Well, you knew that. And Elizabeth Rhodes in the Seattle Times reports on an anlaysis by Theo Eicher at the University of Washington confirms and quantifies what many of us believed.
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 — twice the financial impact that regulation has had on other major U.S. cities.
"In a nationwide study, it can be shown that Seattle is one of the most regulated cities and a city whose housing prices are profoundly influenced by regulations," he says.
He singles out the Growth Management Act as a primary factor.
The Washington Research Council is not surprised.
Eicher's $200,000 conclusion doesn't surprise Kriss Sjoblom, staff economist for the Washington Research Council, a nonpartisan organization that examines public-policy issues.
"It's actually pleasing," Sjoblom says, "that we finally have data that allows us to show things we thought were there all the time."
In 2006 the WRC published Why Homes in Washington Cost Too Much. The crux:
Land-use policies that restrict the supply of building lots are the reason homes cost so much in Washington State.
Eicher shatters a myth.
Economists hold that housing costs are driven by supply and demand, and say those factors have certainly influenced the cost of Seattle's housing.
But Eicher argues that "demand does not need to drive up housing prices."
Cities such as Houston and Atlanta, which have few growth restrictions, have shown that. They've been able to add enough housing to meet demand, so their home prices have risen more moderately than heavily regulated San Francisco and Boston, which have a harder time increasing housing.
And Sjoblom explains the political reality.
"People with higher incomes want the kind of amenities that regulation provides," he says. "If you're a homeowner and growth controls are imposed and housing prices shoot up, you're grandfathered because you own the place. In theory people will say it's [rising prices] a bad thing, but in practice it's not hurting them."
Sjoblom says that's why making the changes that would foster affordability are so hard to get past the public, some 68 percent of whom are homeowners. "When you bring up specific things, like allowing multifamily housing in their neighborhood, they have misgivings."
It's a cycle that must change if we're going to have affordable housing for a growing workforce.
MORE Additional confirmation from the real estate blog in the Seattle PI.
