Tag: homeownership

Morning Crank: Resolutely Pro-Housing

1. Queen Anne homeowner and anti-housing activist Marty Kaplan, who scored a victory in his fight against backyard cottages and mother-in-law apartments in 2016 when a city hearing examiner ruled that the city must do a full environmental impact statement on new rules that would make it easier for homeowners to build secondary units on their properties, is taking his show on the road.

Specifically, Kaplan is going to Bellingham, where he’ll share his experiences “fighting city hall” with the Bellingham Neighborhood Coalition, a group that says it’s fighting “over-densification, parking [problems], congestion, tree canopy loss, noise, and removal of open space” in the small town. As in Seattle, it’s hard to see how allowing homeowners to convert their basements into apartments or build backyard mini-cottages will lead to any of those things (unless we’re now referring to private backyards as “open space”?), but as in Seattle, Bellingham’s homeowner activists appear to be for property rights except for property owners who want to share their property with renters. At any rate, they seem to have adopted some very familiar (and Seattle-specific) rhetoric: The meeting notice suggests that a proposal to allow backyard cottages will lead to “Bellingham being ‘Ballardized’ as city leaders legalize the bulldozing of historic housing stock to be replaced by duplexes, tri-plexes, four-plexes, townhomes, and apartments.”

2. This happened a couple of weeks ago, while I was out of town, but I wanted to highlight it here: Dupre + Scott, the real-estate research firm that since 1979 has been the local source for information about trends in apartment development, sales, rents, and vacancy rates in the Seattle area, announced in late December that they were shutting down at the end of the year. Patty Dupré and Mike Scott, who are married, made the announcement on the Dupré + Scott website on December 27. The closure will leave the city without a critical source of information and analysis about what’s going on in Seattle’s rental market, an especially troubling loss at a time when renters are poised to outnumber homeowners in the city and when rents continue to rise in response to an ongoing housing shortage in the city.

Plus, I’ll miss the hell out of their goofy videos. The latest, and last:

3. Last night, I attended back-to-back public hearings on two proposed developments, both of which could help address Seattle’s housing shortage, albeit in very different ways.

The first meeting was a special review board discussion of a proposed high-rise condo building in Japantown (part of the Chinatown International District), which would be built what is currently a surface parking lot at the intersection of Fifth Avenue S and Main Street. The project, which has to go through a special design review process because of its location in the historic CID, is, predictably, controversial.

Opponents have argued that the 17-story glass-and-steel tower, called Koda Condos, is out of character with the surrounding neighborhood and will contribute to the gentrification of the area. While the building, which is definitely tall and definitely modern, doesn’t look much like the two- and three-story brick-clad, tile-roofed buildings that dominate in the neighborhood, neither did the surface parking lot it will replace. Marlon Herrera, a member of the city’s parks commission, said the building will contribute to the “repeated bastardization of this community” and that the developer’s plan to include “privately owned public space” in the project “is a sham. Only rich white yuppies drinking lattes will be allowed to use this space and everybody else will be forced out by security,” Herrera said. The review board will hold at least one more meeting before deciding whether to permit the project.

The building would add more than 200 new condos to the downtown area, and is one of a small handful of condo projects currently underway in Seattle, where for years developers have focused almost exclusively on new apartment buildings.  Developers tend to favor apartments over condos because the state subjects condos to higher quality assurance standards than any other type of housing in Washington state, making rental units a safer bet.  Although condos don’t generally constitute affordable housing, they are still cheaper than single-family houses—about one-third cheaper, according to Sightline—making them a viable homeownership option for people who can’t afford the median $725,000 house in Seattle. The Koda condos will start in the mid-$300,000 range, according to the developer’s website—if the city allows them to be built.

The second meeting last night, of course, was a public hearing on a planned development on long-vacant Army surplus land at Fort Lawton, in Magnolia next to Discovery Park. Opponents say the proposal, which would include between 75 and 100 units of affordable rental housing, 85 supportive housing units for seniors, and up to 50 affordable houses for purchase, is too dense for a part of the city that several speakers described as “isolated” and “remote.” (Notably, some of the speakers who disparaged the area as an unlivable wasteland lacking bus service, shops, grocery stores, sidewalks, and other basic amenities  live in the area themselves and somehow manage.)

One speaker, Aden Nardone with SOS Seattle, said building housing at Fort Lawton would be tantamount to putting low-income people “in internment camps”; others suggested that nothing should be built at Fort Lawton until there was enough infrastructure (sidewalks, bus routes, retail stores, groceries, sewer lines, etc.) to support it.

I wondered on Twitter what the speakers claiming to support “infrastructure” at Fort Lawton would say if the city actually did divert its limited resources toward funding infrastructure to an uninhabited area, rather than the many neighborhoods that are always complaining they don’t have frequent bus service or sidewalks. And:

A big crowd in the back, which dissipated a little more than an hour into the meeting, seemed to be the source of most of the night’s heckling. People in the back booed a woman who was talking about how affordable housing reflects Seattle’s values as a welcoming city for all people, and repeatedly shouted that people who own homes in Magnolia were somehow being prevented from speaking. For example:

For the most part, though, the speakers at last night’s meeting were resolutely pro-housing, a welcome change from many meetings about homelessness and affordable housing, including several at the same venue (the Magnolia United Church of Christ), that have been dominated by anti-housing activists. A majority of those who spoke, including many who identified themselves as homeowners in Magnolia, renters in Magnolia, people who were born and raised in Magnolia, and people who were priced out of Magnolia, supported the proposal. And some people with actual experience living in affordable housing spoke up about the stability it brought to their lives  as children:

To read all my tweets from last night’s meeting, check out my Twitter feed.


As Rents Increase, Homeownership Even More Elusive

Back-to-back presentations in council chambers Monday morning painted a stark picture of a Seattle divided between the homeowning haves and the renting have-nots, and also showed once again with data (not the ever-popular anecdotes) that the tighter the supply of any form of housing, rented or owner-occupied, the more expensive that housing is.

First, the good news: For renters, a development boom over the last few years is already starting to relieve pressure on prices, meaning that rents are likely to go down or at least stabilize as vacancies go up. Mike Scott of Dupre+Scott, a longtime Seattle apartment market analyst, likened the development pipeline as “a snake eating a small animal—it’s going to digest it, but it’s going to take some time.”

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The relationship between supply and demand—or, put another way, vacancies and rents—is starkly illustrated in the following graph, which shows that as supply tightens (that is, as development slows down), rents go up; as more housing gets built, rents decline.

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That’s true, Scott pointed out, even though new apartments are usually more expensive to rent than existing stock. (The Housing Affordability and Livability Agenda, which proposes to build 50,000 new units over the next decade, including 20,000 affordable units, would make a dent in the need but would not by itself accommodate the 120,000 people expected to move to Seattle by 2035).

The exception to that rule was microhousing, small efficiency units that are expensive per square foot but affordable in practice; according to Scott’s presentation, the average microunit rented for $871 in 2015, compared to an average studio rent of $1,433. Unfortunately, city regulations have effectively banned the development of new microhousing, and that housing type has been replaced by so-called small efficiency dwelling units, or SEDUs (which Scott insisted on pronouncing, “Said-Yous”). Those are still cheaper than studios, but significantly more expensive than micros, at an average of $1,151 a month.

Screen Shot 2016-03-15 at 7.13.05 PMNone of those rents are particularly affordable to struggling working-class or middle-class renters, of course, and the solutions seem obvious: More housing, and more opportunities for homeownership. Unfortunately, city rules that reserve nearly two-thirds of the land in Seattle for single-family homeowners make it extremely difficult to build the massive quantity of new housing stock the city would need to significantly push rents down, and first-time homeownership, as a presentation by Zillow’s chief economist Svenja Gudell illuminated, is elusive to all but the wealthiest and becoming more so. In January, single-family home values were up 11.8 percent over last year, and condos were up 14.2 percent. “That’s very, very strong—much stronger than you would see in a normal year,” Gudell said. The average home in Seattle was valued at $533,000, making this the definition of a seller’s market as long as you don’t want to buy another home in Seattle.

As for first-time buyers, they’re being buffeted by a near-perfect storm: High rents that make it difficult to save money for a down payment; a high-demand market where lenders can afford to be selective about who they loan to; lending standards that have tightened in general since a recession caused largely by banks loaning money to people with bad credit; and the simple fact that there just aren’t many houses, condos, and townhomes on the market to begin with.

“Rents are extremely high, so it’s still hard to save for that downpayment, and if you’ve qualified, it’s quite difficult to find anything at all, because affordable housing at all price points is in very tight supply right now,” Gudell said.

How tight? Here’s an unsettling stat to ponder as you write your next rent check: Right now, there are only 906 homes of any kind for sale in Seattle—a 21 percent drop from last year. So while buying a home is currently much more affordable than renting one (as the graph from Zillow, below, illustrates), it’s out of reach to all but a few. One reason for that is the fact that there are still a significant number of homeowners (about 7 percent) whose homes are underwater, meaning they owe more than the value of their condo or house. Those people, according to Gudell, tend to be lower-income owners of lower-price houses, and they aren’t selling, which means that what would be entry-level homes are simply off the market.

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Actually, pretty much all homes are off the market. Another reason for that: People who want to stay in Seattle don’t really benefit from elevated home prices, because they have to turn around and buy another house in the same overinflated market. “Seattle is a distinct seller’s market right now—as a seller you definitely have the upper hand and have more power in that negotiation compared to the buyer—but most sellers turn around and become buyers and they can’t find house they want to buy.”

The moral, for both renters and buyers? Hang tight and hope* Organize and demand that the city allow more density, which will reduce rents, and wait for the next downturn to roll around.

*Mike in the comments makes an excellent argument for this edit.