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Tuesday, December 05, 2006

What Is "It's a Priority"?

I heard an interesting ad on the radio yesterday. It started off with a generic John and Jane Q. Public talking about how bad traffic is, and how terrible it is that they have to live so far from work, etc... Then Mr. Announcer Guy came on and blabbed something about quality of life, the Washington Realtors® (WR), and It's a Priority (dot com). Here's the introduction to their website (emphasis theirs):

Welcome to the online headquarters of It's a Priority!

There's a housing crisis in Washington State.

The Washington REALTORS® are working to improve our quality of life and ensure there are a variety of home choices available for all Washington residents. That's why quality of life issues like economic vitality, transportation, good schools, growth management planning and home affordability must be top priorities with Washington's state and local lawmakers.

Lawmakers must address this crisis and work for solutions. It's time we make this issue a priority!
Let me stop there for a moment before the rhetoric gets too thick. So, on the surface, this campaign appears to be some kind of good will initiative by the WR, who are gravely concerned about a declining quality of life in our state. I find that I agree with the assertion that the local economy, transportation, and housing affordability are important issues that people should be talking about, but I'm not so sure that running to Daddy Lawmaker is the right solution. Furthermore, I can't help but wonder whether the WR might just have some kind of ulterior motive here.

Moving on...
Our population is growing but the supply of homes isn't keeping up.
Whoops! Only three paragraphs in, and they've already started with the false assertions. As I pointed out here in October, population growth and shrinking household size was outpacing homebuilding, but since 2000, the pressure has eased considerably. I studied King County specifically, but one would assume that the situation would only be better in most other parts of the state.
Homebuyers have to drive too far to find an affordable home. That's caused long commutes, traffic jams and sprawl.
Actually, no one is being forced to do anything. Homebuyers drive "too far" because that's where they find homes that are big enough for their tastes that they can afford. Plus, nobody says you "have to" buy a home in the first place. If you want to trade off a short commute and affordable rent for crawling through traffic from your McMansion with a maxed-out mortgage, that's your choice.
And home prices have increased by 160 percent in some parts of Washington.
And all the while Realtors® and their ilk were giddily cheering the "vibrant" housing market and the "strong price gains."
Home ownership is the American Dream. Having a choice of quality, affordable homes is a big part of that Dream, but the ability to choose is slipping away.

You know we've got a problem when even middle-income citizens, the backbone of our communities — the firefighters, teachers, police officers and nurses — can't afford to live in the communities they serve. You shouldn't have to be rich to buy a home.

Unfortunately, poor government planning has limited the supply of homes near where people work. Too many people are frustrated by the lack of home choices, sky-rocketing home costs, and traffic tie-ups.
So suddenly now the WR are concerned that home prices have gone up too much—that middle-income families can't afford to buy a home? Forgive my cynicism, but I'm having a hard time buying the "we're so altruistic" story. So what's really going on here? What is the true motivation for a commercial group whose #1 priority is to sell houses to undertake this public campaign?

The Take Action page encourages readers to contact their friends, legislators, and local newspapers and demand that everyone "make our quality of life a priority." How delightfully ambiguous! Of course, the real meat is buried in a bunch of boring "policy brief" pdfs that most people are unlikely to ever bother downloading. Well, I read through a few of the policy briefs to try to get a better idea of what the WR are after. Most of the documents are padded with a lot of the same fluff talk about "quality of life" and so forth, but there are some bits that appear to get to the heart of the matter. Here's a telling quote from the Local Actions pdf:
The idea of performance zoning is to anticipate the actual outcomes of a project instead of just measuring units or lot sizes. For example, a parcel that is zoned for four single family homes, but is in an area that attracts single professionals, could be developed as a cluster of ten cottages. The impact of the cottage residents – primarily singles and couples – will be no more than the impact of the larger homes, which would likely have children.

If builders are given tools to propose uses of property that differ from current zoning, they can maximize the value of land and provide more choices in the marketplace. Performance measures that can be employed to evaluate a proposed alternative use include floor-area-ratios, target markets or trip generation.
So at least one of their goals appears to be a loosening of zoning standards, to allow greater density of smaller (i.e., "more affordable") housing units. I can see why the Realtors® would want that, because they are rapidly running out of suckers eager to buy overpriced McMansions and thirty-plus year-old flipped suburban ramblers.

The overarching theme of the policy briefs seems to be "we need more cheap housing, closer to city centers." While I agree with that general sentiment, I don't believe that the root cause of housing unaffordability is "not enough supply," and I definitely don't think that the solution is "build a bunch of tiny cheap houses all crammed together." The whole effort comes across to me as a desperate attempt to keep a steady flow of suckers, er I mean, "buyers" jumping into the overpriced housing market.

But maybe that's just me.

(Washington Realtors®, It's A Priority, 2006)
(Washington Realtors®, Quality of Life Research Briefs, 03.2006)


Matt Rivett said...

So at least one of their goals appears to be a loosening of zoning standards, to allow greater density of smaller (i.e., "more affordable") housing units.

Exactly... the issue at stake is that everyone's traded/flipped up to their 450K in-town craftsman's and the 1st time buyer's are tapped, one can say "they ain't makin' any more land!" but right now I'd be more likely to say "they ain't makin' any more 1st time buyers!"

So, the solution? Cram, cram, cram! A ponzi scheme does not work unless there's a steady supply of newbies fresh off the boat to indulge themselves in the current mania. Personally, with all the condo conversions/developments going on, its seems these precious multi-unit zones are the bridge in the gap to feed the 'equity ladder' to keep the bubble-boosters rolling in their 6%.

So medians are going up? well, like I posted in the open thread, that's all well and good, but its offset if the housing market bi-furcates into the $2M's and the 300K's... 2 differnet markets, same number.

Sales are diminishing and the RE/lending community is figuring out any little trick they can come up with to hump it right to the end... i.e. altruistic organizations touting 'quality of life' b.s....

This is the same sort of nonesense, although much more camoflauged, that we saw when condo-flippers were stroking their altruistic intent by throughing marginal renters out and converting old buildings over to flipper mania...

He NW Realtors... thanks for nuttin'

Matthew said...

I say we build, and build, and build some more... Overbuilding will only contribute to the ultimate housing bust!

Anonymous said...

The whole friggin' US of A is a ponzi scheme built on the idea of perpetual growth--as opposed to sustainabilty. That's why we've got immigrants (illegal and otherwise) flooding into the Seattle area. The corps want cheap labor.

Where to house 'em all? How 'bout screwing up the lower class neighborhoods by changing the zoning laws, thewn 'infill' the areas with house that ain't much different from army barracks. Lots down to 3500 Sq ft. and five foot perimeter yards. Instant section eight housing.

Happening right in my own neighborhood, and it's all immigrants movin' in, while the WASP's move away. It ain't no different from the slave labor camps of old. Difference we get to live next to 'em.

Want to stop it? Put a hold on the flood of immigrants coming here. It's a fookin' stampede.

Anonymous said...

Seattle's report is out as requested. Along with LA and SF.

Matt Rivett said...

The past five years have seen good nominal and real price growth. However, despite robust job gains and historically low mortgage rates, price growth began generating concern in the middle of 2005. This is due to local price affordability levels rapidly increasing local historical averages. Consequently, nominal and real prices should be expected to decline back to the historic level of mortgage debt servicing cost.

expected to decline back to historic levels? Come on! Get on board with the program here, we've reached a 'new plateau', just look at Ballard!

Alan said...

Didn't a developer who wanted similar zoning recently run for a judge position?

MisterBubble said...

Developers love "density" because it lets them sell hamburger at filet mignon prices -- they can build cheap, sell smaller places for more, and cite the resulting population boom as evidence of a "vibrant community."

Meanwhile, they plow over every good aspect of the existing neighborhood, build the modern equivalent of row housing, and don't do anything to plan (or pay) for the increased infrastructural demands that the so-called density will require.

We can already see evidence of this in Ballard, and the "density" geniuses haven't even finished their handiwork -- Ballard is starting to have traffic and parking problems!

myTypes said...

Hey Tim, Good Job on writing this blog, I don't remember reading this blog before. I started writing a blog on Seattle real estate years ago, at Seattle Real Estate News blog
and I pointed another seattle couple to blog years ago. I had a little issue with blogger, so my oldest blogs got erased. Any way, I wanted to comment not just on this topic but overall.

I think the campaign It's a Priority is more good than bad. And, like anything it's more politically valuable to Realtor Association than it is to consumers, but having said that all sides win at some level. I would love to talk with you about possibly partnering with one of our sites( Seattle Real Estate Real Estate Agent IDX Web tools and another blogging/writing venture I am working on. Please email me, the small donation was done just to show my seriousness, and my support for truth!

Comrade Chairman Greenspan said...

If they really want to address the problem of overpriced housing, they could go to DC and campaign against monetary inflation ( But, of course, it's much harder to line your pockets when you have to work for a living instead of simply standing in front of the free money firehose.

David Losh said...

Tim you have made another good point that about an ad campaign that I find particularly offensive. Thank you for addressing it.