maybe we just need Texas (or Alaska) style unlimited land to sprawl out into and multiple cars for everybody

Very good article Charles, excellent work. Another thing Keynes said was, "even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist." Urbanists certainly fit into this mold with their constant trotting out their most loved catchphrase, "that's just economics 101."

Of course the most widely used economics 101 textbook is by Greg Mankiw, and though he's considered still alive in actuality he is a zombie, and one of the biggest proponents of the very insidious zombie school of economics which, because of its proximity to the most ivory of Western civilization's ivory towers, nobody as yet has been able to approach and kill with fire.

"As we entered the present century, it was clear that, as a project, urbanism had failed. Its key principles proved to be too market-friendly. Walkability, improved bike infrastructure, and even access to transit increased, rather than depreciated, the value of a location."

So....if I'm understanding Charles correctly, he's arguing that urbanism failed because it was such a success?

“Spoiler: Capitalism Killed It”

I thought that was a given in your byline.

bro just get rid of 60% of the population and all these problems solve themselves sheesh

Charles should debate the rest of the Stranger staff on this issue, because they all seem convinced affordable housing will start popping up all over if SFH zoning is eliminated.

I don't follow how Mudede's Keynesian argument is at odds with what market-urbanists suggest will happen if we liberalize housing regulation. Yes, investment drives output and employment, but over-investment often leads to price drops or "crashes" (and subsequently lowered investment and employment). The raison d'être of Keynesianism is an attempt to limit the severity and consequences of these inevitable boom-bust cycles.

I think it's reasonable to argue, as many urbanists do, that zoning regulations in cities like Seattle and SF have constrained housing production investment, and certainly have not allowed over-investment. As such we currently have little prospect of an over-supply price crash.

Certainly such "corrections" are not entirely positive, in this case workers in the construction industry would suffer following a crash, but housing prices would decrease (which is when a Keynesian would suggest the government step in with housing sector stimulus). Also, it's likely that investment, even over-investment, would never bring prices down low enough for housing to be universally affordable. For these reasons, I don't think the market is likely to produce a housing panacea, and I'm very much for socialist solutions. However, nothing Mudede has argued here suggest that allowing more investment wouldn't have a downward impact on prices, and I would guess Keynes would agree with the core of argument given by market-urbanists.

@8 yeah it's actually racism and classism that killed capitalism in the production of housing. Exclusionary zoning was created to effect both (after simply making laws that dictated whoever was deemed undesirable couldn't live where they weren't wanted) and artificially prevented the supply of more affordable forms of housing regardless of the demand. Prior to exclusionary zoning, the New England triple decker and the Baltimore rowhouse were private sector innovations that drove housing affordability (including ownership) for working class people. Mr. Market isn't perfect, but in cities like Seattle and San Francisco the government zoned him out.

"At present, the densest zip codes in the USA are inhabited by millionaires (and a few billionaires)."

Next Charles will explain how health care systems are doomed to failure by looking exclusively within the United States. After that he will focus on how modern mass transit systems are extremely expensive and everyone still drives by comparing several U. S. cities.

Holy shit, Charles, what a fucking provincial attitude. America has not applied urbanist principles. We are towards the bottom -- if not at the absolute bottom when it comes to that sort of thing. Go to fucking Japan if you want to see urbanism. To quote this article: https://www.nytimes.com/2023/09/11/opinion/editorials/tokyo-housing.html:

In the past half century, by investing in transit and allowing development, the city [Tokyo] has added more housing units than the total number of units in New York City. It has remained affordable by becoming the world’s largest city. It has become the world’s largest city by remaining affordable.

It isn't just Tokyo either. Smaller cities in Japan (and various European countries) apply the same principle and end up with a shitload of new units and thus affordable housing. Urbanism works quite well in other cities because they actually apply those principles.

Oh, and while anyone with any sense can see that it is zoning that is the main problem, that doesn't mean that economists haven't studied it. They love to study things that are seemingly obvious. There is this study: https://law.yale.edu/sites/default/files/documents/pdf/hier1948.pdf and its main conclusion:

This paper argues that in much of America the price of housing is quite close to the marginal, physical costs of new construction. The price of housing is significantly higher than construction costs only in a limited number of areas, such as California and some eastern cities. In those areas, we argue that high prices have little to do with conventional models with a free market for land. Instead, our evidence suggests that zoning and other land use controls play the dominant role in making housing expensive. [End Quote]

Despite being almost twenty years old, there has yet to be a paper that refutes that study. Seattle, of course, is now one of those cities. There are other studies that have concluded the same thing. This is a paper that covers counter arguments and the supply skepticism:

We ultimately conclude, from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families.
...
We are not suggesting that local officials should focus exclusively on relaxing regulations and facilitating the construction of market-rate housing. First, some level of regulation is needed for the reasons described above. Second, building more market rate housing alone will not solve the deep affordability problems faced by low-income households. The key point is that efforts to create and support housing affordable to low- and moderate-income households and efforts to make the supply of housing more elastic are complementary.
[End Quote]

Got it? You want to allow the market to build more housing while also spending public money on housing just like every advanced country in the fucking world! Not that fucking complicated.

@12 -- Read the comment above you. Here, let me repeat the quote from the paper:

We are not suggesting that local officials should focus exclusively on relaxing regulations and facilitating the construction of market-rate housing. Building more market rate housing alone will not solve the deep affordability problems faced by low-income households. The key point is that efforts to create and support housing affordable to low- and moderate-income households and efforts to make the supply of housing more elastic are complementary.

Not really that complicated. Allow more market rate housing + more public housing = affordable housing. Do you understand now, or should I break out the puppets?

@11 -- Forgot to include a link to the second paper: https://furmancenter.org/files/Supply_Skepticism_-_Final.pdf

@12 I'm sure many of us would also be happy with a Singapore-like housing model, where the government effectively controls the housing market with ~80% of residents in public housing (I know I would). However, that just doesn't seem practicable in the American context, at least not in the foreseeable future. The inability of the free-market to provide affordable housing for all income levels is widely acknowledged amongst urbanists, but, as Ross points, out a mixed approach is likely to yield favorable results. For now we are stuck with capitalism, but we do not need to wait for a revolution to improve material conditions.

@8 "I think it's reasonable to argue, as many urbanists do, that zoning regulations in cities like Seattle and SF have constrained housing production investment, and certainly have not allowed over-investment. As such we currently have little prospect of an over-supply price crash."

Apartment vacancy rates historically average around 6%,* at least when we are not actively engaged in a pandemic. And in most counties, vacancy rates have increased year-over-year, although there are some outliers (Whitman County in particular).* So, we already have more supply than demand even under existing zoning regulations. But despite this, rents continue to rise.* So, why should we assume building more housing will result in more affordable housing units? Is there some reason to believe the tipping point is, say, 8% vacancy? 10%? 20%?

Apologies for bringing statistics into play rather that harping on century-old economic theory like Charles, but it seemed like injecting a little reality into the discussion might be useful.

*https://wcrer.be.uw.edu/wp-content/uploads/sites/60/2022/10/Washington-Apartment-Market-Report-Fall-2022-Final.pdf

@10, 11, 13, & 14 -- Ross: Glaeser and Gyourko (2002) is Chicago School economics (i.e., trickle down capitalism). There is more balanced recent work that clearly demonstrates that Glaeser and Gyourko are wrong that supply alone are able to moderate the displacement impacts of rapid growth and high land costs. Two examples: Zuk and Chapple (2016), Housing Production, Filtering and Displacement: Untangling the Relationships ("https://law.yale.edu/sites/default/files/documents/pdf/hier1948.pdf); Berk (2021), "City of Seattle Market Rate Housing Needs and Supply Analysis" (https://www.seattle.gov/Documents/Departments/OPCD/OngoingInitiatives/HousingChoices/SeattleMarketRateHousingNeedsAndSupplyAnalysis2021.pdf).

Mudede's piece accurately describes what is happening in Seattle. Increasing zoning capacity by itself will not produce housing affordable to low income households. The City currently has sufficient zoned capacity for the expected growth in the need for housing; the problem is that most of those units will not be "affordable." The answer is to adopt policies that actually result in something more than profits (and housing) for rich people. These policies include "inclusionary housing", density bonuses, impact fees, and significantly adjusting the MHA performance:payment-in-lieu ratio in favor of performance (i.e., inclusion).

Seattle has largely been run by and for capital for too long. David Harvey's "Right to the City" explains the issues pretty well: https://davidharvey.org/media/righttothecity.pdf

@16 I'm not sure what your argument is, based on your provided it seems like rental vacancy rates are still generally below your cited historic average of 6%, so if you are presuming a link between vacancy and prices there would still be an expected price increase. There is evidence here of rents stabilizing concurrently with increased vacancy rates:
https://washingtonstatestandard.com/2023/11/01/rents-in-washington-show-signs-of-stabilizing/#:~:text=As%20vacancy%20rates%20go%20up%2C%20rents%20go%20down.

It's my understanding that vacancy rates will tend towards their natural rate, that is the rate at which landlords are maximizing profit. As such, vacancy rates tend to be a weak indicator of prices, as prices adjust so as to keep the vacancy rate roughly constant. While a relationship between vacancy rate deviations and price changes has been found, other factors (including policy, interest rates, speculative housing value, etc.) impact the "natural rate", so vacancy rate in and of itself does not have strong predictive power.

The relationship between supply changes and price, as shown in the papers given by Ross for example, is a much more convincing empirical data than anything I've seen regarding vacancy rates.

@10, 11, 13, & 14 — and regarding your last citation (Been, et al. 2018,"Supply Skepticism: Housing Supply and Affordability"), this extract is reasonably accurate, and is consistent with what Zuk and Chapple concluded:

Recent research analyzing the incomes of successive occupants of homes also suggests substantial downward filtering, particularly of the rental stock due to tenure conversion; as the owner-occupied stock ages, a portion converts to rental. (Rosenthal, 2014). [This paper concludes "filtering" doesn't work well in fast growing cities.] Rosenthal also finds, however, that filtering rates are considerably lower in areas with high house price inflation, though downward filtering still occurs.

In short, new construction is crucial for keeping housing affordable, even in markets where much of the new construction is itself high-end housing that most people can’t afford. A lack of supply to meet demand at the high end affects prices across submarkets and makes housing less affordable to residents in lower-cost submarkets.

It is worth underscoring, however, that allowing more market-rate construction will not address the housing needs of all households. For at least the lowest income households, even the moderation of rent increases that results from expanded supply will likely be insufficient to make homes affordable to them. Housing subsidies, of some form, are still needed as well. However, as increases in housing supply moderate housing prices and rents overall, the gap between what a jurisdiction’s lowest-income households can afford and available prices and rents will be smaller, which will allow any government subsidies to go further.

@ 17 -- The research summary by Zuk and Chapple (2016) does an excellent job demonstrating the importance of subsidized housing and the complexities of local displacement. However, it is not an analysis of the impact of zoning, so only tangentially related to the work of Glaeser and Gyourko (2002).

Regardless, the papers are not at odds, as Zuk and Chapple (2016) found "at the regional level, both market-rate and subsidized housing reduce displacement pressures, but subsidized housing has over double the impact of market-rate units."

The more worrying finding, of course, is their finding that at the local level housing production (both market-rate and subsidized) does not provide local displacement protection. This though, is not an argument against zoning liberalization, in fact quite the opposite. In both Seattle and the Bay Area most multi-family housing development has been forced to occur in the very areas with the highest displacement risk, preexisting multifamily zones, because those are the only areas that have been zoned such development. A logical conclusion from the paper's results is that in order to gain the region wide benefits of development without risking local displacement, more development should be allowed in areas with lower displacement risk, i.e. our rich single family neighborhoods.

@20: Yup. And why is there limited land allocated to multi-family housing where it is in the city? Central planning by racists and classists.

In 1923 these charming folks made multi-family illegal on most city land and for the first time on any where homes were allowed: "… the City’s first zoning ordinance, adopted in 1923, was promoted by the Zoning Commission as a way to prevent ‘lowering…the standard of racial strength and virility’ and crafted by a planner who touted zoning as a way to ‘preserve the more desirable residential neighborhoods’ and prevent movement into
‘finer residential districts… by colored people.’”

And, also, too: "“Saint Louis introduced zoning designed to preserve homes in areas unaffordable to most Black families in 1919, and the city often changed areas’ zoning designations from residential to industrial once numerous Black families moved in. Similarly, Seattle’s 1923 zoning laws changed many areas with a large number of Black or Chinese American families from residential to commercial.”

Subsequently: "“Seattle’s first zoning ordinance in 1923 and its major update in 1956 located multi-family residential districts at the edges of rail lines, industrial districts, and manufacturing districts. These land use decisions were racially motivated and caused harm to non-White households.”

And most recently in the 90s neighborhood planning process (here's Wallingford): "“Most of Wallingford is comprised of architecturally attractive single-family homes, which are experiencing ‘escalating sales prices (and property taxes) due to the increasing desirability of Wallingford as a place to live…’

Some people proposed changing the zoning to allow more affordable types of home in more places, but instead: "…New multi-family units along Aurora, and the housing stock along I-5 and near the Fremont industrial areas were cited as areas where students, new families, and others could find affordable housing.”

Mr. Market isn't perfect, but in Seattle the shots have been called by Mr. and Mrs. Bigot instead for a long time.

@20, yes at the "local level." The data is clear that market forces have led to huge displacement in the CD, and other South end neighborhoods. In fact, the FEIS for the MHA showed that my census tract in Fremont had the highest rate of economic displacement in the entire city. But OPCD doesn't want to include that analysis again; they don't want to show where displacement is occurring? Data is available even though the mayor vetoed the rent roll bill the Council passed that would have produced even more granularity for analysis at the "local level" where it's needed.

More market rate neoliberal economics won't solve a problem it created. A key part of the solution that flows directly from Zuk and Chapple's conclusions—never included in City plans or zoning—is to require inclusion of a substantial percentage of low income housing when increasing allowed density. Don't give away land value to the already well off (and the rich) for almost nothing. Inclusionary housing policies would greatly reduce the land value escalation pressure that is a major driver of displacement. It works in many cities (both the Lincoln Institute and Urban Displacement Project at Berkeley have good survey reports). Why is Seattle so resistant? Oh yeah, because the non-profit housing sector got in bed with the profit sector (O'Brien and Murray's "grand bargain") in exchange for MHA 'fees-in-lieu' instead of truly "mandatory inclusionary housing", with the fees pegged at about a 1/4 of the rate they need to be to be effective, and not requiring the new low income housing in the same neighborhood (i.e., allowing segregation).

Now we're seeing more of the same policies in the "One Seattle Plan." I'm going through the Housing Appendix and the Anti-Displacement Framework. It's more of the same; lots of documentation of displacement but almost no policies requiring inclusion. There's a small "additional bonus for development of low-income housing in updated NR zones." It should be a much higher percentage and required City wide. IOW, One Seattle is another huge giveaway of land value with lots of blather about how swell market urbanism works. Fact is, it hasn't and it won't.

@22: "but almost no policies requiring inclusion"

How about "require construction of an affordable housing unit on the property whenever and wherever a new large lot single family home is constructed or significantly renovated" - that would be pro-inclusion, pro-integration, and rich people can afford it.

@23 Correct—one tiny piece. Do some math and tell us what portion of new housing would likely be "inclusionary" due to this provision, and whether it would likely be distributed in a way that counters the segregative impact of the proposed up zones generally on top of MHA. And tell us where in the Comp Plan EIS these effects are assessed.

Charles lives in a single-family house but advocates density for others.

This seems timely…
https://southseattleemerald.com/2024/05/12/doom-loop-words/

So much talk about the free market (as if such a thing exists). The issue of housing/density/affordability is not that complicated. It comes down to land. Rather than Keynes, I look to Henry George who saw, as did Ricardo and Smith, that land and access to it is essential.

Seattle is 84 miles in area. If you add 25% more people (600,000 in 20000 to 750,000 today) on the same amount of land what do you suppose happens to the cost to acquire land to develop? Everyone likes to rip on developers but that's completely wrong-headed. Developers are doing actual work, as opposed to speculators who are strip-mining the economy of many cities, not just Seattle, and city council and the local chamber of commerce are totally here for it. If the city turned over the old SPD parcel across from city hall — still a hole in the ground 19(!) years on — to a developer on a ground rent/land value tax basis, it would be developed and thriving by now, as the developer would have to pay the value of the land as a productive asset, rather than a speculative one.

Under a ground rent, it could be paying $3M/year to the city. How long will it take to match that at the $60,000/year that vacant lot generates in revenue? A mere 5,000 years. And it might still be a vacant lot then.

The Mercer Megablock project was valued at $1.2B over the course of a 99 year lease…that's what the developer offered. Seattle's galaxy brain city finance office sold it for about $150M, a small fraction of that while giving up a valuable asset to an out of state owner. The old SPD parcel could command a similar value (about $1M/acre) it could be paying about $3M/year in annualized rent (the 99 year lease total/the lease term). That means money on the table now, in tax revenue, and a revenue stream the city could borrow against, just as we borrow money based on our own income. And now that land, formerly surplused by the city, is in the speculative marker, part of someone's asset portfolio.

Considering land as part of the free market is a mistake. We cannot make more of it or move it to more favorable location. An acre in Spokane does not have the same value as an acre in Seattle. It has value based on the economic activity taking place on or around it. Why else would Seattle be so expensive? It's not the weather…it's the fortunes being made here, which is also why rents and housing prices are going up. It's not just scarcity (84 sq miles) but the rising pay of the newcomers. Just as the farmer could expect a rent increase after a bumper crop, tenants and buyers are seeing higher housing costs because of higher wages

"Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title." John Stuart Mill

None of this is new: many have seen this, written about it, but the fallback is to blame it on capitalism or developers. Landlords and speculators are the issue here, as well as Seattle's entrenched land owner cartel. Putting land into the market ensures that speculators will siphon off the value, just as Piketty's "r > g" makes clear. Wealth grows faster than the economy and land is the ultimate store of wealth.

Rather than have city parks and public spaces, Seattle's land cartel wants private parks around their homes, even as they mortgage their lives cutting grass and pruning bushes, all to protect their property values. Just last week I had a NIMBY complaint about nearby corner lots being developed and how it was wrecking the character of the neighborhood…as if Wedgwood has character. It's Staten Island, not really part of the city that appears on the street address.

You could/should have just written in KEEP-IT-SIMPLE style and this would have been a much better, more useful article. I get the basic economics in your arguments, but all the citing and quotes of dead economist I don't have the interest or time to study, the reference to Social Security and socialism versus capitalism, and all the obscure factoids served only to put me in a brain fog...

I was going to add some additional detail to a comment I left earlier but I see it was deleted. Perhaps it failed to engage with the status quo? Shame on me for not copying the text before submitting.

to my comment at @26, I would ask readers to consider why so many new buildings (like the the UDistrict) look the same…dull rectangular solids, no details, no styling, nothing to make them appealing (in contrast to new buildings I saw overlooking MLK Park in Paris last month). They are as dull as they are because the cost to acquire the land is so high. As noted, the land under Mercer Megablock was valued at a $12M/year lease: if you can get 3 acres to develop for that price, even if you have to put 10 years of it in escrow, you're way ahead of a $150M fee simple purchase. Likewise the SPD parcel: what the Canadian developer paid was much more than an annual ground rent would have cost. So there is sits, a hole in the ground, waiting for the speculative market to make it worthwhile to take on the debt to actually build something.

CIty Council has to see that every day. If it was up to me, they would hold their meetings in the hole itself.

See also all the downtown parking lots, little more than a layer of asphalt with a paybox: any city that has unimproved land like that in the midst of a multi-year homelessness "emergency" and affordability crisis is a failure. Look along the waterfront and see warehouses and cheap storage on the most valuable land in the city. A tax on that value would see a lot of that torn down (oh, no, cry the mossbacks) and truly market rate — as Vienna does it — housing, vs speculative grifting and hoarding.

Keep land out of the market until you figure out how to make more: you can't apply supply and demand economics to something as inelastic as land.