Markets—Not Microsoft or Washington—Could Save Seattle
Microsoft’s pledge to devote half a billion dollars to provide for affordable housing in high-cost, high-rent metro Seattle—the company’s hometown—has met with faint praise. Anything of the kind is helpful, local officials allowed, implying that the computer giant’s loan and subsidy fund is a drop in the bucket. The New York Times was more explicit in its reservations: “Microsoft is trying to help fix a market failure—a job government typically does.” Only government can build subsidized housing at the scale required to address high housing costs, the paper suggests.
Affordable-housing advocates in other high-cost cities (think New York and San Francisco) also blame the “market,” but those locales operate under anything but a free market in housing. Constraints on construction—including zoning and building codes, mandatory “affordable” guidelines, and the opposition of anti-growth community groups—hamstring the capacity of the private market to respond to demand. That was one of the chief conclusions of an impressive set of housing-market reform proposals advanced in 2015 by a city-appointed group in Seattle.
The task force for the “Housing Affordability and Livability Agenda,” in its recommendations to the city’s mayor and city council, mentions but does not emphasize a need for federal funds (it hoped for a scant $270 million, less than the Microsoft pledge). But its key insights were broader. The task force concluded that the city was “constrained by outdated policies and historical precedents.” Low-density zoning came in for sharp criticism. The report notes that “two-thirds of Seattle (is) currently zoned exclusively for single-family homes.” But rather than proposing the usual panacea of high-rise, low-income housing in wealthy enclaves, the task force endorsed what I’ve called “densification”—incremental changes to permit the construction of a ladder of housing types, similar to what can be found in older “streetcar” suburbs throughout the Northeast. “In a land constrained city,” the task force avers, “increased housing density is the necessary companion to urban growth. That means more cottages, in-law apartments, flats, duplexes and triplexes.”
The group concluded that building more housing at lower cost did not require technological breakthroughs. Cost-efficient wood-frame construction would do just fine for the new housing. Seattle’s zoning law requires any building taller than 75 feet to use “more expensive concrete or steel framing,” even though five-story buildings can be safely built with cheaper wood framing. Fire and safety laws, the committee found, were unnecessarily stringent. The committee—which included tenant activists, construction firms, foundations, and the building-trades union—believed that zoning-rules changes could make a big difference, and that a combination of “up-zoning” and relatively limited subsidies could lead to construction of 50,000 new housing units.
So why has Seattle remained such an expensive city, such that one of the nation’s largest corporations felt the need to pledge $500 million toward housing construction? At least part of the answer lies in the response of Seattle community groups to the committee’s housing and affordability agenda: extended legal action to halt zoning changes. A coalition of neighborhood groups, including five from upscale West Seattle, asked that up-zoning be halted because of its environmental impact—on noise, traffic, and such. The plan was finally upheld in November, though the city must refine it to ensure that historic buildings are not harmed.
Microsoft will get the headlines, but the real change in Seattle’s housing market might come from the same market that so routinely gets blamed for the problem. If that happens, Seattle will continue an American tradition in which private interests have successfully addressed housing shortages. Developers once built row houses in Brooklyn, three-family homes in Boston, and duplexes in Chicago—none of which would be permitted in most of urban America today. Let Seattle give the market a chance before it calls in the feds.
