In a guest editorial in this morning's Times, Aaron Ostrom and Carla Okigwe argue that the growth management act isn't to blame for median home prices in King County that exceed $440,000.00.
They cite as their primary evidence a Brookings Institute study that asserts that "market demand, not land constraints, is the primary determinant of housing prices".
Since our guest columnists are liberals, it shouldn't surprise any of us that they missed the critical third leg of the market demand/land constraint relationship, something Adam Smith(the economist, not the congressman) called SUPPLY!
An appropriate metaphor to the market forces that dictate housing prices in our region is the diamond market. Diamonds are carbon, one of the most prevalent atoms on the planet, and diamonds are far from rare. The reason diamonds are expensive is that the supply is limited by a cartel that owns the majority of the world's diamond mines, while creating demand through aggressive and effective marketing.
Think of this scenario, what would happen if we woke up tomorrow morning and suddenly discovered a 30% increase in the amount of available housing in King County, not in Renton, nobody wants to live there, but in desirable areas. Housing prices would plunge. Every real estate agent will tell you "It's a seller's market" partially because they are paid a commission on the selling price no matter which party they represent, but mostly because the supply of housing is kept artificially low by regulation, which our government justifies as required by the Growth Management Act.
Demand will not magically increase just because more houses are available; demand is a function of the number of people who choose to live in the region. Those people come here mostly for jobs, which, even in our robust economy are a limited resource. Bringing in 30% more people won't create 30% more jobs in the region.
So Aaron Ostrom and Carla Okigwe, I reject your argument, you are either using flawed logic to reach your conclusion that growth management regulation doesn't affect housing prices, or you are deliberately obfuscating the facts to advance your political agenda.
That's what I thought... until I bought my first place here (a condo). Renton isn't that bad, and a most of it is quite nice (especially east of 405).
It is also why in the year and a half I've lived here, the value of my condo has shot up around 40-50%. People realized it wasn't that bad a place to live, and a lot cheaper than Bellevue or Issaquah. And given the scarcity of supply of affordable housing... brought on by the lack of available land where houses that can be built... a lot of folks are moving here.
This is great for my bottom line, I plan on making a killing when I move in a few years. But for folks who haven't gotten into the market yet for whatever reason or who are moving here from cheaper parts of the country, this is just going to make it that much harder for them to buy a home, even a condo. The only solution is to build more homes.
Posted by: Mike H on January 5, 2007 08:06 AMHe supports the regulatory taking of peoples private property without compensation. His organization sues municipalities who are trying to exercise some level of control over developement in their own community. His group sues private landowners and Youth Sports organizations for trying to provide the active recreation areas that the Government cannot or will not provide to meet increased demand. Futurewise (formerly the Thousand friends of Ron Sims) simply adds unecessary costs and regulation to the developement process. But they are supported in their efforts by big developers who pay-off the Democrats in charge of the process.
He and his buddies are scum and I wouldn't believe a word that utter. They add no value to the area and are opportunistic slugs on the backs of hardworking, honest, law abiding landowners. Pass the salt!
Posted by: Huh? on January 5, 2007 08:07 AMIf the urban growth area is too small to meet necessary supply, then governments can make it larger. The fact that they don't might even suggest governments working with the building industry to intentionally restrict supply so housing prices, and profits to developers, will remain over the top.
Posted by: MJC on January 10, 2007 08:09 AM