle Times was a trade journal for apartment developers one could see the reason for taking this angle. “Watch out folks, prices for apartments may be coming down. Be careful what you build!”

But the subtitle could just have easily been:

A year into the Seattle area’s biggest apartment-construction boom in decades, recent data points to possible fall in apartment prices, making Seattle more affordable.

The reason I am hassling Pryne here is that too often his story’s mindset is the one that informs the anti-growth sentiment. “Why grant these people a rezone to build more apartments, we already have too many!”

But that’s exactly when we should be opening the permitting spigots, permitting even more apartments. Private developers take the risk in these cases. If they “overbuild” it just means more affordable units for prospective renters. When supply goes up that’s good for people in the market for housing.

That’s why many of us pushed for more height in Roosevelt. The proposal there will result in more apartment buildings. This argument isn’t just about the whims of local neighbors who don’t want the view of the high school blocked, but about regional issues affecting the housing market and affordability. Roosevelt with 65 feet can be part of the affordability solution, rather than Transit Oriented Blight which is what would be guaranteed if the neighborhood opponents of a rezone got their way.

For everyone worried about affordability these days let’s be clear: an “overbuilt” apartment market just means that living in dense, mixed use neighborhood gets easier. It means that people struggling to make ends meet can more realistically consider living near transit than they could otherwise. Stories like these make the point that economics is complicated for sure, but when it comes down to it, the principles are pretty simple. More housing means lower prices; but you can’t create more housing when land use policy makes it more difficult to build those units.

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7 Responses to Solve Transit Oriented Blight, and Affordability: Build More Apartments!

  1. The economics of it all just seems too mind boggling for you, Roger. It there are too many apartments with too low rents the apartment owners won’t be able to maintain them. So they’ll be loosing money and lay of maintenance employees. (Must be what happened to Mr. Sisley.) Builders will quit building, (because they’ve over-built) and the building trades will be out of work, hence, not even be able afford the low rents. Looks like the continuing of the recession to me. People are more worried about jobs these days. Only you seem fixated on housing rents.

  2. zefwagner says:

    I generally agree with Roger on this one. A glut in the short-term leads to more affordability long-term. We see this in Capitol Hill, which has benefited from massive “overbuilding” of apartment buildings in preparation for the Worlds Fair in the 60’s. We got a huge amount of building stock out of that particular bubble. The 2008 housing bubble could have been good if it wasn’t so focused on single-family homes in the exurbs. In fact, we see some good in all the condo buildings built during the bubble that are no being converted into much more affordable apartments.

    The only time a glut could be bad is if it is concentrated in one area. If a whole building sits empty for a long time in hopes of higher rents, then the neighborhood can suffer because vacant buildings are a sign of blight. However, this only happens because the developers are stubbornly trying to make profits when they should really just cut their losses.

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  4. Lack Thereof says:

    Glenn: A recent City study showed that a full 10% of Seattle households are paying over half their income in rent, and a full third of households paying more than the classic 30%.

    Seattle landlords are in no danger of going under – our rents are artificially high. When a modern 1 bedroom rents for $1400/mo, there’s plenty of room for rents to drop.

  5. Lack: I keep asking people for examples where more building leads to lower prices in desirable cities. You all just assume it’s true because it makes sense. I’m not from Missouri, but you’ll have to show me anyway.
    I feel sorry for the 10%. What were they thinking when they signed that lease? And the 20% you chose to pay more than 30% of their income for housing also made a choice, one they figured they could handle.
    If you want to build a Walmart for human storage then try it in your neighborhood.
    Controlled growth is not a bad thing. In fact, it is what has made Seattle a city of desirable neighborhoods.

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  7. Pingback: Build, Baby, Build! “Overbuilding” Seattle May Be a Good Idea | Seattle's Land Use Code

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