Want Lower Housing Prices? Increase Supply.
Want lower housing prices? Smart Growth Seattle's Roger Valdez says the solution has to include increased housing supply.
As part of announcing our new partnership supporting the work of Smart Growth Seattle, I was asked to speak at the Seattle Metropolitan Chamber of Commerce's Community Development Round Table (CDRT) as part of a presentation about the future of microhousing by Foot Print Investments.
In Seattle, some people think that if housing prices are going up, we ought to control those prices so they stay the same or go lower using land use regulation and rent control. Planners and city staff should decide prices based on a ratio of gross monthly income to housing cost, and those same planners and staff should determine how much return private investors should receive from successful projects.Even for poor people, location, schools, and safety matter when choosing where to live.
This view ignores the fact that real people in the housing market don't buy housing based on a percentage of their gross income, but by considering the utility of one housing choice over another, only one factor of which is the monthly price. Even for poor people, location, schools, and safety matter when choosing where to live. The dominant view about housing also ignores the truth that profit is the benefit of successfully taking a risk.
There is a different view in Seattle, however: if we want to affect housing price we need to increase supply to keep up with or exceed demand. If we were truly worried about the price of housing getting too high, then we would permit more housing, and many different kinds of housing, in every neighborhood in Seattle.
These two views about price have been around as long as there have been markets. When wages don't seem to be going up fast enough and prices seem too high, some people are tempted to intervene, to force the issue. "Let's set wages and prices so they are predictable; let's make sure there are more winners than losers."
But we say, "let's create more jobs and wages will go up; let's create more housing and prices will go down." And microhousing is the perfect example of a profitable venture that meets housing need for people who want or need to spend less money on housing.
In today's housing market producers of housing are vexed by some neighbors who fear change, by some social progressives who want price controls, and by a city council unwilling to loosen their grip on how we use our land. Instead, the council's tendency, in the face of rising demand, is to clench.
That's why we created Smart Growth Seattle, to advocate for more innovative housing solutions. We believe that population growth should happen in our city, not in sprawling suburbs. Growth in the city is more sustainable, efficient, and economically beneficial.
- Housing Choice;
- Urban Density;
- Sustainable Development;
- Economic Opportunity; and
- Architectural Diversity
We want more jobs in Seattle and more housing for the workers who are seeking those jobs.
We believe that we should build more single-family homes, a wider variety of multifamily housing, and more work space for employers all over our city.
Good things happen when we increase housing supply. When there are fewer homes to choose from and demand is high, prices tend to climb and buyers compete with buyers for scarce housing choices. When we allow more building, then there are more homes to choose from, and then landlords and developers have to compete with each other for buyers. More building also means more living-wage jobs.
We think the second option, building more, makes Seattle a better, more sustainable, and welcoming place to live.
We also believe that the people who build housing and work space— whether they are use a hammer or an Excel spreadsheet—are building Seattle's future. We intend to make their case and to argue that people of all incomes, classes, and origins who move to this city to live and work should find a warm embrace, not fear of change and high prices.