Daily Score Blog

This is part three of a series. Here are parts one and two.

I'm taking a look at a Seattle Times article 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.

This is part two of a series. Here are parts one and three.

Earlier today, I promised to take a look at a Seattle Times article about study showing that regulations have added $200,000 to Seattle's housing prices. Criticizing this article has been one of the most difficult blog posts I've written. There are so many confusions, distortions, and half-truths that it's very difficult to know where to begin or how to proceed. So I've settled for the somewhat artless tactic of taking it in order. Ready?

Okay, let's dig in. The third paragraph is the first place that really caught my eye.

Between 1989 and 2006, the median inflation-adjusted price of a Seattle house rose from $221,000 to $447,800. Fully $200,000 of that increase was the result of land-use regulations, says Theo Eicher [a University of Washington economics professor].

Really? That would mean that nearly all -- 88 percent to be exact -- of the inflation-adjusted price increase in Seattle was due to regulation. That would be pretty surprising during a time when Seattle's population increased by 66,000, the region's wealth exploded, and a national housing bubble sent prices skyrocketing. But, okay, let's read further..

The result [of the Growth Management Act] is artificial density that has driven up home prices by limiting supply, Eicher says.

Huh? What does "artificial density" mean? Density that would not have occurred without the GMA? But why pick on growth management as "artificial"?  Why not when the government seizes private property for freeways and dumps billions of public dollars into highway building? Why is it not "artificial" when zoning laws drastically suppress housing supply in desirable neighborhoods? Why is it not "artificial" when historic preservation laws prevent adding housing supply? And why is it not "artificial" when we prevent building in flood plains and on erosion-prone slopes?

Eicher may have included these in his study -- some of which have done far more to affect land use and housing supply than growth management -- but it concerns me that his primary target appears to our laws to preserve rural areas. But it's important to remember that all sorts of things suppress housing supply -- safety codes, single-family zoning, industrial zoning, and flood plains, not to mention more general stuff like road building, sewer lines, law enforcement, school-building, and on and on.

When you think about it for even a second, all land use -- from urban Belltown to dairy country near Duvall -- is "artificial" in the sense that our policies affect it. Still, there's a fair question here: does the GMA restrict housing supply enough to drive up prices? (Hint: we never find out.) 

Let's read on...

This is part one of a short series. Here are parts two and three.

Today's Seattle Times leads off with a shocking -- and implausible -- article about a study purporting to show that land-use regulations have added $200,000 to Seattle's housing prices. Many of the claims just don't seem to pass the straight-face test, and I'm crunching the numbers now to show why. I'll post the results later today. But before then, I just have to blow off some steam about the level of journalism here. It's lousy.

First, the entire article appears to be an excuse to beat up on the Growth Management Act, which is a weird slice of regulation to pick on ( but more on that later). In any case, after repeating the study's findings, the reporter interviews an economist from from the Washington Research Council. He agrees! Then interviews an officer from the Master Builders Association. He agrees too! And then a rep from the Dwelling Company, a development firm, who also agrees! Super!

Unfortunately, the reporter neglects to mention that two of those groups might have a direct financial stake in criticizing growth management. The reporter also characterizes the Washington Research Council as "nonpartisan" -- which is fair enough, they technically are -- but omits to mention their distinct right-leaning and anti-regulation slant.

So, after beating up on the growth management act for 1,255 words, how about a token perspective from Futurewise, Sightline, an affordable housing group, the growth management folks, the city, or the county? How about referencing some past research -- there are dozens of studies to choose from -- such as this well-respected study (pdf) from the Brookings Institute, showing very little connection between growth regulation and housing prices? Or -- and I'm really going out on a limb here -- how about interviewing an independent expert on housing prices and trends? Crazy, I know, but I'm a dreamer.

In fact, there is not a single alternative viewpoint represented in the entire article. That's a shame because there are some very suspicious claims. If you'd like to see some skeptical analysis, check back here later and I'll have it posted.