Brand-new buildings, a booming economy, and people—so many people—packing up all their belongings and pointing northwest. It’s this year’s story, and last year’s story, and the story of 1889. Back in the late 1800s, though, lumber and coal drew newcomers to Seattle, not tech.
Fishing, shipping, and a new transcontinental railway connection also contributed to the city’s growth, and during the first half of 1889 Seattle was gaining an estimated 1,000 new residents each month.
It was around then that Lilly McCaulay Peabody, great-great-grandmother of Seattle City Council member Rob Johnson, moved here from back East and settled into Capitol Hill, where she raised her children and then they raised theirs. Johnson’s grandmother Margaret, or Monie, as the grandkids called her, was in the first class of women to graduate from nearby Seattle University. Johnson’s mother and aunts all attended Forest Ridge, the Catholic school that first opened in Capitol Hill in 1907.
As for Johnson, after earning bachelor’s and master’s degrees out of state, he returned home to work as an urban planner. He served on the statewide Transportation Choices Coalition before he moved behind the council dais.
Elected in 2015, Johnson owes not only his provenance to his great-great-grandmother Peabody, but perhaps even some of his political success, given his mantle as a fifth-generation resident who has lived, worked, or attended school in the area for decades.
And yet: “We don’t have anyone that lives on Capitol Hill anymore,” Johnson says. The council member, his wife, and their three daughters live in Ravenna. Of the many Peabody progeny that long called the neighborhood home, his generation is the first to leave.
That’s thanks in part to rising housing costs, another story that now seems like it’s on repeat. The neighborhood was among several areas in King County that broke record highs for single-family homes in December 2017, an apt bookend for a record-breaking year in Puget Sound real estate. The median value of homes for sale in Seattle alone was $718,700. By that metric, Belltown experienced a nearly 24.9 percent increase in cost compared to 2016, according to Zillow. Capitol Hill was not far behind—the median value of homes, both on and off the market, rose to $649,000, increasing by 17.4 percent compared to 2016.
But for those of us who harbor hopes of moving to the neighborhood, from the East Coast or somewhere closer, like, say, Beacon Hill (median home value $583,100), we might do well to pay attention to another number. The Capitol Hill area, a historic refuge for blue-collar workers and, later, artists and the gay community, had its own first last year—the median price of a single-family home on the market finally reached $1 million.
Seattle, the country’s reigning crane capital with nearly 45 of the construction machines crowding the skyline—about 25 percent more than any other U.S. city—does not have enough housing. It’s a problem shared by cities in states as far east as Colorado, says Matthew Gardner, chief economist for Windermere Real Estate. “If you want to find housing, go to Kentucky or Ohio,” he says.
Developers here aren’t building to capacity because land, labor, and materials are all too expensive, Gardner says. That puts more pressure on the resale market, aka houses that are already built and bought. These homes can sell quickly and for a lot of money, as demand pushes prices higher. But, continues Gardner, folks don’t want to sell their homes until they’ve found somewhere to move. And often they can’t—at least not somewhere akin to their current homes, in a neighborhood they can afford. So they hunker down.
None of this bodes especially well for millennials shopping for a starter home. Baby boomers are living longer and retiring later, and they aren’t downsizing as often as older generations, says Gardner. Americans used to live in their houses for an average of about four years; now it’s eight.
But this is no bubble. While prices are increasing—and even a modest rise in mortgage rates like the one predicted this year can dramatically hamper someone’s ability to borrow—successful buyers are able to make their mortgage payments on time and shell out cash for big down payments.
It’s no surprise that the surge of high-paying jobs in the region has created a class of high-paying home buyers. But the influx has fueled competition for houses, says Skylar Olsen, Zillow’s senior economist. Nationally, the average homebuyer must make more than one bid to buy a home. In Seattle, meanwhile, aspiring homeowners must bid three, maybe four times before they can hope to bag a house.
As a result, potential buyers continue to seek homes outside the city’s core. Among the neighborhoods that remain “fairly affordable,” according to Olsen, is Riverview, in West Seattle (median home value $533,400). But property there is appreciating, she says, and quickly. Prices jumped 19 percent compared to 2016. That leaves cities like Tukwila or Lynnwood, in Snohomish County, which lie close enough to commute to downtown Seattle jobs and inexpensive enough to save for a down payment—an impossibility for many in Seattle neighborhoods like Ballard ($640,300), Fremont ($767,000), and Ravenna ($843,400).
“Things are moving very, very fast here,” Olsen says. Seattle’s “one of the most competitive housing markets in the country, without a doubt.”
One yardstick realtors use to measure the market is the time span of inventory—how many months it would take to sell out every house on the market. In a healthy market, that should be about four months, says Windermere’s Gardner. In King County, as of mid-January, there were about two weeks of inventory. Seattle had only 11 days.
“Which is just insane,” Gardner says. “We are not close to being balanced.”
Reconciling it, the economist argues, means reckoning with the city’s zoning—and NIMBY-leaning property owners. Almost 70 percent of the city is single family, an allotment Gardner argues doesn’t make as much sense now as it may have a few decades ago.
Eventually a dearth of affordable housing could also hobble the economic and job growth that put pressure on the market in the first place, he adds. Consider San Francisco. On average, a single-family home in the Bay Area sells for $1.4 million, he says. In the past five years, 178,000 adults have fled California for sunnier cost-of-living climes; Seattle apartments rent for about half the price of a San Francisco one-bedroom.
Still, as the courtship for Amazon’s second corporate headquarters has illustrated, many cities covet Seattle’s economy, and they’d certainly like the 50,000 high-paying jobs the tech company has promised.
“The economic prosperity in our city and region is envied by many around the United States, but there are absolutely negative externalities associated with that growth,” says council member Johnson. Count the displacement of some residents among the pitfalls, Johnson’s family included. Between him and his wife, the couple has about 40 first cousins who live in the state. The ones working in fields like finance or tech can generally afford to live close to their offices. But others, working in nonprofits or teaching, live far from their jobs. Some family members are forced to leave the city because of the cost of housing. Others have left the state altogether.
Johnson used to rent a house in Eastlake. He lived there when he married and when two of his three daughters were born, but as rent crept up each year, the family couldn’t afford to stay. About seven years ago they bought a “teeny house” in Ravenna, Johnson says.
The house has doubled in value. He’s benefiting from the tight market, he admits, as are other Seattleites who are what he calls “stably housed.” But, he adds, Seattle needs to ensure that everyone is benefiting.
Affordability, as defined by the federal government, means people aren’t paying more than 30 percent of their income on housing. In Seattle, 40,000 low-income households spend more than half their income on housing, according to the city. Nearly 3,000 people are sleeping on the streets.
To help remedy that, the city council is currently working through 65 recommendations made in 2015 by the Housing Affordability and Livability Advisory Committee, a group that includes renters, homeowners, and developers. The goal is to make housing more affordable for more people—to bring equity back to a city that is increasingly characterized by poverty as much as its bullish economy.
“You can build your way out of a housing crisis,” Johnson says. “But you can’t do it very quickly.”
In one family photograph, Johnson’s grandmother Monie beams from the entry to her Broadway apartment on Capitol Hill as Johnson’s grandfather, Robert, formal in a military uniform, wraps his arm around her waist. An older photo shows Robert and his brother as boys, posing outside their house, also on Capitol Hill. And a third image features great-great grandmother Lilly seated with white hair and flanked by her children outside of the Peabody homestead at 1144 Harvard Avenue North.
When white settlers came to the Seattle area in 1851, the town they established, where Alki Beach is today, was first called New York. After moving across Elliott Bay to what’s now Pioneer Square, though, leaders gave the village a new identity, Seattle.
By March of 1889, some 500 buildings were under construction. The new developments, however, were largely built with wood, a downtown tinderbox that went up in flames when a fire razed 116 acres in the city’s business district that June. The damage cost millions. Growth slowed but it didn’t stop.
From the ashes came opportunity, including the neighborhood that four generations of Johnson’s family called home. The city widened and regraded the streets and bolstered municipal utilities. Residents formed a professional fire department. New buildings were built taller, this time with brick and steel.