Roger Valdez: On Transit-Oriented Ghost Towns

Funny how government distorts markets with its ineptness.

Valdez certainly does relish his gotchas.

even funnier when markets crash from lack of oversight

There is a difference between oversight by ensuring that property rights are protected versus implementing several layers of regulation, often overlapping and contradictory, in order to push a “social justice” agenda…

This is how it comes across to me.  Sally is afraid to “intervene in the market” by rezoning an area that is already derelict and underused? 

But by keeping the zoning the same on the underused and derelict parcels, isn’t she keeping the conditions the same, meaning that they will continue to be underused and derelict?

Something has got to be shaken up in Roosevelt to get the neighborhood redeveloped. There’s a reason why the area hasn’t developed–and a major reason is the parcels need zoned capacity to allow a development to make sense.  The City Council has an amazing opportunity here to do the right thing and to give the area the kick in the pants it needs. 

It’s so disappointing that she sees modest height increases (65 feet) as “overzoning.”  And she calls herself pro-TOD, anti-global warming, etc. etc.  Sigh.  Put your money where your mouth is, Sally.

Like the deregulation and consequent lack of oversight that allowed the housing bubble to grow and burst and lead us into the current depression?

It’s obvious that complicated regulation is bad, but to imply regulation is the problem by broadly criticizing government oversight as the source of the problem is simplistic and dumb.

Bullshit – if developers can make 45 foot height limits pencil out profitably in Eastlake (and lots of other neighborhoods) they can in Roosevelt, too. 

The real difference here is that Hugh Sisley has deliberately let his properties become rundown to create a bogus rationale for a zoning scheme that is grossly out of scale with the surrounding neighborhood.  Clark (and for that matter DPD) is right not to reward him for this cheesy attempt at zoning blackmail.

This statement is free-market bs:  If the developers over build around light rail and nobody shows up, the price of those units will drop.  I’ve seen rental rates in Seattle stay high despite having vacancies in apartment buildings.  Rather than lease at a lower rate, property management companies will use the vacancies as write-offs to reduce income tax liabilities. Common practice, really, especially among larger property management companies/development companies.Seattle has a well-established process for developing neighborhoods that works fairly well, is highly democratic, and seeks to balance community need with those of developers.  It may take a bit longer to come to consensus on requirements, planning, etc., but it works.

Have you guys ever read “Government Failure versus Market Failure”? I read it in my Public Sector Econ class as an undergrad, seems kind of relevant here.
http://www.brookings.edu/press/Books/2006/governmentfailurevsmarketfailure.aspx

The implicit assumption in your statement is that government “oversight” operates from a position of greater information and moral standing.  I just see NIMBYism being codified. 

I see, yet again, another example of the passive-aggressive, faux progressive Seattle consensus that says we want the benefits of a mass transit system but none of the density that should accompany it, simply to protect a nice affluent neighborhood.

Seattle has a well-established process to protect existing neighborhoods from ever changing, unless they are poor/minority ones.

It was called redlining in the past, now we just call it “neighborhood planning”

If I may give Sally Clark the benefit of the doubt, I think what she meant was that she did not want to zone the property for a development type not supported in the market that might led to further enduring land speculation and no near-term development. As opposed to being built out to a high density and them becoming derelict. Downtown single-level parking lots with are evidence of this affect because their is huge difference between future potential and currently feasible project value; they both are more valuable than a parking lot but the speculative value for an office tower exceeds value as say a townhouse or low-rise apartment project. I doubt this would happen in Roosevelt over a difference of 10-20′ in height

Exactly. If only those who write the laws could spend their time making better regulation. Instead they deregulate to appease their campaign donors, or pile on existing regulation because it’s easier than rewriting it. Since the right wing sticks to simplistic campaign slogans like “government regulation is the problem” and stifles any attempt to build consensus as to what good regulation can be, we all suffer.

The problem with yours and Valdez’s arguments is that dynamics governing supply and demand depend on well-functioning price signals, and price signals in real estate are anything but well-functioning at this time.  

Just one example as to why oversupply is a serious issue–there is a well-known phenomenon known as “price-stickiness,” where prices do NOT go down despite oversupply.  This is CLEARLY demonstrated in areas like Pioneer Square, where dozens of $400,000 condos sit empty rather than their owners taking a huge bath on selling them for the likely market price of $150,000.  There’s no way out of this problem so long as the previous owners are able to hold them–there’s no one willing to pay, say, $375k to nudge the price down slowly.  

There’s also the problem of “shadow inventory”, large developer conglomerates withholding properties from the market to artificially boost prices on other properties.

Third, there’s the issue of cash-rich former Microsoft employees and the like who snap up “bargains” for cash with an eye to speculating on them when the market “inevitably” recovers.

In the long run, perhaps this will even out.  As John Maynard Keyenes said, though, in the long run we’re all dead, too.  Sally Clark is right to be concerned.

The problem with yours and Valdez’s arguments is that dynamics governing supply and demand depend on well-functioning price signals, and price signals in real estate are anything but well-functioning at this time.  

Just one example as to why oversupply is a serious issue–there is a well-known phenomenon known as “price-stickiness,” where prices do NOT go down despite oversupply.  This is CLEARLY demonstrated in areas like Pioneer Square, where dozens of $400,000 condos sit empty rather than their owners taking a huge bath on selling them for the likely market price of $150,000.  There’s no way out of this problem so long as the previous owners are able to hold them–there’s no one willing to pay, say, $375k to nudge the price down slowly.  

There’s also the problem of “shadow inventory”, large developer conglomerates withholding properties from the market to artificially boost prices on other properties.

Third, there’s the issue of cash-rich former Microsoft employees and the like who snap up “bargains” for cash with an eye to speculating on them when the market “inevitably” recovers.

In the long run, perhaps this will even out.  As John Maynard Keyenes said, though, in the long run we’re all dead, too.  Sally Clark is right to be concerned.

“the price of those units will drop.”

This is not happening at a rate fast enough in the downtown core or Pioneer Square to decrease vacancy rates.

Until the city can address issues such as developer shadow-inventory collusion, Clark is correct to be concerned.

Another day, another environmentalist says “the law of supply and demand” ensures that there can never be an overproduction of housing (or office space, for that matter). The price goes down, a tenant is found, et voila! We have never seen commercial property owners sit on vacant storefronts instead of reducing rent. We have never seen real estate developers sit on vacant housing rather than sell below what they expected or rent to the “wrong kind” of people. We have never seen developers demolish buildings to redevelop a site, but then lose their financing and just leave the site vacant (like at 2nd and Pine, in Seattle’s “dense” neighborhood, where there’s been a vacant lot parking lot for 45 years where a 200 unit apartment building once stood).

Do you know how many vacant houses there are in Florida right now, where people aren’t even renting their homes because the going rent wouldn’t cover their mortgage obligations? How about 1.6 million, roughly 18 percent of all houses in Florida. If the “law of supply and demand” works as Valdez suggests, then Florida is on the verge of solving homelessness for the whole country.

But of course it’s not.

I think Sally Clark is wrong here, but it’s not because of an abstract law of supply and demand. It’s because the cost of gas, combined with the value of living near light rail and the university, mean that the housing market around Roosevelt station can likely absorb a great deal more growth. We need to argue over specifics like that, get past these absurd arguments about the natural law of inevitable progress of the unregulated market…

For another example of vacant overbuilt property, go to Burien and see the town square project.

Mr. X, since you obviously live in the neighborhood, wouldn’t you agree that all neighborhoods are different?  Same goes for the way developers look at the neighborhood.  Maybe developers can make something work at 45 feet in Eastlake, but they can’t in Roosevelt due to demographics, land prices, parcel sizes, etc. and need a little bit more height to make it work.

Your neighborhood has an incredible opportunity to clean up the Sisley properties by increasing zoning by only 25 feet above the neighborhood’s plan.  It would be a shame to waste that opportunity, and to waste the public’s investment in your neighborhood by not allowing more people to live near the transit station. 

PS Somehow I doubt Sisley has done this as a grand blackmail scheme. He wins, and you and the rest of the City loses, if the zoning stays the same and his properties remain the way they are.

Nonsense – Hugh Sisley is sitting on his properties in hopes of getting a massive upzone to build towers, and is holding out for that.  If he doesn’t get that upzone (and he shouldn’t), he can make plenty of money at 45′, let alone 65.’  Sisley bought his properties for a song decades ago, and owns them free and clear.  Land cost is not a factor, so your assertion that he can’t make money unless there’s an upzone doesn’t wash.  For that matter, the Scarlet Tree just reopened in a brand new one-story building on 65th.

This reminds me of the former WOSCA property along 1st Ave S, where the developer was clamoring for an upzone to some ridiculous height based on the claim that building there wouldn’t pencil out for them.  That site is now the location of a substantial new building for ING Direct – which didn’t require an upzone to for someone to make money after all.

Same shit, different paper.

…and I don’t live (or own property) in Roosevelt.

real estate development is actually one area where there are functioning markets….lots of participants….and Sally was way wrong.  Upzoning doesn’t lead to stagnation as owners “hold out for more money.”  If the upzoning is there, they will get more money.  If not not.  Just because we have one Sisely doesn’t mean we should overgeneralize.

That said, it’s true that uncertainty over changes to zoning do tend to freeze land sales and development.  But it’s the uncertainty, not the upzoning. 

The theory that developers and owners sit around accepting losses is baloney.  Most of theem go bankrupt if they have to do that.  There are  tiny few like Sisely who own free and clear and can sit around, but they’ll likely sit around for their own perverse reasons not having anything to do with zoning.  In Sisely’s case, no real bank is going to lend to him and he’d be sitting on his property NO MATER WHAT the height limits are.  He ain’t gonna sell folks. 

Roger should get a real job. His moms basement is affecting his mind and those submerged windows affecting his perspective.

don’t most rich microsoft employees donate overwhelming to democrats too…. Hmmm

Well, there ya go Roger, I now find myself agreeing with Tevor.

Maybe Roger could go the Vegas and strip copper out of vacant homes for spare cash.

I agree with Trevor here, there is a public transportation investment that should be maximized. If that can be done without the words “condo auction” involved then that is what should happen. That does not nessisarily mean the sky is the limit on the upzone.

Roger is, after all, the upzone cheerleader.

If you are right, why is Pioneer Square, West Edge, and Belltown full of empty condos?

Yep, perfect example of price stickiness.  If supply and demand governed this situation, the condos would be selling for around $95k.  Yet they are not.  Why?  Because real estate markets–ESPECIALLY THOSE ZONED FOR DENSITY–don’t function like other markets.

If this is true, why do I hear stories of condos selling in Maple Leaf for ridiculous prices like $88k?  Upzoning should come with assurances from developers that they won’t simply hold the property until they gentrify the F out of everything.  I have zero confidence this will happen.

I’ll put my money any day on Sally over Roger on this issue.  Sally has had real world responsibility for land use policy & regulation, and Roger?  His real world responsibility was smoking cessation programs in the public health sphere – not a dumb guy but out of his league, think tank communications director doesn’t measure up.

mt_spurr

Don’t forget his last place primary finish in a race for office a couple years ago that featured some retrospective backbitting that (in my mind) proved how childish his hothouse environment had stunted his development.

mt_spurr

Don’t forget his last place primary finish in a race for office a couple years ago that featured some retrospective backbitting that (in my mind) proved how childish his hothouse environment had stunted his development.

mt_spurr

Don’t forget his last place primary finish in a race for office a couple years ago that featured some retrospective backbitting that (in my mind) proved how childish his hothouse environment had stunted his development.

Yeah, let’s not bother to listen/read to what they are actally saying. Sally has the “real world responsibility”, so she must be the one who is right. Despite the fact that any real estate professional in this city (you know, the people that actually DO this stuff day in and out) would tell you that her comments on issue display a profound lack of understanding.

Yeah, let’s not bother to listen/read to what they are actally saying. Sally has the “real world responsibility”, so she must be the one who is right. Despite the fact that any real estate professional in this city (you know, the people that actually DO this stuff day in and out) would tell you that her comments on issue display a profound lack of understanding.

Well, yes, you’re right regarding well functioning price signals at this moment. But with the Roosevelt re-zone we need to be thinking 30 years out, not 5 years out. We have a growing population, and already way-unaffordable housing in the city. Even if they build some condos that sit empty for 5 years, in the long run we need the density in the city to accommodate a growing population, and those condos will get filled.

Of course you don’t.  You own property in Greenlake, Northgate, Lake City, Mountlake Terrace, Lynnwood, Shoreline or Kenmore.  )  j/k  But seriously, prop. owners (real estate corps.)  *do* stealth fight to manipulate supply to their advantage.

Station properties should not be subject to general height restrictions or they become vulnerable to sprawl interests.

Clark should go at the two issues directly:
1) More housing for the Roosevelt station
2) Crack down on shadow-inventory collusion

Clark should go at the two issues directly:
1) More housing for the Roosevelt station
2) Crack down on shadow-inventory collusion

What rapid rail line is in Burien?

What rapid rail line is in Burien?

C’mon kids.  Play nice.  No name calling.

this is not true.  i will say no more. 

People have always fled density….from New York City onward the average American wants a house and a yard.

In fact, the whole reason for Seattle’s growth during the 90s was that it was one of the few last remaining cities that had avoided density and centralization, letting natural green neighborhoods and associations dominate over the centrists.

More density is its own demise.   High vacancy rates, crime and people leaving to find something cheaper, bigger, more pleasant…the things they sought in the first place!

Actually, you’re outright wrong; surveys show most Americans do not want yards.  Well under 1/2 of Americans want yards.

I think last I checked roughly 3/4 want houses.  Presumably because you can do stuff with an owned building you can’t do with a rental.

Conclusion: there’s an unfilled demand for rowhouses.

I’d love to see that survey.

Could you be referring to the 2010 Trulia survey…the one that was cited in countless “urbist” blogs saying the “age of the McMansion” was over.

I found that here: http://info.trulia.com/index.php?s=32055&item=106116
But unfortunately the link to the data doesn’t work.

What I could gleen from the ballyhooing in the blogs was that Americans said they wanted “smaller” homes but not necessarily townhomes or condos.  And by smaller they meant a return to the original size of homes — sort of the classic style of Seattle single family homes…the ones you guys are trying to tear down!

Just 9 percent of the people surveyed by Trulia said their ideal home size was over 3,200 square feet. Meanwhile, more than one-third said their ideal size was under 2,000 feet.

Which means that nearly 60 percent want a home between 2,000 and 3,200 sq. ft!!

http://www.cnbc.com/id/38757287