Housing Supply Works: Rally Today

Here is my testimony.

Rally Info

Today is a rally at city hall for housing at 4:00, with public comment starting around 5:00. I believe the plan is to line up around 4:15, so people don’t get too cold!

I will not be commenting in chambers. Much of this council has been quite noisy about their dislike of me, and I don’t want to trigger their negative feelings about me and push them in the wrong direction.

But I will be submitting the following testimony in writing.

Please note—if you testify, it is almost always better to share your personal story. But they know my personal story—we were all on the campaign trail together. And given that they already have strong feelings about me—my personal story is unusually unlikely to matter to them.

So instead, I will be providing some feedback on the central claims that they use for siding with the NIMBYs.

My comments

Councilmembers,

You have before you a momentous decision. Will we replicate the mistakes of the past—reinforcing the concentrated poverty created by redlining, and the unaffordability and homelessness caused by housing scarcity? Continuing the mistakes of blue city governance that are driving people in expensive metros toward Trump?

Or will Seattle actually lead?

I know many of you are not big fans of me and have no wish to please me or do any favors. So instead of sharing anything about me or my desires, I want only to point to a couple of claims I keep hearing from CMs that are demonstrably incorrect.

I hope you will sincerely consider the (overwhelming) evidence.

Some CMs seem to believe that new market rate housing does not help with prices.

Such CMs cite no research regarding this, which is understandable, because there is very, very little that would support such a claim. Instead, they make references to the high rents in new units, as if this this somehow shows that housing supply does not moderate prices.

This is not only a logical error, it is demonstrably false.

New Buildings Lower Local Prices

As this article shared by Fannie Mae discusses, rigorous research shows that new buildings depress rental prices and sales prices in the neighborhood. Another paper published in a top economic journal shows a similar result in very different housing market. Another paper in another prestigious journal shows even larger results.

High Supply Lowers Regional Prices

The impact of supply is more than local.

The Financial Times nicely illustrates some natural experiments that show that cities that produce a lot of housing, relative to demand indicators, see a significant impact on pricing.

Take Minneapolis, relative to its Midwest peers.

Or take housing production in the entire Midwest.

Or look 8000 miles away from there to Auckland, where broad upzones and increases in supply rapidly moderated prices, erasing the significant premium people paid to live in Auckland compared to Wellington.

The Effect of Supply and Demand Shocks

We can also look to other notable increases in housing supply to look at their impact on regional housing prices. A bunch of new apartments hit the market and overall rents dropped 12.5% in Austin. A (non-rigorous) analysis shows something similar happening during a flood of new apartments hitting the market in Seattle.

Similarly, big decreases in housing supply have the opposite effect. The recent tragic fires in Los Angeles destroyed tens of thousands of units, many of them high-end or unaffordable (just like the housing these CMs claim won’t help). When that expensive housing disappeared, new listing on the rental market (and many were older homes) tripled their prices.

Demand changes or shocks are also extremely impactful. When people fled cities during Covid, prices dropped precipitously in those cities. The places they migrated, like Bellingham, or Montana—saw vertiginous pricing increases. Low demand cities, like Baltimore, Detroit, and St Lewis, are cheap relative to high-demand cities like Austin, DC and San Francisco. And so on.

How New Housing Makes Old Housing Cheaper

We have a pretty good idea of how this works. A brilliant paper by Mast actually documented what happens when new market rate housing goes in—and it looked at “52,000 residents of new multifamily buildings in large cities, their previous addresses, the current residents of those addresses, and so on, for six rounds.” Their key finding:

constructing a new market-rate building that houses 100 people ultimately leads 45 to 70 people to move out of below-median income neighborhoods, with most of the effect occurring within three years. These results suggest that the migration ripple effects of new housing will affect a wide spectrum of neighborhoods and loosen the low-income housing market.

One needs only to look at the not-entirely-analogous-but-still-instructive used car market-- to get a simplified sense of how this works.

When we had a chip shortage during covid, the rate of new cars hitting the market slowed way down. The result was soaring prices for old cars. When the new “unaffordable” market-rate cars started hitting the market, the prices for the old cars came down.

We very much need something similar in the housing market.

The Broad Consensus

The is a degree of affordability the market is unlikely to deliver, even if it were working well, to those farther down the economic ladder. We need subsidies too, and I’m the first to fight for those.

But it is pretty clear why the general consensus on the center right, center left, technocratic left, of leading Democratic Socialists, and among most economists is that supply restricted zoning, particularly in high-talent urban agglomerations such as Seattle, strangles economic growth, hurts minorities, and shuts millions of BIPOC children out of neighborhoods where they otherwise thrive.

The “People Feel Unheard” Talking Point

Let’s be frank. People who do not get their way always feel unheard.

The city has done an unusually thorough job of outreach—in many languages, in person, and online, over the course of years—when it came to this comp plan.

Just one round in the online engagement center in the summer of 2022, brought in over 1000 personalized comments. This system also allowed for users to up and downvote these comments. The users provided 13,000 rounds of feedback through their voting. This is to say nothing of the hundreds of people who showed up at neighborhood feedback sessions, or wrote to council or OPCD.

It may be that some CMs were inattentive to this. But the fact that they, or complaining constituents, didn’t pay attention when there was such thorough outreach over a long period of time—does not make the claims of missing outreach remotely true.

And anyway, we have representative data for the hundreds of thousands of people who live here and in our state. A supermajority of people in Washington want more housing in their neighborhoods. Seattlites, by a two to one ratio, would allow four to six story buildings for social housing in every neighborhood. The Chamber’s quarterly poll has consistently shown that majorities want more multifamily housing in their neighborhoods.

The question is—will the council hide behind complaints about “feeling unheard” to act in a counter-majoritarian way? This is much of the essence of what has failed in blue governance. Or will you act as democratically elected people are supposed to do?

The choice is yours.