‘Tis All in Pieces: The Confusing Cost-Price-Ideology Housing Debate

Save Old Buildings

‘Tis all in pieces, all coherence gone,
All just supply, and all relation;
Prince, subject, father, son, are things forgot,
For every man alone thinks he hath got
To be a phoenix, and that then can be
None of that kind, of which he is, but he.

From An Anatomy of the World by John Donne

Recently someone sent me a link to University of Washington Professor Theo Eicher’s 2008 study on how land use and other regulation affects housing price. Eicher’s thesis is that cities, and Seattle in particular, are overregulated, with rules that add measurable costs to housing construction that in turn result in higher prices. The study was seen, at the time, as salvo against Washington’s Growth Management Act, and proponents of the GMA rallied against Eicher’s study and the Seattle Times article about the study. It’s worth taking a quick look back at the discussion then about affordability and where it is now.

Eicher’s study concluded that, “statewide regulations and growth management are associated with increases in housing prices.” He went on further, adding

When statewide regulations negate sprawl or limit building heights, they exacerbate agglomeration pressures at the city centers. Ultimately these dynamics are reflected in the increase in housing prices

Supporters of the GMA pounced. My former colleague Eric de Place at Sightline wrote a three part series blasting the Seattle Times article on the study, and one on the study itself heavily based on a paper refuting Eicher written by the Washington Chapter of the American Planners Association.

De Place’s work flattening the Seattle Times piece demonstrated the folly of the idea that growth management in general and the GMA in particular are the cause of all sorts of bad things, including high housing prices and even, in a bizarre twist of data and credulity, sprawl itself.

There are plenty of good financial reasons single-family housing developers who are building outside the Urban Growth Area have to blast the GMA, and forces aligned against more growth in cities like Seattle, would rather see growth go somewhere else, something limited by the GMA. But their attacks on growth management are usually blunted by credible arguments on the other side.

So in 2008, right before the collapse of the housing market and the economy with it, that’s where the discussion stood. On the one side progressive, liberal supporters of the GMA and, on the other, developer advocates who opposing the limits imposed by the GMA. Increased costs associated with regulation were downplayed by greens and builders argued that if you were mad about housing price, you had regulation to blame.

But even back then de Place was wise to point out the distinction between the GMA and other regulations limiting the use of land in our cities in the region.

It’s too easy to conflate “regulation” with “the growth management act.” In fact, that sort of conflation happened in the press coverage, and it’s been happening since in political circles.

This conflation is important, because it is the source of a major hang up in the discussion of land use regulation and affordability.

The truth is that the Growth Management Act is a way of pushing future growth into cities like Seattle. But what happens when the growth gets here? Too often it runs into opposition from people who are already here. And oddly, it’s becoming affordability advocates who are now criticizing the Growth Management Act. Here’s Kate de la Garza (a non-profit housing developer and all around smart person) writing in the comments section of a post I wrote for Publicola on prices and the Growth Management Act:

I think when you really look at it, what density has done has pushed rental housing affordability further and further out of Seattle, making Seattle urban villages almost exclusively enclaves for the rich and well off. (So on a macro-level, I may agree with your argument, if you concede that said affordability is located in Renton or Tukwila.) I am working on a study of this, by looking at historical date related to cost of rental housing in urban villages. My aim is to demonstrate with hard data that the average cost of rental housing has steadily risen within urban villages since the GMA was enacted.

Post housing boom it’s now the social justice set that is seeing the GMA as a problem when it comes to housing price.

And, in something of a reversal, Sightline’s Alan Durning is now pushing for less regulation, acknowledging that too many rules push up housing costs. Here’s Durning on occupancy limits in a long series on housing rules and regulations that he thinks should be abolished:

These two stories hint at what turns out to be a giant opportunity hiding in plain sight. Across the Pacific Northwest, occupancy limits constrain access to the cheapest, most profitable, most abundant, and most sustainable housing option currently available: bedrooms in existing buildings. They criminalize the simplest and perhaps the oldest solution to housing affordability: roommates.

Allowing Durning’s wealthy friends to have lots of roomers isn’t going to put a dent in housing supply, but his point is pretty clear: fewer rules could help reduce housing price by allowing more options for people looking for housing.

What’s going on here? Progressive Urbanists like Dan Bertolet have landed on the supply side shores in Seattle, finally realizing that making more rules about housing—even well intentioned rules like incentive zoning—actually make housing more scarce by making it harder to build. That reduced supply means higher prices. Thoughtful environmentalists like Durning are pushing for fewer rules and more flexibility. But social justice advocates and NIMBYs are banding together to add more rules in the name of affordability or just simply slowing growth.

I think what’s happening is an ideological realignment on growth that is painfully pulling apart an old coalition of urban planners, environmentalists, and progressives who, generally, have been in alignment on social and political issues. But if we want to tackle sustainability and reduce the effects of climate change we have to build more housing in a smaller footprint: it’s called density. The harder we make it to do that by imposing taxes, fees, and fines on people creating housing the more expensive we make it.

Regardless of ideology the facts are pretty simple. When government limits housing inventory with zoning and adds cost with regulation prices for housing goes up. While these facts might create ideological whiplash for liberal Seattle, we need to get over that quick and make it easier to create more housing.

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One Response to ‘Tis All in Pieces: The Confusing Cost-Price-Ideology Housing Debate

  1. Josh Mahar says:

    Very interesting stuff Roger. The massive shift in coalitions is certainly intriguing and it will be fun to watch how each of the mayoral candidates maneuver that come campaigning season.

    I’m still not sure I’m sold though on the simple mantra: more housing = more affordability. I understand that in the broadest of terms, yes this is true. If no additional housing was built then yes, current housing prices would go up. But I’m not sure some of the big regulation issues at hand (height limits, incentive zoning) make any difference. Let me try and articulate some of my hang ups.

    First, it seems to me that most regulatory changes would be captured by land owners, not developers. If it becomes cheaper to build for developers, than that money can be used to bid up land prices until we end up back at the same profit margin that existed before, thus not changing the affordability of housing in the short term.

    Second, regardless of the incentives to develop, you will never get any long term oversupply of housing. As soon as developers start having trouble filling units, other projects will be put on hold until rent prices return to what they were.

    Finally, I do agree with the idea that today’s new construction will be tomorrow’s cheaper units so more is better, but I don’t necessarily see Seattle having an issue attracting development. In 2011 Seattle was in the top 10 metros for new home construction (http://www.theatlanticcities.com/housing/2012/05/top-us-cities-new-home-construction/1935/#). I can’t confirm this myself, but anecdotally I’ve also heard numerous pundits call this one of Seattle largest building booms. So it doesn’t seem that regulations are somehow denying new construction in Seattle.

    The larger issue for Seattle’s affordability seems to be that today’s middle to upper classes are more attracted to in-city living than suburban living. This is a national trend and unless it reverses, over the long term any inner-city unit will have a premium compared to similar suburban units. Period. (Unless directly subsidized of course.)

    Now you might say that Seattle stands as relatively more expensive compared to other major metros. Here were really just talking about prices for mostly creative class folks so its somewhat irrelevant to the affordability discussion. However, i think a lot of it can be attributed to good wages and good job opportunities in Seattle. And to the fact that people who live in Seattle may be willing to pay more for housing to take advantage of other amenities (close hiking, in-city biking, good arts, etc.)

    So what many of these discussions come down to I think is overall density. Height limits will indeed limit the overall number of people that can potentially live in a particular geographic area. I think many urbanists’ stances are that more density is inherently better. But I’m not in that boat. I’m with Kaid Benfield is believing that a 4-8 story neighborhood (like Capitol Hill) achieves all of the sustainability and health benefits you need. http://www.theatlanticcities.com/politics/2012/11/urbanist-case-keeping-dcs-height-restrictions/3934/

    I’d compare it to a similar discussion about increasing gas mileage. Eric De Place once did a great post about emissions called “18 is enough” where he made the very convincing case that moving from 15mpg to 18mpg was much more effective than moving from 50-100mpg.

    I’d say “6 is enough”. Trying to add more 4-6 story buildings into currently sprawled suburban SFH neighborhoods is a much more effective strategy than trying to build skyscrapers on Capitol Hill or SLU or Pioneer Square.

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