You are right, Charles.
And I can’t help but read with a twinge of guilt. Because, god help me, I’ve made a small fortune because of this perverse market. And purely through luck and timing but very little actual work. And there is a small but powerful segment of this city like me (Unfortunately most believe it was all part of some inherent genius). Regardless. None of us want to relinquish our undeserved wealth. Me included.
So. What are you going to do?
Charles, you previously blamed speculative foreign investment for Seattle’s housing prices, and predicted our market would show dramatic increases after Vancouver implemented a tax on such investment.
That didn’t happen.
You were wrong then. Why should we think you are right this time?
Do not listen to market urbanists who insist that these prices reflect the real economy.
Correct you are. They reflect very high demand and very limited supply. Very high demand because of the large increase in employment locally and very limited supply because the local government artificially restricts housing.
Case in point: The neighbors down the street sold their small house on a big lot (about 25,000 square feet or so). Can you guess what they built? A small apartment? No, that would be illegal. A dozen or so row houses? Again, illegal. Small houses on small lots? Still illegal. They built three big houses on three big lots. The lots were as tiny as legally allowed (they couldn't be under 7,000 square feet). This is not (as you might guess) a really desirable neighborhood. This is not Ballard, or Capitol Hill -- this is a budget community that lacks sidewalks or premier parks. But it is closer to downtown (and the jobs) than Shoreline (and a hell of a lot closer than Auburn) so they built what they can build. They can't build housing for the masses (because that would be illegal) so they built a handful of homes, which of course are expensive. Housing is expensive in Seattle because cheap housing is illegal.
It's the speed of the increased population, uncontrollable, but welcomed by our city. What do you propose? Involuntary evacuation? To where? You could, maybe, make it more affordable for someone if you moved out.
Not sure bragging is very attractive Dr Zaius. Sounds like you are suffering some guilt, and the antidote to guilt about too much unworked for money is to share some of it.
Its ok...once hq 2 is anouced the market will cool more, and once amazon has it built and hires mostly there the market will stabilize...
@6, classical socialist point of view, you are worth X dollars because your property is worth that. That's not dollars in the bank account. It is if you sell. Never the less that person is being taxed at X dollars rate as if he is rich. Go after the person who has the cash to buy the property.
Dr Zaius is also classical, do as I say, not as I do. He feels enlightened now so it's ok.
@7, exactly. The simple explanation is that buyers are all overpaid Amazon employees, bidding up a finite number of houses. No fancy economics terms needed.
@3: You just compared something Charles once wrote to verifiable, external reality.
You, sir, are an excruciatingly cruel and vindictive sadist of the highest order.
@8, I didn’t see where the Dr said his gains are in cash or property.
@11 I have both. And stock. Yes the properties now (on paper) are obscenely overvalued. But don’t kid yourself that it doesn’t still give property owners like me significantly more leverage in acquiring more wealth. I can borrow against that property and even if the bubble pops be almost totally sheltered. My income from rental properties almost matches my business income.
Sure I give some money away. I do LOTS of pro bono. I don’t do enough. I should do more. I could do more. We all should.
But here’s the deal. I’m paying about 13k a month for assisted living care (memory care) for my AND my wife’s parents. Alzheimers is an ugly, ugly disease.
Now, my grand parents lived into their late nineties. So I’m looking at possibly another decade of over 100K a year.
So. The ugly reality of life in America is you better be rich. Or you’re going to die impoverished, sick and in squalor in some cruel shithole care facility. That’s the reality. I’d like to see that change with liberal policies like universal healthcare. Because they work.
So. Am I going to give away what I have to alleviate my social guilt? Sorry. But. No. I will give some. But I’ve seen what it takes to survive in this stupid country. And I hold out no hope this country will wise up.
That is, I plan on living. But if I don’t we will leave whatever is left over to someone who will do some good with it. But otherwise im going to need that money.
It’s not hypocritical. I generally vote to raise my own taxes. I don’t use half the shelters I could. But I’m not just giving up my money. So I shelter some. I’m a capitalist. I’m a liberal. Not a socialist.
I’m a liberal because you shouldn’t have to be rich just to die with a little dignity.
If your line is "I only keep SOME of my considerable wealth in tax havens," then I reckon it's gonna to be a good long while before we hear the end of those "limousine liberal" accusations, you know?
I'm a little surprised by the most expensive housing list statistics. I was sure Los Angeles real estate would have been first, or a close second after San Fransisco. San Jose?
Dr. Zaius, thanks, I understand your position much better now. And your right, unless you currently own or are buying real estate and setting money aside religiously every paycheck into some kind of retirement fund, you have nothing.
@13. Yeah? Well. So what. Limousine liberal. What dumb false dichotomy. In this country that’s a badge of honor.
You have two (non)choices in this stupid country. Be lucky. Or be totally vulnerable. Blame the game. Not the player. You want to make a real difference? Raise taxes. On me. And on you. But this country won’t do that. It will never do that.
I mean. Sure. I get to take a month off ever year. So do the Danish. Even the poor Danes. In America you have to be rich to live like a Danish peasant.
Yup. I fly business class. Sue me. I also pay $130 K a year to make sure my parents are not eating dog food in the streets.
I also give a shit ton of time and money to a wide range of causes. Do I give enough? Nope. Neither do you- any of you. None of us do. Because frankly it doesn’t work very well. Giving away your money individually doesn’t work very well. You can never give enough to actually solve anything.
And until we craft a society and government that doesn’t rely on the sad pittance of personal charity to deal with vast array of social problems and help the vulnerable we’ll never make any progress. Our system forces people to be selfish. Including you.
So. Again. I ask what are you going to do about it?
@16 calm down there little buckaroo...have a graham cracker and a juice box then take a nice nap.
"A city that's hostile to developers"? I can't believe the stuff I read here sometimes. Hasn't Seattle broken records every year for several years in a row, new units opening? Have we not had more cranes in operation than any other city our size? Is there any developer here who is sitting around waiting for an opportunity to build, any building trade worker who doesn't have as much work as he wants? Someone must have spike the market urbanist Kool-Aid with LSD, to create the mass hallucinations - "a city that's hostile to developers" - ha ha ha!
@17 that sounds delightful and I would love to but some lunatic keeps screaming all night.
@19 absolutely right. Of all this cities problems being mean to developers isn’t one of them.
Unless making billions in profit is mean.
I love it how liberals with money pretend they can't pay extra in taxes and pretend they can't give charitably.
It's a real ball and chain, isn't it?
I mean you WANT to be a good person and you don't WANT to be an enormous hypocrite, but what can you do? You HAVE to keep all the money that you don't want which you made by being an evil capitalist and making investments.
Tell the truth for once in your life. You made good choices, and made some money that you would rather keep than give away. You like having the money. You don't have to be ashamed.
I don't see him making any pretenses. His point: we choose a social structure that leaves everyone else, everyone without the money he's fortunate enough to have, in the shit. Could we live like the Danes? Maybe we couldn't if we wanted to, but apparently we don't want to.
He said he votes often to raise his own taxes. Not sure what exactly you're ranting about there.
@23: Why wait for the government to force you to do something you can do whenever you want?
You are free to overpay taxes whenever you want. Yet, people never do, even when talking a big game about how taxes are too low. It's very weird.
That being said, I don't care about how much tax he pays. I just find the hypocrisy and self-flagellation extremely entertaining. You don't have to hate yourself for being successful.
Well, we're working on it. Now Rob Johnson is hard at work ramming through a "tree protection ordinance" that removes every one of the protections that have been in place - no more protection for exceptional trees, for groves or multiple trees on a lot, for trees on undeveloped lots, and instead imposes a permit system on homeowners, as if we're losing our trees because of homeowners. One more developer-hostile set of regulations down!
@24: LOL Only you could see someone admit (multiple times) that he is lucky, thinks he should be taxed more (and voted accordingly!) and that even though he does give a good amount of money and time to charitable causes could stand to do more, and claim that person is a hypocrite. Dr. Z doesn't hate himself for being successful. He's just honest enough to understand how much of what he has is due to luck.
@3, what part of 73.6% ($434k to $754k) increase in average house price in only 4 years did you miss? Its not clear that its all Chinese, but its certainly not being driven by owner-occupiers. Charles, it would be great to see some numbers on the shift in owner-occupied to rental ratio, and percentage of absentee landlords. Asset bubbles (which is what years of near 0% prime lending rate and massive share-buybacks cause) create a lot of loose cash, casting about the world for profitable investment opportunities. Someone who is high salary is still totally dwarfed by someone with investment income, so stop blaming tech workers for this just because their tastelessness is seated next to you in public places, unlike all the shell companies buying up houses on behalf of hedge funds.
@24-Zaius clearly doesn’t need to hate himself for being successful. People like you have more than enough hate to go around. Sounds to me like he’s been both lucky and smart and also is doing a fair bit to make society work better.
@19 -- You missed the point. Read item number 4 again. Is there anything in there that is "hostile to developers"? of course not. Not a single thing. Developers don't give a shit. They don't wake up in the morning thinking "I'm going to address the current shortage of housing that is the result of a sudden increase in employment in Seattle". No. They just build shit. Ask them to build big buildings, they will build big buildings. Ask them to big big houses, they will build those. Ask them to build tiny apartments, they will build those. Except they can't -- because they are illegal.
Most housing types on most of the land is illegal. Seriously. Sounds crazy, right? "Most" means more than 50%. Surely we can add apartments on more than half, right? Not even close. Fuck, you can't even build small houses on small lots on most of the city. Just read the zoning maps. Not only is most of the city zoned only for houses, but most of it is zoned for houses on big lots.
The city basically draws tiny little circles and says "build here". That is where the cranes are. Cranes are expensive. Think about it. A lot of the time, you take a perfectly good house (worth, maybe a million dollars or so) and then destroy it. Before you have even built anything your are deep in the hole. Then you wait for the city to say it is OK to build an apartment. You put up the sign, watch it get tagged, hire guards to get rid of the homeless (because otherwise you can be sued) and wait. Eventually, you will be able to build your apartment. But you can't build too many. Apodments are now illegal. You are limited in the number you can build per acre, and most of the time, you have to add parking. Parking, of course, costs money (roughly about 25 grand per unit) and for all you know, no one wants the parking. Would it make sense to build these apartments were cheap? Of course not. Thus the market is artificially high. Once prices go down, all those cranes will leave town. Because you don't get cheap housing with big cranes.
You get cheap housing by building cheaply. You build townhouse where an empty lot used to sit. You split up a lot and put in a house next to a house. You convert a big house to an apartment. That is the way everyone used to build, before Euclidean zoning became all the rage. There are still places, of course, where cities manage to have a strong economy and affordable housing. But none around here: https://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-affordable-housing/
I'm not sure I followed all of that - it seems like you're saying they're not able to build apartments, but OK they do build apartments but they're expensive because ... parking? Well, if people weren't driving cars, they wouldn't need parking. The city could rig things with the existing RPZ system to make that work, with more RPZs and a limit of 4 permits per lot instead of per household. Would they even consider that for a moment? No, because everyone knows that the real parking requirements are at least 2/3 car per unit, and the developers are just externalizing the costs of parking onto the neighborhood. "Would it make sense to build these apartments were cheap" seems to have an error in there, so not sure what you meant to say, but, no, it doesn't make sense to build cheap apartments where the market is full of affluent renters. Let the people with less money live somewhere else and commute - market urbanist. Rezones are not going to change a thing. If the council plows ahead with MHA next year, watch the unit production fail to rise (indeed, it will fall.)
“Why does Seattle have high housing costs?” asks the chapter president of the Caracas-based Economic Misfortune Society.
Because demand currently exceeds supply. That’s why.
Thankfully, “Mudedenomics” works both sides of the equation, with stifling bureaucracy and burdens to limit supply, and a grievance economy, punctuated by vagrants and petty crimes, to reduce demand.
Find anyone in the building trades who's sitting around idle, stifled by bureaucracy. While you're looking, try to cut back on the market urbanist Kool-Aid.
I got caught up in the housing crisis. Bought a house in a suburb in the south in 2006, got a promotion 4 years later and needed to move. Ended up selling a rather nice house at a loss and had to come to closing with a check for $30,000 then handed over the keys.
I tell you, it's a lot better being in a housing boom than a housing bust.
btw, no one should be ashamed of making money or being wealthy, as long as you didn't step on the necks of anyone on your way.
There are plenty in the building trades that are THRIVING (momentarily) because of the bureaucracy. A high housing cost creates worker scarcity. This causes wages to inflate. And the slowing of projects in process for reviews, excessive inspections, permits creates lots of stand-around time, paid. This cost, of inefficiency, goes straight the the bottom line, making construction (and so, housing costs) much higher.
While free markets have their faults, it's objectively observable (science!) that markets where government plays a busy-body role in housing (as developer, rent-setter, zoner), is HIGHLY correlated with both excessive housing costs.
New York. San Francisco. Los Angeles.. and now, Seattle....
But strangely, not Denver, or Dallas, or Phoenix that all have MUCH lower indexed housing costs.
Now that sociopolitical "Regressives" on City Council want to romp-around in economics, homeowners in Seattle can salivate that Council may try for rent control, which will pump up sales prices by a nifty 30%. Then we can sell, not to performance artists -- but to down-climbers from other ludicrous markets, and speculators rushing in to ride investment waves.
And the politicians will really have their teeth into you then. You will have institutionalized the problem, that they have incentives (personal, financial, social and political) to perpetuate, not fix.
Has it never occurred to you WHY busy-body governments are never able to ACTUALLY fix the problems the intend to address?
That you don't seem to understand how these things work, would suggest you sit quietly and allow the adults to chat.
Your imaginary scenario is somewhat at variance with actual record housing production in recent years. It's "... and now, Seattle" not because of busy-body government zoning authority, which has not changed in decades, but because of a half decade of employment growth that considerably outpaces real estate developers' ability to make new housing. Nothing's holding them back, they're building at record rates, but there's only so much that's going to happen at once. I'll say this again, the long anticipated MHA upzones will be followed by a downturn in production, and no significant progress on affordability.
Donna, just because they’re building at record rates doesn’t mean that the supply has reached equilibrium with demand. Don’t get so easily distracted by shiny claims. And, frankly, No —you’re wrong. Had you ever actually built something in Seattle and elsewhere you’d understand the loooooooooong delays Seattle imposes on all manner of zoning variances, plan reviews, site inspections, code reviews, etc. Just because there’s More than Ever doesn’t mean there’s Enough.
Where supply reaches equilibrium for demand, you may still find housing less-attractively priced for some. Yes, that will be true. But we can’t all afford to love in Monaco, Manhatten or Hong Kong either. Welcome to reality. The world isn’t here to subsidize your preferences, Champ.
@38: It's all about return on investment. A developer needs to recover the cost of purchasing a piece of property, plus the cost to build on that property. The latter includes the cost of permits and zoning variances as well as the cost of carrying that property on their books while waiting for approvals. The more hoops to jump through and the longer the wait, the higher a price the developer will need to justify the investment.
The other side of the equation is the "best use" property tax assessments. If my neighbor sells his comparable lot to a developer, that high price will automatically get rolled into my basis, including the fees tacked on for permitting and zoning. But I haven't developed my property yet. Nevertheless, that places a floor underneath the price that I will eventually sell for. And, given a hot market with lots of demand, it will sell soon. Another piece of affordable housing will disappear from the market.
Let's face it--ANYTHING on the West Coast is hot.
Unfortunately it’s probably going to get worse before it gets better, Seattle. Vancouver Canada, average housing price August 2018: $1.3M (all types), detached home average? $2.6M! Also unfortunately, terrifyingly now apparently #1 in North America for the gap between housing and wages. The living wage is over $21. Minimum wage is $12.65! My partner and I each make twice that hourly working at nonprofit orgs and certainly aren’t comfortable by any means. So sub $1M housing? Your bubble has quite a ways to go!
Everyone here thinks I’m nuts for wanting to move to the US when I’m finally done nursing school (but Drumpf won’t be around forever- thank god)- and given that housing rentals are cheaper in 99.9% of the US than here? And nursing wages the are the same to 200%?! Ie. x150% in Hawaii over what BC is offering? When people in Vancouver tell me “Yeah but Hawaii is expensive” I can’t help but to LAUGH (speaking as someone who has lived in both places).
I read this paper online every week. My partner and I used to go to Seattle frequently for weekend getaways , but having not been down there in 6yrs, it makes me wonder if I’d even recognize Cap hill anymore?
@28- I don't think that speculators/investors are to blame for the rise in single-family houses. I've seen a couple of dozen houses in my area sell in the last few years and I don't think ANY of them were bought by investors or speculators, Chinese or otherwise. Now, the multi-family market is different -those of course almost all go to investors by their nature. But as far as I can tell, the rise in single-family home prices is due to increased demand by people who want to live in them.
Basically, costs are high here because people WANT to live here. Very simple. No conspiracy needed. Yes, Omaha or Topeka are cheap. Guess why?
Charles, part of the issue of affordable housing here is: the profit margins of development.
Banking a decade of profits in 2-3 years... who would make low profit (low income) housing? Another part, Seattle never allowed itself to grow in the past (hello infrastructure) & can't meet the breakneck speed of our global economic 'neighborhood' (Singapore, Seoul, Shanghai).
I worked for the dream, and after 30 years my ship has come in. In the process, I've changed as have my city, my neighborhoods, and NOT in the same direction. Adapt or adjust. I'm adjusting.
For LavaGirl and the like, I worked, planned, and worked my plan for 3 decades. I kept rent low, repairs prompt, Tenants & Neighbor's happy, and didn't waste the opportunity provided. In case you weren't aware, those same opportunities are not available in Jet City in the 21st Century. Pretending that I somehow owe anything to anyone else... who? I mean EXACTLY who? As it is despite the windfall with 2 commas, 20% debt, 20% Fed tax, fees etc. and my proceeds are just above half of the sales price. Do you have a realistic plan for financial independence, or are you doing the religious thing and praying someone else leaves you a ton of equity?
Do I work an extra decade to 'pay back' my last 30 years of day job, savings & night job?
Just who could I give money to and expect it to be spent wisely?
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