SEATTLE | CITY Activity (non-downtown)

[jpdivola]

Originally Posted by alki

New construction raises the rent ceiling. Old bldgs mostly follow suit. That's why rents are rising overall in the Seattle rental market.

Hum...That's a pretty novel interpretation. Are you actually arguing than new construction increases the rents on older units across the city?

Is the mechanism that new construction in the urban core makes the urban core more desirable (more street life, more interesting architecture, more retail/restaurants) which in turn attracts more affluent people in from the suburbs?

I guess the idea is that 1,000 new units will induce demand for 1,100 units?

I can maybe see a localized gentrification effect in less desirable neighborhoods. New development replaces blight, adds middle class residents/amenities, etc. But, I dunno if I can see this on a city wide basis?

[alki]

Originally Posted by jpdivola

Hum...That's a pretty novel interpretation. Are you actually arguing than new construction increases the rents on older units across the city?

Yes, I am making that point. If only new construction rents were higher, overall rents in the city would not be going up because the existing unit base is significantly larger than the new units coming online. Its only because landlords are raising rents on existing units that we are seeing overall rents jump up citywide. Owners of existing units see an opportunity and are taking advantage of it.

Renters in older, mediocre properties also are seeing bigger rent hikes than renters in newer apartments, perhaps because those of modest means have fewer affordable alternatives.

“You could raise your rents pretty aggressively without risking losing your renters to a new apartment property,” says Jay Parsons, director of analytics and forecast at Texas-based MPF Research.

http://seattletimes.com/html/busines...trendsxml.html

"Not only are the rates going up but the owners are not wanting to sign long-term leases," said apartment manager John Evans. "What they want to do is have short term leases where they can continually raise the rents."

http://www.seattlepi.com/local/komo/...le-4653750.php

[mhays]

You're all over the map alki, conflicting with yourself and uninformed at every turn.

The analyst was talking about standard supply and demand, in a tight vacancy scenario. Add units and you ease the price on older ones, the opposite of what you claim to think. I'm shocked this is confusing. Usually businesses try to price lower than each other, and apartments are no exception.

That affordable stuff at High Point is non-profit. Regular developers have been building there too, but that's either market-rate or they're subsidizing it as part of their deal. Try again.

Micro residents can be short-term or long-term. Maybe they forgot to ask you. Many are in the $600-900/mo range, similar to a lot of income-restricted units around town.

Your supply-keeping-up-with-demand point is right on. So why are you arguing against it elsewhere? I could refute you on most things by quoting you.

Micros either built or in the pipeline number in the thousands of units locally. As for whether they're a sigificant number, I guess we can hope the number gets larger, right?

[alki]

Originally Posted by mhays

You're all over the map alki, conflicting with yourself and uninformed at every turn.

The analyst was talking about standard supply and demand, in a tight vacancy scenario. Add units and you ease the price on older ones, the opposite of what you claim to think. I'm shocked this is confusing. Usually businesses try to price lower than each other, and apartments are no exception.

Excuse me but several posts back I said the very same thing to you. Supply and demand does effect price......mostly on a temporary basis. However, there are other factors at play. In fact, they have a greater impact long term on price than supply and demand. Those factors include availability of low cost, buildable land.........Seattle is constrained by water to its east and west, and by building costs.........Seattle's labor costs and material costs are higher than average for the US. Building a huge number of units will slow and even depress rents......TEMPORARILY. Long term, rents will continue upward so long as Seattle remains a growing employment center.....supply and demand be hanged.

That affordable stuff at High Point is non-profit. Regular developers have been building there too, but that's either market-rate or they're subsidizing it as part of their deal. Try again.

No. I am not trying again. There are number of ways to build affordable housing. One way is for the city to help non profit developers with their building plans by utilizing the fees they collect from for-profit developers. That's one way of leveraging those funds.

The city seems to be doing something else in Capital Hill:

Nine teams of developers — both local and national — are vying for a chance to build around the Capitol Hill station, which opens in 2016. A minimum of 397 apartments could be built on four sites on or near Broadway, between East John Street and Seattle Central College. At least 36 percent of the units must be reserved for lower income people.

http://www.djc.com/news/re/12067811.html

Why don't you check it out and report back to us.

Micro residents can be short-term or long-term. Maybe they forgot to ask you. Many are in the $600-900/mo range, similar to a lot of income-restricted units around town.

They are glorified dorm rooms. Hardly affordable housing for couples and families.

Your supply-keeping-up-with-demand point is right on. So why are you arguing against it elsewhere? I could refute you on most things by quoting you.

Dude, you are not refuting me. You only think you are. The housing problem as it relates to rent in Seattle is far more complicated than you are making it.

Micros either built or in the pipeline number in the thousands of units locally. As for whether they're a sigificant number, I guess we can hope the number gets larger, right?

I suspect micros have seen their day so enjoy their benefits while you can.

[jpdivola]

Originally Posted by alki

Supply and demand does effect price......mostly on a temporary basis. However, there are other factors at play. In fact, they have a greater impact long term on price than supply and demand. Those factors include availability of low cost, buildable land.........Seattle is constrained by water to its east and west, and by building costs.........Seattle's labor costs and material costs are higher than average for the US. Building a huge number of units will slow and even depress rents......TEMPORARILY. Long term, rents will continue upward so long as Seattle remains a growing employment center.....supply and demand be hanged.

I guess I'm not following you. I get that high density urban infill is expensive. Supply in Seattle is constrained by geography and lack of undeveloped land and Seattle is a high cost city, so construction costs will be expensive.

But, at the end of the day. Isn't this still all just basically supply and demand. As you say, rents will remain continue upward as long as employment grows (I.E. Demand keeps increasing). Limiting supply would only make things worse.... on a permanent basis.

Seems the only way to make a city cheaper is to engineer a Detroit-style economic collapse.

Short of that, it seems the best way to moderate price increase is more new construction to prevent SF-style shortages. Yeah, new construction is expensive due to development costs and will never be truly cheap. Seattle can't build it's way to sunbelt sprawl prices (on a psf basis). Affordable housing will need to be subsidized in some way. But, not adding supply seems likely to only make things worse.

[mhays]

You're not making any more sense Alki, and your examples are incorrect. But, although you're lacking a cohesive viewpoint, I'll take your individual points.

Your Capitol Hill and High Point examples are both subsidized. On Capitol Hill, Sound Transit is requiring developers to build low-income housing on its property. They'll pay for that because developers will pay lower ground lease prices. It's subsidized. High Point is a mixed-use redevelopment with Hope IV and levy funding and non-profit developers, plus special requirements of its market-rate developers. So....you don't have examples then?

The supply-demand equation isn't temporary. Where did you dig that one up? If asking rents get out of whack, they'll be undercut. These dynamics have always worked and always will.

You still haven't answered why you want to make market-rate housing more expensive with your fees. The vast majority of renters depend on market rate not getting out of whack. Why no sympathy?

Micros can serve any purpose. You'd (apparently) be shocked that much of the city is singles. Many live long-term in small units. But even short-term housing is a crucial element of affordability. Should people run out of options because YOU don't approve?

Micros are popular. Their main hurdle is a City that's making them more expensive, and some NIMBYs who don't want the poor folks living near them.

[mSeattle]

The "housing market" that is only corp banks/real estate corps will never ever supply adequate affordable housing. Development will always be significantly below demand. The only way that those two entities are involved in so-called "affordability" is through sprawl. Which is to say that it's a sham and not affordable. You have to have strong civic/government players (city/state credit unions and banks) to get to the volume and pace that leads to affordability.

[mhays]

That's not true. Sure, the market won't build midsize/large units that start affordable to below-median incomes, because things cost too much.

But as units age they move downmarket. Aside from the current frenzy of demand, living in buildings from 1925 or 1970 has generally been a good deal in Seattle. This relies on enough units getting built, i.e. avoiding San Francisco's problem of restricted supply.

And micros tend to be much more affordable. $800 isn't that bad to live in a desirable city, in a new, functional unit, without a roommate. Further, micro residents usually don't have cars or kids, so the typical 30% standard will often be more like 50%. I wish I'd had that option in my 20s.

[mSeattle]

Matt, you're starting at the wrong end, so to speak. Start at the wage end then you get to what is affordable.

[mhays]

Ok, let's use that 50% figure for housing, transporation, and (non) childcare. Base it on $12/hour and 40 hours. $480 x 4.3 = $2,064/mo, or $1,651 assuming 20% deductions. Call it $800 for the apartment and $50 toward transportation (for those who don't just walk).

That's amazing...developers are providing brand new market rate housing that's affordable at $12/hour. Shouldn't we gather around and clap?

Obviously shiny new micros aren't for the truly poor, and some cost well over $1,000. But they hit key segments that can't be served otherwise, except by subsidy.

[mSeattle]

You miss student loans. You assume 40hrs but many don't/can't do that. What happens when one loses hours or a whole job? You assume no children. This is a problem with current urbanism and sprawl.
You miss the $1600 move-in which means lots of months of saving (while paying existing housing and health...) then competing against existing city-folk and newcomers. This is not affordability.

Adult population outnumbers units and increases faster than units. The "market" (banks/real estate) will not/never build for true affordability. Their business model is debt.

[mhays]

Agreed, the point is affordable under certain conditions. The demographic I referred to is pretty large though...no reason they should suffer just because nothing has miraculously solved every side of the problem. Further, supply/demand works at the low-end too....with fewer micros, the same number of people are competing for fewer low-end units.

So what's your solution? If it's fees, anything you do will be a drop in the bucket, while directly making housing more expensive for hundreds of thousands of people. People earning over $12 aren't immune from affordability issues.

There are a lot of partial solutions. We have a very effective levy, which I'd love to expand. But mostly, we can avoid foisting added costs on new housing, so the price set by supply/demand will at least stay stable. Reduced parking is helpful. Liberalizing accessory housing policy would be big. Not persecuting the micro concept would help a lot. Upzoning a moderate amount more land (a little more multifamily zones) would untighten the land market and reduce or at least stabilze that cost.

That would at least reduce the number of people who had to make rediculous commutes, or have multiple roommates, or worse....instead of helping a relative few, and screwing everybody else.

[mSeattle]

Here's some of the things that I think should happen:

• Understand decent, affordable housing as an environmental and public health issue.
• Waive height fees and assess less property tax for projects that include some number of workforce housing units and family-size units.
• Give tax-incentive "lottery" for fast starts/completions (safety in mind).
• Give major incentive (waive fees, tax breaks etc.) for modular/container construction if the source product is manufactured locally.
• Increase local modular/container manufacturing companies.
• Put a "tax that hurts" with annual increase onto commercial surface parking lots and put the money into housing funds. The larger the lot the higher the tax.
• Put a "lesser tax" with annual increase onto surface parking lots adjacent to residential and put the money into housing funds. The closer to transit, the higher the tax.
• "Award" districts (property tax relief?) by percent of residential/small business growth/infill.

[mhays]

A lot of good ideas there.

[mSeattle]

Glad that these are points that we can agree on.

I still do think that there should be a city/state bank or credit union as one of the players to provide financing breathing room.

[mhays]

If we want housing to be cheaper, we have to treat it like a positive rather than something to punish and discourage. New housing saves the public money if it means shorter commutes and a larger in-town tax base for example.

Prefab might be a plus long-term as technologies improve. It has some hurdles, like needing to buy most of your materials way farther in advance than normal, which is hard with normal financing models, but I like the idea of being a center for those companies, and encouraging innovation.

Punitive/progressive taxation is a good idea if it's relatively gentle. Punishment can't make development pencil, but it can nudge land owners to try development or sell. That would be a good source of housing revenue, and coincides with getting more housing vs. the reverse.

Affordable new family-sized units are tougher. Fees might be 6% of the development cost, but the affordability deficit for the average <60% income family is several times that for new construction in multifamily areas. It would be a partial measure that would ease things a little. But rezone a few square miles of single-family to allow townhouses, maybe just outside urban villages and on small arterials, and skip any special bonus fees, and maybe you can cut tens of thousands off the total development cost per unit.

And accessory units. Hugely important for both the residents of those units, and the people with existing houses who could use the boost. I've yet to hear a reason other than nimbyism/parking/classism to be against these.

[mSeattle]

I think that the accessory model works to a point. They can be a problem in single-family areas that are off of the main transit routes. We could be packing more units (and cars) into the sprawling transit challenged areas.

Our best bet is TOD. For instance, Broadway as an example. Any retail rehab should require office and/or residential above. No single-floor rehabs, require three or more floors. We should encourage contemporary urban micro-walk-ups (apodments/micro apartments) since there may be multiple ground floor businesses and/or property owners. This gives a small developer an option other than owning large plots of land and building large bulky buildings.

Giving incentive to districts for infill/growth could help spread out the desirable, affordable and housing-diverse "urban" options within city limits. Rainier Valley is probably most need of improvement along with Beacon Hill. Northgate and Yesler Terrace need an incentive to pick up steam and get more project starts now.

[alki]

Originally Posted by jpdivola

I guess I'm not following you. I get that high density urban infill is expensive. Supply in Seattle is constrained by geography and lack of undeveloped land and Seattle is a high cost city, so construction costs will be expensive.

But, at the end of the day. Isn't this still all just basically supply and demand. As you say, rents will remain continue upward as long as employment grows (I.E. Demand keeps increasing). Limiting supply would only make things worse.... on a permanent basis.

Seems the only way to make a city cheaper is to engineer a Detroit-style economic collapse.

Short of that, it seems the best way to moderate price increase is more new construction to prevent SF-style shortages. Yeah, new construction is expensive due to development costs and will never be truly cheap. Seattle can't build it's way to sunbelt sprawl prices (on a psf basis). Affordable housing will need to be subsidized in some way. But, not adding supply seems likely to only make things worse.

No one is suggesting not adding to supply. I am unclear where you got that impression. All I am saying is that short of a huge structural change in Seattle's employment growth, housing is not going to be cheap long term no matter how many units are built.

[alki]

Originally Posted by mhays

You're not making any more sense Alki, and your examples are incorrect. But, although you're lacking a cohesive viewpoint, I'll take your individual points.

Let me make clear.........you want to have future discussions with me stop saying I am confused or not making any sense. If you don't understand my posts, ask questions please.

Your Capitol Hill and High Point examples are both subsidized. On Capitol Hill, Sound Transit is requiring developers to build low-income housing on its property. They'll pay for that because developers will pay lower ground lease prices. It's subsidized. High Point is a mixed-use redevelopment with Hope IV and levy funding and non-profit developers, plus special requirements of its market-rate developers. So....you don't have examples then?

Those are two examples of how you get affordable housing. You may not like them but that's your prerogative.

The supply-demand equation isn't temporary. Where did you dig that one up? If asking rents get out of whack, they'll be undercut. These dynamics have always worked and always will.

The supply demand equation changes over time. If too many units are built, demand exceeds supply and construction slows/stops and rents stabilize or decline. If demand increases and exceeds supply, rents go up and construction resumes. Housing tends to be fairly elastic.

You still haven't answered why you want to make market-rate housing more expensive with your fees. The vast majority of renters depend on market rate not getting out of whack. Why no sympathy?

There are no free rides. If one of the goals for Seattle is to develop more affordable housing, and that's what at least some city leaders are claiming, then you have to find ways to make that affordable housing happen. Life is about trade offs. If Seattle wants to become a rich enclave like SF or Manhattan or Santa Monica, then it can ignore developing affordable housing.

Micros can serve any purpose. You'd (apparently) be shocked that much of the city is singles. Many live long-term in small units. But even short-term housing is a crucial element of affordability. Should people run out of options because YOU don't approve?

Micros are popular. Their main hurdle is a City that's making them more expensive, and some NIMBYs who don't want the poor folks living near them.

No one knows how popular micros are. They are new type of housing and only a few units have been built. They are an unknown quantity.

[mhays]

You say new housing moves rents for existing buildings up, then you conflict with that by saying construction can also stabilize rents or move them down.

Your fee-based recipe is exactly what would make Seattle a divide of rich and poor. It would help a few people but raise housing prices substantially for most renters. "Doing something" doesn't have to mean moving backwards.

All rentals are unknown quantities. We can only ask the owners, whether it's one at a time or comprehensively as the brokerages attempt. So far the owners are clamoring to build micros and saying they're generally full. That's a pretty good sign.