Whenever we criticize how Seattle’s rush to increase density creates a negative impact on low-cost housing, we hear that adding residential units will expand our housing supply. Then, the reasoning goes, these extra units eventually will trickle down and become affordable to low-income and working people. Despite the appeal of that simple supply-and-demand argument, markets only behave like that in a first-year economics class, not when it comes to Seattle’s housing stock or any other real housing market.
Locally, too many variables intervene. Seattle is a built-up city with limited vacant land. New, higher-end residential development often requires the removal of existing older, lower-density housing stock. That housing rented for much less than the new development replacing it.
Moreover, concentrations of new residential construction tend to drive up land values and, thus, rents on surrounding properties. More owners of older rental buildings, eyeing quick returns in a hot market, sell to speculators and developers. Annually, 2,000 to 3,000 units in older buildings are sold in Seattle during periods of high growth. To cover financing, the new owners promptly raise rents.
Last year, 1,300 low-cost units were demolished. Add that to the low-cost units sold in older buildings, and we’re looking at a loss of 3,000 to 4,000 low-cost units per year. And this doesn’t count units lost to condo conversions or perfectly good buildings sitting vacant for years, awaiting a developer’s wrecking ball.
“But wait,” pro-density apologists say. “In high-growth times, we build many more units than are lost to these forces, and prices ultimately will fall.”
Let’s get real: Pro-developer policy decisions by our mayor and city council uproot several thousand people each year, along with upzoning, a process that uses zoning changes to increase density. Some people wind up in tents under a bridge, in long lines for subsidized units or in the suburbs, far from friends, jobs and families.
No matter where they end up, there’s still no trickle-down. A decline in household size has led to fewer people living in one space. This, coupled with population growth, has caused an increased demand in housing. In good times, more young people leave parents and college for jobs and their own places.
More employment opportunities bring many younger, smaller households to Seattle. Over the past 35 years our studies have shown that, while jobs and housing both expand in high-growth times, new jobs bring even more folks into town faster than we can build new housing for them. That’s no less true today.
Despite upzones that have added capacity for another 12,000 units in Seattle since 2010, demand still outpaces supply. Real estate analysts Dupre + Scott report a vacancy rate of 2.9 percent in Seattle, down from 3.1 percent a year ago. And in January, The Wall Street Journal reported that Seattle “leads the nation in rent increases,” up 5.8 percent in one year.
The big push for upzones and more density is not the variable that brings rents down or frees up supply for those at the bottom or the people right above them. Generally it makes things worse for these groups. Mind you, we’re not arguing here for no growth at all: No one wants to be Detroit. Instead, we’re advocating for moderate, managed and reasonable levels of growth that don’t adversely impact our existing supply of low-cost units. The runaway growth we’re now experiencing threatens Seattle’s affordability and livability.
Before any more upzones are approved and we give away the keys to development interests, let’s first put in place measures that prevent demolition or require developers to replace, at their expense, any low-cost units they remove. And let’s adopt a right-of-first-purchase for low-income tenants and give them the city-levy dollars they’d need to buy their own apartments before they’re sold to speculators and yuppie gentrifiers.
The best hope for Seattle’s neighborhoods and the future of our existing low-cost housing stock is structural change. We need to change the way we elect our city councilmembers so that each of them lives in and is accountable to the neighborhoods or districts that elected them. If approved by voters, the “7-2 initiative” heading for the fall ballot would create such a system. This, right now, is our best vet to break the pro-density lobby’s lock on city hall.