Whenever we criticize Seattle’s rush to density for its negative impact on low-cost housing, we hear the argument that adding residential units will expand the supply so that more 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, and certainly not when it comes to Seattle’s housing stock.
Too many variables intervene. Seattle is a built-up city with limited vacant land. Consequently, new, higher-end residential development often requires removal of existing lower-density, older housing stock that rented for much less than the new development replacing it.
As growth accelerates, so, too, does the demolition of these units serving low-income and working households. Over the last 30 years, our city has lost about 600 low-cost units a year to demolition, but last year, that number was up to 1,300.
Moreover, concentrations of new residential construction tend to drive up land values and, thus, rents on surrounding properties. More owners of older rental buildings, eying 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. The new owners promptly raise rents above low- or even moderate-income thresholds.
Put that together with demolitions, and we’re looking at 3,000 to 4,000 low-cost units lost per year. And this doesn’t count units lost to condominium conversions or speculative abandonment (perfectly good buildings sitting vacant for years, awaiting a developer’s wrecking ball). Upzoning a neighborhood only exacerbates these trends.
‘Trickle-down’ can’t happen
“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: Several thousand people each year are uprooted from their homes and communities by these market forces, spurred on by upzones and other policy decisions by our mayor and City Council. Where will they stay while waiting for supply to expand? Many wind up in tents under a bridge, in long lines for subsidized units or the suburbs, far from friends, jobs and families.
But no matter how long they wait, there’s still no trickle-down. Our population has grown, rising faster in high-growth times. The continued decline in household size also contributes to more demand. In good times, more young people leave parents and college for jobs and their own place. And more employment brings many younger, smaller households to Seattle, lured by new opportunities.
Over the 35 years we’ve been tracking Seattle housing trends, while jobs and housing both expand in high-growth times, the new jobs bring even more folks into town faster than we can build new housing for them. That’s no less true today.
Despite recent upzones that have added capacity for another 15,000 units in Seattle since 2010 and new construction at levels real estate analysts Dupre + Scott say, “have not been seen in a calendar year since the early ‘90s,” demand still outpaces supply. They report a vacancy rate in Seattle at 2.9 percent, down from 3.1 percent a year ago. And in January, The Wall Street Journal reported Seattle “leads the nation in rent increases” — up 5.8 percent in one year.
Corroborating this inverse relationship, King County’s 2012 Housing Needs Assessment reports that, “as jobs decline or increase more slowly (as in 1999 to 2002 and 2008 to 2010) vacancy rates tend to increase.” In effect, low-income and working people find more low-cost housing in down times when there’s less job creation, less housing demand and less residential construction (and less demolitions).
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 even working people. It makes things worse.
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 so adversely impact our existing supply of low-cost units. The runaway growth we’re now experiencing threatens Seattle’s affordability and livability.
Needing structural change
Before we upzone any more neighborhoods — before we give away the keys to the city 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 Council members so that each of them lives in and is accountable to the neighborhoods or “districts” that elected them. The “7-2 initiative” heading for the fall ballot, if approved by voters, would create such system. This, right now, is our best hope to break the pro-density lobby’s lock on city hall.
JOHN V. FOX and CAROLEE COLTER are coordinators for the Seattle Displacement Coalition (www.zipcon.net), a low-income housing organization. To comment on this column, write to QAMagNews@nwlink.com.