Seattle Bubble

Is downtown Seattle destined to become populated with nothing but luxury condos and low-income housing? If taxes and fees for building downtown keep going up, some see that as Seattle’s future.

As the Seattle City Council prepares to vote on reshaping downtown Seattle with taller buildings, a heated debate remains over how much residential developers should pay to maintain affordable housing downtown.

Builders who want to profit from taller skyscrapers would contribute to a fund used to create housing affordable for $11-an-hour workers such as Allen and other low-income residents.

Business interests, neighborhood groups and even some low-income housing builders worry that if the city imposes fees that are too high, it could frustrate goals to concentrate new residents downtown.

Additional expenses for affordable housing, environmentally friendly buildings and underground parking could disproportionately hurt developers trying to build less lucrative apartments or condos aimed at the middle class, some argue.

"It guarantees downtown will have only luxury or subsidized housing, which … will not make a healthy neighborhood," said Kate Joncas, executive director of the Downtown Seattle Association.

Certainly if the appreciation of the last five years were to continue, and the City Council imposed more and more fees, that would seem to be a likely outcome. Of course, appreciation isn’t likely to continue this break-neck pace, so a two-caste system seems rather unlikely. Come to think of it, I seem to have heard this argument somewhere else…

(Jennifer Langston, Seattle P-I, 02.23.2006)

While most home “owners” are nothing less than thrilled about skyrocketing real estate prices, mobile home owners are having the land sold out from under them as land owners cash in on Seattle’s bubble.

Our state is facing a mobile home space crisis. Exploding real estate prices are making the land too valuable for this moderate-to-low income way of life.

According to state figures, 115 parks have closed in Washington since 1989.

In the past year, nine parks have sold or are up for sale in the Puget Sound area, where land prices have risen the most.

Six hundred twenty one families in our area now must find another place to move their mobile homes, 167 in King County alone.

I guess it’s not really surprising, as all sorts of low-cost residential options have been replaced with sardine subdivisions and chicly condos.

(Wayne Havrelly, KIRO 7, 02.21.2006)

Here’s an insightful headline from The Olympian: Renting may be better for first-time buyers. Yes, that’s “may be better.” Heh.

Is it better to rent than to own, particularly as the median price of a home in Thurston County keeps climbing and now approaches $250,000?

Renting offers the advantage of flexibility and a landlord who will take care of repairs; home ownership brings the reward of increased equity and a tax write-off.

But as the difference between the average cost to rent and a typical mortgage payment widens, some experts say renting could be a better option for prospective first-time buyers.
…
Taylor, a former Ohio resident who lived in Tacoma for four years and has spent a year in Olympia, describes the prospect of West Coast property ownership as “nightmarish.”

Property values are “grossly inflated,” homeowners’ insurance has become more expensive, and lots are getting smaller, he said.

“I wouldn’t be able to sneeze without offending my neighbor,” said Taylor, 38, who works as a shipping and receiving clerk for Office Depot in Kent.

You don’t say.

(Rolf Boone, The Olympian, 02.19.2006)

Another local mortgage firm has been shrinking lately. Mortgage Investment Lending Associates, Inc.’s staff has shrunk by roughly 17% since January.

Rising mortgage rates and the slowing housing market nationwide have caught up with Mortgage Investment Lending Associates Inc., which has reigned as one of the region’s fastest-growing companies.

Better known simply as MILA, the wholesale mortgage lender has reduced its work force by about 120 people since Jan. 1.
…
The lending company now employs about 600 people, according to company estimates.

So much for that “fastest-growing” title, I guess. Maybe they should think about getting into the foreclosure business.

(Eric Fetters, Everett Herald, 02.15.2006)

Here’s a good one to chew on. Is Seattle’s housing market poised to become as ridiculous and unlivable as San Francisco? Could be…

The ripples of San Francisco’s housing crisis don’t stop at the city limits. When the working poor — receptionists, day care providers, retail salespeople and housekeepers, for example — flee the city, pressure increases on them and their employers. Commutes extend time away from both the job and home. Cities lose middle- and lower-wage earners, decreasing not just economic diversity but sometimes racial diversity as well, census figures show.

In San Francisco’s case, those effects extend more than 800 miles north to Seattle, where city officials use San Francisco’s housing data as both a grim forecast and scared-straight therapy session.

“We all know we don’t want to have a housing unaffordability situation as San Francisco does,” said Adrienne Quinn, director of the city of Seattle’s Office of Housing. “We don’t want to become that.”

But it is the direction Seattle is headed. Rents in the eastern Puget Sound region have risen 35 percent over the past 10 years, according to the U.S. Department of Labor. In Seattle alone the jump is closer to 40 percent — compared with 50 percent over the same period in San Francisco.

Well we can’t have it both ways, people. Housing prices shooting up and up can’t be both good and bad at the same time. Either it’s good because all you homeowners out there are essentially making money from nothing, or it’s bad because fewer and fewer people can afford to live. Whoever wrote this article though definitely seems to believe the latter. Here’s a grim prediction:

“The housing situation here in San Francisco is this: If you are making less than $100,000, housing is not affordable. It’s in crisis. It’s not available for working class, lower class. The number of evictions is skyrocketing. …

“It’s almost as if two parallel cities are happening. The very poor (and) the very rich. What you see in (San Francisco) you will see in Seattle. It’s clashing social strata.”

I would like to know why people that are that hard off don’t do whatever they can to move to a cheaper place. If the city I lived in became completely unaffordable to me, I would use any means necessary to move to a place I could afford. Anyway, also worth mentioning is Stefan Sharkansky’s take on this article over at Sound Politics:

Oddly, the article does not contain the two most important words for understanding San Francisco’s unusually high housing prices: RENT CONTROL. … Both forms of rent control offer perverse incentives for a dweller to remain in their current home longer they would otherwise. Thus the supply of available housing is artificially suppressed, thereby raising prices for anybody who is seeking housing. Seattle would do well to learn from this experience and in general to think about the consequences of obstructing a free market in its quest to make housing more affordable (to some).

So what do you think? Is Seattle heading toward the unpleasant situation found in San Francisco? How does rent control factor into the situation? Will San Francisco and Seattle’s housing markets ever pop? Will I ever stop asking stupid questions and just go to bed?

Well I know the answer to at least one of those questions—the last one—and the answer is yes.

(Mike Lewis, Seattle P-I, 02.16.2006)