The (Zoning) Battle of Seattle

If ever there was a time for outsiders to pay attention to local Seattle politics, this is it. It’s a city council election year and the candidates have a better chance than ever before to discuss Seattle’s already declining affordability.

Seattle’s mayor, Ed Murray, recently announced that he was backing off key elements of the Housing Affordability and Livability Agenda (HALA) recommendations that the city had requested. Specifically, there was a loud outburst on the part of homeowners to HALA’s proposal that much of Seattle’s land be “upzoned” – that is, the city would change zoning regulations to allow the construction of multifamily homes (mostly duplexes, triplexes and condos) in areas that currently only allow single family homes.

Seen in the context of all the HALA recommendations, upzoning is a sensible idea that could make possible the radical changes that Seattle needs to maintain its diversity and livability for all. During the raucous few weeks of the plan’s rollout, however, most politicians seem to be content to demonize their enemies (if I never hear the word “fauxgressive” again, it’ll be too soon) rather than discuss real change.

Seattle has the opportunity to build broad based support on the terms of the plan, but the deck is somewhat stacked against sensible changes. The housing issue is boring and can be data heavy. Supporters also apparently shot themselves in the foot with some political missteps.

Viewing this battle from afar gives me a little space to examine the quality of argument on each side. If HALA supporters can somehow resurrect the zoning changes, do they stand a good chance of making an impact on the city’s affordability?

Supply and demand in Seattle

smallzonemapSeattle is a land constrained city with enormous and growing appeal. Like other similarly situated areas (San Francisco, New York, Boston, etc) the price of housing has skyrocketed in recent years. In addition, a vast amount of its land is covered by Single Family Zoning (SFZ) allowing only detached homes placed within a given lot footprint. Up to 65% of the land area is covered by the light yellow shades representing SFZ in the map above.

It’s not a big stretch to see how limiting the size and structure of homes to the least efficient mode translates into higher housing costs. If developers can’t build up or across, they have to make independent, freestanding structures on each plot. Zoning codes also dictate a certain lot size, which makes for an even more inefficient use of land. These factors reduce the supply of housing, increasing the price.

A good background piece from Daniel Kay Hertz (not about Seattle) in Washington Post points out why this is:

…[Z]oning laws restrict the total amount of housing that can exist in any given area, which means that wherever well-to-do people decide to move, they will bid up the price of housing until it’s out of range of everyone else. Imagine, for example, if there were a law that only 1,000 cars could be sold per year in all of New York. Those 1,000 cars would go to whoever could pay the most money for them, and chances are you and everyone you know would be out of luck.

Incidentally, Hertz also references the racial and economic exclusion that is inextricably linked to zoning in this country. HALA did something similar which may have backfired, as a relatively benign mention of this fact in the HALA recommendations caused some pearl-clutching and outrage, largely from the population that benefits from the status quo.

“Infinite Demand”

Advocates for the status quo in Seattle make a few different arguments for why housing is more complicated than “Economics 101”. A comment on an article about zoning and housing prices on Pedestrian Observations provides a concise summary of their position:

The more housing you build, the higher prices become. Build enough housing, and eventually nobody but rich people can live in that city. Building housing makes cities unaffordable.

Economists can’t wrap their heads around these kinds of paradoxes because they’re unable to understand that not all parts of the real world function in the idealized way described by Econ 101. In the real world, there is infinite (or effectively infinite) demand for some goods, and creating more supply creates exponentially more demand in a vicious feedback loop.

…building more housing in America’s most desirable cities doesn’t reduce housing costs, it just lets more people move to those cities who otherwise wouldn’t. Why wouldn’t you, as a resident of Keokuk Iowa where wages run $8 an hour and jobs are scarce, move to Seattle WA, where the minimum wage is $15 an hour and jobs are plentiful? Obviously you would if you could. And when Seattle builds more housing you do move. So do lots of other people. But the number of people who move is always exponentially greater than the number of housing units built.

You’ll see the words “infinite demand” pop up a lot in these conversations. It may be functionally true – there may be many more people that want to live in Seattle than is viable to produce housing for. However, it is difficult to see how, all else being equal, increasing supply would increase prices.

The claim that “the number of people who move is always exponentially greater than the number of housing units built” doesn’t seem compelling – where is the evidence that people move because of the availability of housing itself? Generally, people move because of the signal of availability they get from price. There are not millions more who would move to Seattle if there was an “available house” that cost exactly as much as houses already do. If there were, the housing costs would probably be even higher.

If I’m being charitable, perhaps these folks are arguing that a new type of person will be attracted as more multi-family housing is built in Seattle – the same people that are currently bidding up the price of single family homes are not the same as the people who will be attracted to denser living. I guess this is a reasonable assumption, but there’s not a clear outcome from this. The families that are more likely to live in duplexes and triplexes are certainly not as

This is not to say that increasing supply necessarily leads to widespread cost decreases. Many, including perhaps most forcefully Jim Russell of Burgh Diaspora, write that high demand is the prerequisite to skyrocketing prices, and supply doesn’t affect the equation much. This is a bit difficult to overcome in a desirable place like Seattle – it’s unclear whether or how we should try to convince people that places that they view as desirable are in fact undesirable.

That being said, the effect of spreading out development over the city rather than only allowing densification in the very few areas that the homeowners will allow would be to decrease the effect on any one district. A citywide (and actually a regional) approach is necessary. It’s kind of bizarre that we live this up to local jurisdictions in this country.

Displacement

Again being charitable that there’s not other influences at play, another potential concern is that upzoning would cause displacement of current residents from affordable single family homes. Bill Bradburd, who advanced out of the primary and is running for a citywide seat wrote an op-ed criticizing the HALA recommendations:

The false assumption inherent in the HALA Report is that creating more supply at the high end will trickle down to increase the supply of workforce and very low-income housing for seniors and people with disabilities.  Tearing down or renovating older, moderate-cost buildings only displaces renters and exacerbates the affordability problem.  In reality, truly affordable housing types can only be produced with subsidies.

The most compelling version of his argument is that developers only have an incentive to build for the high end of the market that makes them the most money. This is undeniably true, and is happening in the hottest housing markets in the country. Take out a neighborhood of moderately affordable renting houses to design a high rise of ultra sleek apartments for the rich, and you’ve forced out people hanging on by their fingernails to the opportunities to be close to jobs and infrastructure.

There’s a couple logical flaws in this argument, the most prominent being that the current system is not protecting low income people. If you’re renting in a neighborhood that would support price increases, your landlord already has an incentive to get you out of there. That is, in fact, what is happening all over Seattle.

The second problem is that zoning is not what’s doing the preservation that is currently going on. It protects far more rent seeking homeowners who bought at the right time than it does income limited renters who need affordable housing. To address displacement, Seattle desperately needs to take measures to preserve, build, and even take off market housing that preserves affordability. Zoning changes are not the sole solution to this challenge, but they also are not the cause.

Bradburd’s objection also ignores the work that the HALA recommendations do to tie affordable housing to for-profit development. If the proposal was to destroy zoning and let the market sort it out Bradburd’s argument would be far more viable. The problem is that it will be up to people like Bradburd, if he wins, to implement the policies that create a system with greater equity and affordability in mind. If he rejects out of hand that anything should change it’s tough to see how a better outcome could happen.

“Character/X comes first”

I put two other rhetorical tools from people who disagree with upzoning on principle in a separate category, because they tend to fail on argumentative grounds, rather than evidentiary ones.

The first I find so uncompelling that I have to try hard not to make a caricature of the position: that the addition of multi-family housing will ruin the “character” of the neighborhood. This is not always meant as a racist or classist dog whistle (although it often is) but does prey on the fear of looming disaster that change represents. Never mind that there are plenty of ways to do things like preserve architectural unity or preventing a gas station moving in downstairs without requiring extensive single family zoning. The boiled down argument usually comes to: I don’t want new people or activities in my neighborhood.

Comments on articles about HALA are filled with people saying “I bought a Craftsman in a nice neighborhood 10 years ago. Why should my needs and desires be dashed for people who want to move here?” There’s a lot wrong with that sentiment – not least that allowing denser construction is actually probably good for homeowners. But on a philosophical level, a desirable large city like Seattle does not owe each and every one of its residents the preservation of what they perceive to be the “character” of the neighborhood, especially when that involves large plot single family homes in a major urban area.

There are a number of claims (some disingenuous and some reasonable) about what Seattle needs to invest in before they upzone. Some people will claim they need better parking facilities for residential areas (this is ridiculous). A more supportable criticism is that Seattle has ineffective public transit and is a traffic disaster, and that allowing densification without better infrastructure is counterproductive. As someone currently based in a city with a very high percentage of triplex houses without effective public transit, this does hit close to home. Although the reading I’ve done about Seattle does seem to indicate that they doing a very poor job on transport issues, this is not in itself a reason to reject zoning changes.

In fact, zoning could just as easily be seen as the gateway issue. A lack of density means more people have to have a car because regular transit service isn’t cost efficient. It also ignores the other recommendations of HALA that complement this investment (for example, reducing parking requirements). Also, call me cynical, but I bet the people voting against public transit funding and against upzoning are probably not entirely distinct.

A Small but Commonsense Step Forward

Let’s finish with the obvious: zoning reform is not a silver bullet. To quote someone: there are no silver bullets, just a lot of lead ones.

I was almost ready to publish this post when I read this great piece by Pete Saunders about why Zoning Reform Can’t Fix Everything. If you’ve made it this far in my post, you should read it. Saunders makes a critical distinction that is not well understood by fundamentalists of either camp: upzoning is a useful tool in some contexts, but there are others where it could well be disastrous. Upzoning and letting the market take over in South Side Chicago, which suffers serious perception, segregation, and quality of life issues, will do nothing to change the fundamental characteristics that create “global Chicago” and “Rust Belt Chicago”, for example.

Once again, this proves how we don’t really have a “national housing market”. Renting a house in San Jose is different than buying a house in Buffalo. The problems are actually the opposite of one another, and the search for a single solution is more than useless – it’s counterproductive.

However, I don’t think it would be controversial to claim that a huge portion of Seattle, including many of the single family zoned areas, represent a high demand and constrained market that is not like the struggling areas in Rust Belt or East Coast cities. While not a panacea, I don’t see how to make things more affordable and sustainable in Seattle without the ability to live more densely. The change would create greater opportunities for careful urban planning and development rather than solving the affordability problem in one fell swoop.

The best outcome that Seattle can hope for may be that rents don’t go up as much as they would have. This is still a positive impact, if depressing – Obamacare supporters will tell you that this is pretty weak tea to build support around.

Housing mix is going to depend on the particular levers deployed by local government to carry out development: the carrots and sticks that create a housing market that works for all of Seattle. Make no mistake that the whether the decision today is to embrace change or delay, the city will be living with the consequences for decades.

Update: now Tacoma’s talking about it. Obviously the context is significantly different but you can see all the same tropes on display in this article.

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