I’m taking a look at a Seattle Timesarticle about a study claiming that regulation has added $200,000 to Seattle home prices. I was skeptical, so I ran the numbers on trends in other cities. It turns out that the numbers tend to give lie to claims that growth management is to blame for unaffordable housing.
In our last installment, the article was using housing bubble appreciation from 2001 to 2006 to imply that growth management makes housing unaffordable in Seattle. Unfortunately for that line of thinking, Seattle’s price increases are pretty modest by national standards. In fact, official US figures (pdf) don’t have Seattle anywhere near the top of cities for appreciation from 2001 to 2006. Where prices spiked was in the Sunbelt, a region notorious for its near total lack of meaningful growth controls. Florida had by far the largest number of super-appreciating cities with a handful of showings by cities in Arizona, Idaho, and California. So what gives? (Could it be lack of regulation causes unaffordable housing?)
The thing is, Seattle housing prices just haven’t appreciated that much by national standards. That’s what the official US government figures show. By 2006, the Seattle metro area ranked in exactly 57th nationally for one-year housing price appreciation. That’s right, 57th. Tacoma, sitting in compartively growth management-lax Pierce County, ranked 49th. Over the 5 year period from 2001 to 2006, Seattle’s rate of appreciation was outstripped by scores of cities from all points of the compass, often by multiples of two or three or even more. (2/15: I did some updating to this para.)
In fact, Seattle’s appreciation was slower than the national average. Again, using offiical federal numbers, by 2006, total US housing prices had increased 293 percent since 1980, and 57 percent since 2001. Comparable figures since 1980 aren’t available for Seattle, but our appreciation was 54.5 percent from 2001 to 2006.
But what about over the longer term? After all, Eicher’s analysis is for a 17 year period.
Well, according to Standard & Poor’s Home Pricing Indices, Seattle has had modest long term housing price increases. According to the S&P ranking of the big city appreciation from 1990 to 2006, Seattle comes in 11th out of the 18 cities with comparable data. Where did housing prices rise faster? In order: Miami, Los Angeles, San Diego, Phoenix, Las Vegas, Washington DC, Tampa, San Franciso, New York, and Portland. (Portland and Seattle appreciated at similarly modest rates over the period.) Minneapolis and Boston are right in there too.
Take a look at the chart. It shows big city price changes since 1990. Washington’s Growth Management Act became operational in the mid-1990s. Notice anything?
Yeah, me too. It looks like after Seattle starting operating under growth management, our housing price increases actually started lagging the national increase. Correlation ain’t causality and all that, but the numbers make it kind of difficult to believe that the burden of growth management (or any other regulation for that matter) is out of whack in Seattle.
Okay look, I don’t want to spend too much time criticizing the principal research Theo Eicher. The reporting was so bad that it’s hard to know if his views were represented accurately. But the article raises more than a few red flags.
Maybe it is true that regulation is the cause of almost all of Seattle’s price increase. And maybe growth management is the prime culprit. Maybe without regulation Seattle’s median housing price would be around $250,000, roughly the price of a house in Provo, Utah.
On the other hand, the numbers suggest to me that Seattle might be under-regulated, compared to other US cities.
I’m going to start digging into the study now. And, yes, I’ll post again if I find anything interesting.