[mhays]

I agreed that a new building can raise neighboring existing rents on a very localized basis by making a neigbhborhood more desirable, but not on a broad basis. You've put the idea out there without any such context I've seen, as if it's a broader market dynamic. That would conflict with the tendency of any widening in the supply/demand equation to flatten or reduce prices. As for "setting a bar" on pricing, that's a sub-dynamic at most, and has more to do with one building jockeying against its neighbors.

Put all that together and you've suggested that new construction raises prices, and also said it can keep prices in check. That's what's inconsistent.

As for new construction, of course there's no good prediction. It's all opinion-based cost/risk/return models by each developer and financier. But here's the key: keep the entitlement process in check, and avoid piling on extra costs, and developers will tend to stay well ahead of demand, and compete with each other at lower price points than they would otherwise. That faster the process the more nimble they can be.

I didn't say supply will always stay ahead of demand (better defined as what demand would be at a given price...price fluctuation always keeps supply ahead in real terms). But with Seattle's amount of buildable land (at least for now), developers can build a lot of supply if they want to. They'll want to if the economics work, which gets back to avoiding the extra fees. But raise development cost by 5% and maybe it won't make sense to build until the resulting scarcity moves rents that much above where they'd otherwise be.