Seattle's record apartment boom is ready to explode | Hacker News Reader

Seattle's record apartment boom is ready to explode

seattletimes.com

48 pointsjseliger27 comments

This a great thing considering Seattle's insane, tech-driven population growth and the pressure it has put on housing supply. To the city's credit, they have not been shy about aggressively constructing new housing, both rental and for sale. Nonetheless, housing costs have been skyrocketing because the builders haven't been able to keep up with the demand rate. Hopefully this is a sign that they are finally catching up with Seattle's market demand and rental rates can come down a bit.

While it is difficult to grow an urban region this fast without side effects, I think Seattle has done a reasonably good job managing the crazy population growth compared to some cities like San Francisco.

The money quote:

"The city is on pace to see more apartments built this decade than in the previous 50 years combined"

The problem isn't the builders, it's the city's fear of its own NIMBY residents. It takes 4-5 years to build an apartment building, but less than 1 of those years is actual construction. The rest is taken up by draconian regulatory compliance, permitting, and several community reviews where developers basically have to concede to every possible demand of current residents. And this is the best case scenario. If you need to rezone, you should be prepared to sit on empty land for ten years or more. If Seattle was more serious about increasing supply, that build cycle would be a lot closer to 1 year than 5...housing developers would love to respond more quickly to demand.

And because of this there is the YIMBY-movement: http://yimbytown.com/

:-)

Regarding the money quote: Doesn't it beg the question as of why exactly supply took so long for catching up with demand? Because I doubt the increase in citizens in the last years is also more than in the "last 50 years combined". Also, those new citizens surely didn't only moved to Seattle just because of the "amazon effect".

Is this the story of too much red-tape or the story of too low a demand to cut-through (costs of) red-tape? Seattle has seem to cut back on it by "allowing denser housing or rolling back requirements to build costly parking garages".

IMO, supply here isn't being built for the existing demand, because entry-level housing (cheap) isn't being built as much. Indicating a market interference to me. There (as in most cities) doesn't seem to be much done to make efficient housing construction possible. So for the less affluent ones: Scale down your housing-expectations per dollar, wait out until those new constructions have been worn down and the boom-buildings have seen their bust-caused ownership changes.

To my understanding, the initial big change in Seattle was about a decade ago when they massively overhauled the city planning and zoning restrictions to effectively eliminate height and density restrictions (and NIMBY drama related thereto) in the urban core, hence the explosion in residential high-rises as well as new office skyscrapers. Recently they've been making similar but more incremental changes further out. Removing the need to build for suburban assumptions in the urban core, like mandatory parking, also made things much more sensible e.g. most people that live in the core don't drive or even need a car much, so it was silly to mandate parking that few people used. Supposedly Seattle was a bit more like San Francisco before these changes were put in place but it was before I lived here. In hindsight, these sweeping regulatory changes may turn out to be an inflection point for the city over the long term.

I've only lived in Seattle since 2010 but I don't believe the "Amazon effect" explains all of it. Most of the people, at least in tech, that are moving to Seattle recently that I've talked to seem to have two main reasons for moving to Seattle: quality of life and low (no) taxes. If Seattle can keep housing costs in check while still preserving its quality of life and tax advantages, I expect the city to do well for the foreseeable future. It may never be "cheap" but it will probably be manageable.

It is a feature, not a bug, that American government moves slowly. Magnified by how much faster our world turns cmp to even 50 years ago.

This feature smoothes over the jagged lines of voters opinions. It also frustrates the righteous and unrighteous, because both desire bending to their values immediately.

This is very good news. The worst thing cities can do is to create silly laws to curb construction, driving prices to insane levels. Hopefully rental prices will go down towards a more sustainable level.

It's interesting to see people rediscover the law of supply and demand. :-)

The law of supply and demand doesn't necessarily apply. Companies seem to be fine with empty units since rates are so high, and the market seems to be regulated by algorithms based on my observation of daily price fluctuations. It is my personal opinion that the "law" of supply and demand is the biggest lie told in Economics 101, and is easily repeated to the point that people accept it as truth. The place I moved out of in Seattle saw a 30% rate hike as it was entering the shadow of a new apartment complex... which also killed the view. True value drops, price goes up. It's a regulated bubble. That's my experience.

I think the standard caveat for most economic theories is "given enough time".

Yes. That, and a whole bunch of other caveats about market competition:

https://en.wikipedia.org/wiki/Perfect_competition

There's a storybook understanding of economics that pervades pop-culture and is dangerously okay-ish as a first approximation. Faith in the potential for free markets to exist can be a powerful force. Unfortunately, the conditions required to have a truly free market are pretty rare--and I'm most definitely not advocating for reflexive deregulation here.

When perfect market conditions don't exist, you can think of things like information asymmetries and transaction costs as economic friction. Sometimes that results in market lag. Sometimes, especially in big markets, that friction can lock big tectonic plates building pressure until something fails catastrophically.

As for housing in Seattle, additional supply is a good thing. It's not the only thing needed for near-term affordability, but it's one thing.

It always applies. The rate hike you saw was supported by an increase in demand relative to the supply. The new apt complex simply kept the price from rising even higher.

That's why you moved out of it, and if nobody wants to move into it, then the price will drop. Supply and demand are still setting prices, but its a bit of a dance.

> "law" of supply and demand is the biggest lie told in Economics 101

The law of supply and demand cannot NOT apply. The relationship might be elastic or inelastic. The cause and the measure of supply and demand may be difficult to find.

But it cannot NOT apply.

Sounds a lot like what's been happening in Melbourne for a decade now. Lessons to be learned there.

Isn't this a positive thing? Increased supply will reduce prices.

I don't mind it even if it's all to sell to foreigners, but I do mind when they don't rent it out and the apartments are built horribly, with major defects, unlivable sizes, paper thin walls etc because the overseas buyers don't care and just want bank accounts. You need strict minimum standards.

I do think too there should be always quality standards for construction to secure a minimum quality of housing (Most of what attracts people to suburbia besides the price is privacy).

But I think the biggest inflater usually is height-restrictions, parking-lot-requirements and a general uncertainty of what an ownership title actually means: in every municipality you'll find different possibilities of NIMBY-interference and likelihoods thereof.

Is there a lot of Chinese speculation in the Seattle market?

Recently more interest as Vancouver turned against foreign buyers with new taxes. However, the strong USD should clamp down a bit. Seattle also has strong local demand though, for now.

Atlanta as well. They're all "luxury" buildings and a 400 square foot studio is 1200 a month.

> a 400 square foot studio is 1200 a month.

Is this a good or a bad thing? That sounds cheap to my ears.

That's very expensive for Atlanta.

edit: it's the new normal for desirable in town neighborhoods.

About 10 years ago I paid $800 monthly for a nice 550 sq ft studio in midtown Atlanta and thought that was pricey. The most luxurious studios were ~$1k at the time. The rate of increase seems reasonable.

Wow. 20 years ago my roommates and I split a 3 bedroom / 3 bath apartment for 1200 / mo in Home Park -- just north of Georgia Tech in Atlanta. Crazy to think the same amount of money will now get you a 400 sqft studio.

IIRC, my 2BR in Buckhead was $810 back in 1998.

Well I think they will get rented by all of the ex-silicon valley folks who want a better deal.

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