Tuesday, August 4, 2015

Seattle Ponders Rent Control While Land-Use Rules Make It Difficult For Developers To Construct New Units

See Taking Control of Rent Control by Adam Millsap of a research fellow for the State and Local Policy Project with the Mercatus Center at George Mason University. Excerpt:
"Seattle is certainly experiencing an increase in demand for housing. From 2005 to 2014 Seattle’s population increased by over 93,000 people, a 16 percent increase. However, even this large increase in population only reflects a portion of the actual demand for housing in Seattle, since there are likely many people who want to live there but don’t due to the high cost of housing. The potential residents who don’t live in the city still contribute to the high prices since they bid them up when they compete with other consumers for apartments and houses.

In response to this increased demand developers would normally build more housing, but in Seattle that’s not easy to do. Local land-use rules like the tower-spacing rule—designed to preserve views in the downtown area—make it difficult for developers to construct new units. There were 43,524 single family and large apartment building units constructed in Seattle from 2005 to 2014. And while this may sound like a lot, contrast that number with Houston, where over the same time period 115,749 units were constructed. Houston grew by over 160,000 people from 2005 to 2014—67,000 more than in Seattle—but home prices there are still much lower than in Seattle. Both cities are experiencing higher demand for housing, but only in Houston is the amount of housing growing at a pace that aligns with that demand."

"the only real option is to increase supply. Rent control doesn’t increase supply, but instead does the opposite: It discourages new construction by preventing prices from rising. Many cities across the country are having a difficult time attracting residents so Seattle shouldn’t take its growth for granted. But if Seattle and similar high-growth, expensive cities want to be affordable places to live they need to allow more housing."

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