The New Battle in Seattle: Don’t Blame Amazon for the City’s Housing Woes

 

Seattle has decided to be a last-minute entrant into the competition for Amazon’s HQ2. But while most cities — such as Boston and Washington — are trying to land the retailing giant’s second headquarters, Seattle is doing its best to make Amazon reconsider the importance of its current home base. The company “will continue to evaluate its long-term plans for Seattle after the City Council passed a bill to tax large businesses to fund homelessness services,” according to the Seattle Times. Recall that when a larger tax was being considered, Amazon had halted planning one new office building and was considering subleasing the office space on another that’s under construction.

Look, Amazon has a legitimate reason to feel like it’s being scapegoated for the proper working of the laws of supply and demand. Seattle has some of the strictest land-use regulations in the nation. NIMBY alert! As a long Politico Magazine feature detailed last month, local residents don’t want to change zoning laws to allow new development. Over half the city’s land is zoned for single-family homes, when what’s really needed is more density — more town homes, apartment complexes, and other multifamily housing types.

Some numbers, courtesy of Politico and the Seattle Times: Since the end of the Financial Crisis, Seattle has added 100,00 new jobs, but only 32,000 new homes and apartment units. In the typical year over the last two decades, King County (home to Seattle) had one home for sale for every 230 people. Now? There’s one home available for every 1,060 people.

But it’s not just Seattle. The US has a macro problem with housing affordability in some of its highest productivity cities. Research by Chang-Tai Hsieh and Enrico Moretti finds that the “creeping web of these regulations has smothered wage and gross domestic product growth in American cities by a stunning 50 percent over the past 50 years.” And it’s not getting better. Just recently, a California bill to allow more housing density died in the legislature. The Amazon-Seattle dispute seems to be getting more press attention than that conflict, which is good; the issue needs a big spotlight to help spur action. Check out this snippet from a recent podcast Q&A I recorded with Obama White House economist Jason Furman:

Pethokoukis: If you wanted to boost productivity growth, we mentioned a little bit about investment, but are there any other policies that people aren’t nationally thinking of which have been hurting growth or depressing growth in recent years? Housing maybe and land-use regulation? I know it’s something you’ve written about.

Furman: Housing and land-use regulation. You can answer all the questions for me. I think there is a lot of evidence that where people are matters for productivity and having conglomerations of people in the most productive areas is great for the economy. And right now a lot of people can’t afford to live in those areas so I do think knocking down those land-use regulations would help. And the other one is occupational licensing which prevents a lot of people from moving between occupations and also prevents them from moving across state lines. Non-compete agreements, I would throw that in as well.

Pethokoukis: What can the federal government do about that other than talk about it?

Furman: I think one thing that the federal government can do which I certainly tried to do at CEA is use the bully pulpit to educate. We used to talk to governors and mayors about those issues. When I was in the White House we put out a template for what you could do to deal with it. I think there is some federal money that could be created as an incentive to deal with those issues and as a penalty we could withdraw those funds if you don’t deal with those issues. Do we want to have some federal reciprocity for licenses? I think that’s something we should be thinking about. The FTC can do greater enforcement on the antitrust violation aspects with occupational licensing. But look a lot of this is if San Francisco wants to have really stupid rules that benefits the people that own housing there already and hurt everyone else and hurt the economy in the process, I don’t know if at the end of the day we can do something about that federally.

Published in Economics
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There are 19 comments.

  1. Coolidge

    Great article and research. Health care costs are the least of my worries. Housing costs are Number 1.

    • #1
    • May 16, 2018 at 5:08 pm
    • 3 likes
  2. Thatcher

    Just posted over at RushBabe49.com. I live just north of Seattle, in Everett.

    https://rushbabe49.com/2018/05/16/part-two-welcome-to-21st-century-seattle/

    Scroll down for Part One.

    • #2
    • May 16, 2018 at 5:48 pm
    • 3 likes
  3. Member

    What is this thing called housing affordability problem? I live in the Greater Houston Metropolitan Area. It has high productivity, yet I see no problems with housing affordability here – even with the flakes moving here from Crazyfornia buying the biggest McMansions they can afford after cashing in their California bungalows to buy one.

    Maybe if Houston had zoning laws we would see a problem in housing affordability. (The last mayor saw Seattle as a how-to textbook, so maybe . . .)

    • #3
    • May 17, 2018 at 5:33 am
    • 2 likes
  4. Thatcher

    Please look at a map of Seattle to figure out why housing is scarce. Seattle has NO room to spread out, being squeezed between Puget Sound and Lake Washington.

    • #4
    • May 17, 2018 at 6:08 am
    • 2 likes
  5. Member

    I can’t prove it, but I think Amazon is such a monster because of Fed easy money and a parasitical financial system. Socialist central planning isn’t going to fix this. They probably don’t want to house more people on the peninsula, the west side of Puget Sound either.

    • #5
    • May 17, 2018 at 6:19 am
    • Like
  6. Member

    RushBabe49 (View Comment):

    Please look at a map of Seattle to figure out why housing is scarce. Seattle has NO room to spread out, being squeezed between Puget Sound and Lake Washington.

    Housing is scarce because multi-unit housing is strictly contained. If apartment buildings, duplexes, and four-plexes were allowed in more neighborhoods zoned as single-family (most with lot restrictions) much of the problem would go away.

    Houston’s population density is growing because many of the single-family houses inside the 610 Loop are being replaced by multi-unit housing. Much of this is luxury housing. These units are not being erected because of local government fiat. They are being built because the developer can make a profit and because there is a demand for this type of housing. Coincidentally, it keeps the price of the remaining one-family housing within the Loop at reasonable prices. Why? Because upscale hipsters do not have to bid up the one-family homes to live in trendy inside-the-loop neighborhoods. (Most of them don’t want a single-family home. Yard work and building maintenance are not trendy ways to spend time.)

    This dynamic also applies in Galveston, which is on a barrier island and even more constrained than Seattle. It is hobbled somewhat there because there is zoning, and NIMBY types have some success in blocking development.

    • #6
    • May 17, 2018 at 6:35 am
    • 6 likes
  7. Member

    Thanks, James.

    Cost of living studies have put the high cost of housing as far and away as the most damaging cost to the average American family budget.

    However, the green “Smart Growth” cadres who are all over, in and around government have successful embargoed housing growth in the high productivity metro areas using multiple strategies, not just zoning to create a disastrous situation for many American families , particularly those families just starting out.

    According to Joel Kotkin, urban infill housing is 2 1/2 times the cost of large development housing on the periphery of our cities. A truly “smart growth” approach would have been to encourage the building of housing in large housing developments where housing is built almost assembly line style on our cities periphery and to build the appropriate infrastructure to sufficiently support that housing. But no, the Green Lobby has successfully though multiple strategies destroyed that approach. This Green approach to killing growth is not just through zoning, it is also through an incredibly complex system of approvals, including the always deadly “Design Review Boards” that require often years to complete for even a simple house, much less a housing tract, and through the wholesale refusal to upgrade and maintain infrastructure for traffic, power, sewer and stormwater. It must be noted that in the recent deadly horrific mudflow floods that killed several and nearly destroyed much of ultra chic and expensive Montecito, the culprit seems to be that the green lobby successfully lobbied to not maintain the debris basins that protected that city and the result was catastrophe.

    Here in California, where once we had not so long ago believe or not, some of the least expensive housing in America, even in LA and the Bay Area, this “Smart Growth” denial of growth has reached it’s apogee and has driven housing sale and rental prices to truly unaffordable levels. Our esteemed Government Moonbeam way back in his first term, some 43 years ago, slammed shut any new freeway growth and traffic has gotten worse and worse and worse ever since. Now with California traffic approaching gridlock nearly on an hourly basis in many parts of the state, the idea of building housing on the periphery hours in driving time away from the large employment centers has become pure folly. Thanks Greenies! Of course we are now inundated by our wonderfully Progressive government by demands to “do something” about our flourishing tent cities of homeless in key areas of our cities that have grown no doubt because of our acute housing shortage.

    Also not well understood is that small business growth flourishes in those now nearly forbidden growth areas on the periphery of cities. It is there where there is cheap land and cheap building with room to grow and affordable living conditions so that a new small business often starting out on a shoe string budget can get a foothold and grow. Forget about it in our new wondrously expensive “smart growth” urban areas.

    • #7
    • May 17, 2018 at 8:20 am
    • 1 like
  8. Thatcher

    Those “smart growth” Greenies want you out of your car and into “mass transit”, even if there is NO “mass transit” available. You can’t have mass transit without mass, and the people mightily resist being crammed into apartments and townhouses. It has been said about Seattle that their residents feel that they can’t raise children in an apartment-they require the single-family house with a yard. Not that they raise many children anyway-Seattle has more cats and dogs than human children, and it has been that way for years.

    • #8
    • May 17, 2018 at 8:45 am
    • Like
  9. Member

    Unsk (View Comment):
    Cost of living studies have put the high cost of housing as far and away as the most damaging cost to the average American family budget.

    Our financial and political system is dependent on overpriced shelter never going down, too. Look at global labor rates. This equation spells disaster. 

    • #9
    • May 17, 2018 at 8:55 am
    • Like
  10. Member

    RushBabe49 (View Comment):
    It has been said about Seattle that their residents feel that they can’t raise children in an apartment-they require the single-family house with a yard.

    I don’t disagree about raising children in an apartment. My middle son is moving back to Houston (where he owns a house that is currently rented) from the Dallas-Fort Worth area because he plans to be married and they want children. However, the reason Seattle housing prices are so high is that single (or DINK) hipsters who would rather be living in condos and town homes that Seattle has too few of are buying single-family homes so they can be in Seattle.

    If you traded one 12-block neighborhood of single-family homes for apartments, condos, town homes, you would free up 48 to 60 blocks of single-family homes (assuming an average of 5-6 households in space of one single-family home in the mid-density housing area). That cannot happen because of zoning and NIMBY attitudes. Also as demand for single-family residence drops (because the one-person households leave the single-family homes for condos and town homes) prices for single-family homes would drop – which would cause a squeal from Seattle homeowners you could hear in Portlandia.

    RushBabe49 (View Comment):
    Not that they raise many children anyway-Seattle has more cats and dogs than human children, and it has been that way for years.

    You got anything against fur children? You speciesist.

    • #10
    • May 17, 2018 at 8:57 am
    • 1 like
  11. Member

    RushBabe49 (View Comment):
    Those “smart growth” Greenies want you out of your car and into “mass transit”, even if there is NO “mass transit” available. You can’t have mass transit without mass, and the people mightily resist being crammed into apartments and townhouses. It has been said about Seattle that their residents feel that they can’t raise children in an apartment-they require the single-family house with a yard. Not that they raise many children anyway-Seattle has more cats and dogs than human children, and it has been that way for years.

    People like Matty Yglacious think this stuff jacks up GDP so we can pay for Medicare. 

    I think the Minnesota GOP finally put a lid on this crap, here. 

    • #11
    • May 17, 2018 at 8:58 am
    • Like
  12. Coolidge

    But the argument for more high rises and shorter commutes should be part of the argument. I would suggest suing these guys and making the complaints that there dedication to there houses is anti-environmental along with those laws prohibiting working out of your homes. Add a carbon footprint to everything and use there own belief and regulations against them.

    • #12
    • May 17, 2018 at 9:35 am
    • Like
  13. Member

    Shelter in aggregate is at least 15% overpriced. But if it ever went down it would wipeout Wall Street and the government. 

    KASHKARI: LACK OF AFFORDABLE HOUSING SHOWS SOMETHING IS BROKEN; WE NEED MORE INFLATION 

    • #13
    • May 17, 2018 at 10:59 am
    • Like
  14. Member

    I just don’t get the pull of Seattle and Portland. They have miserable weather. They, along with LA, San Francisco and San Diego, have accepted homelessness and misery as growth industries. They coddle the drug-addled recalcitrant idler and treat being a ward of the state as if it were a career choice. Why? Why would any sane person want to live in a place like that? I mean, I can understand why bums pick San Diego; the weather there is ideal. But Seattle and Portland. they have to rolling out the veritable red carpet to attract deadbeats and druggies. And they are! Everyone is supposed to accept this outreach as a sign of beneficence and charity.

    But then again, it’s disgusting to scrape the beneficence off the bottom of your shoe! Call me old fashioned, but this is no way to “help” the homeless. You help them by institutionalizing those who need it, and as for the rest – zero tolerance. Encourage the help of charitable organizations. You don’t get homeless off the street by validating and subsidizing their plight. It takes some tough love and this first comes with zero tolerance.

    • #14
    • May 17, 2018 at 12:43 pm
    • 1 like
  15. Member

    Doug Kimball (View Comment):
    I just don’t get the pull of Seattle and Portland. They have miserable weather.

    It’s mild 100% of the time. It beats the four hard seasons in so many places. IMO, the sun belt is gross. 

    • #15
    • May 17, 2018 at 12:52 pm
    • Like
  16. Thatcher

    Doug, don’t you know that the radical liberals who run Seattle do not ever listen to reason? They continually operate on Feelings, and have no care for those who pay the bills. As long as they personally don’t step in the stuff, they are fine. All of them live in neighborhoods where no homeless are found. They should be forced to house those homeless camps in their own backyards. They want YOU out of your car, but they drive their own SUVs to and from work every day.

    And Mr. Jones above is absolutely correct about the climate. We can actually go outside 12 months a year, and the majority of dwellings in the Pacific Northwest need no air-conditioning.

    • #16
    • May 17, 2018 at 2:54 pm
    • Like
  17. Member

    Housing, like any other market good would sort itself out if governments would just get out of the way, even the price declines would be acceptable as anyone who has owned a property for a few years won’t lose their investment and reforms are always slow to take effect. On the other hand people who own homes in these high cost cities have a piece of monopoly and won’t support changes that harm them and such people are the principle voters. Since liberals won’t change, the solution is slow but inevitable, they’ll all gradually lose relative population until prices adjust, then with a lower tax base and liberals still unmoved and uneducated they become Detroit. Of course, if the people moving out carry their views with them, and liberals will because they don’t learn, they’ll destroy them as well and the whole country becomes Detroit until some smaller towns become attractive cities and plan their futures the way Singapore planned it’s future, which makes a lot of sense since by then we’ll be run by Chinese anyway. 

    • #17
    • May 21, 2018 at 5:33 am
    • 1 like
  18. Member

    I Walton (View Comment):

    Housing, like any other market good would sort itself out if governments would just get out of the way, even the price declines would be acceptable as anyone who has owned a property for a few years won’t lose their investment and reforms are always slow to take effect. On the other hand people who own homes in these high cost cities have a piece of monopoly and won’t support changes that harm them and such people are the principle voters. Since liberals won’t change, the solution is slow but inevitable, they’ll all gradually lose relative population until prices adjust, then with a lower tax base and liberals still unmoved and uneducated they become Detroit. Of course, if the people moving out carry their views with them, and liberals will because they don’t learn, they’ll destroy them as well and the whole country becomes Detroit until some smaller towns become attractive cities and plan their futures the way Singapore planned it’s future, which makes a lot of sense since by then we’ll be run by Chinese anyway.

    I should save this for a future Quote of the Day.

    • #18
    • May 21, 2018 at 5:41 am
    • 1 like
  19. Thatcher

    And then, there’s this.

    • #19
    • May 21, 2018 at 6:14 am
    • Like