Chalk one more victory to the side of market regulation by Wise Government Bureaucrats:
Backed by studies showing that middle-class Seattle residents can no longer afford the city’s middle-class homes, consensus is growing that prices are too darned high…
An intriguing new analysis by a University of Washington economics professor argues that home prices have, perhaps inadvertently, been driven up $200,000 by good intentions.
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
Even as legions of over-taxed Californians cashed out their equity in the 90′s and headed towards greener pastures up north, Seattle acted to limit growth, requiring rural landowners to keep their property in its “natural state” rather than selling out or parcelling. A seller’s market ensued, which is of course, an unalloyed good for those fortunate enough to be “vested” in home ownership. But this is a zero sum game:
(Renters) suspect they’re being priced out. And they’re right, according to a housing-affordability index created by the Washington Center for Real Estate Research at Washington State University.
Last summer, King County’s potential first-time buyers earning the median family income ($75,143) had just 37 percent of the financial wherewithal to buy the median-priced single-family house ($477,000) at the prevailing interest rate (6.47 percent).
Five years earlier, when King County’s median-priced house cost $282,500, median-income, first-time buyers possessed 72 percent of the income needed.
Markets aren’t perfect, but they’re better than any alternative. Remember this when government agents interfere with the free exchange of value: The ensuing inefficiences all but guarantee that the guy with the fewest resources is the one who gets the shaft.
Free market or not, 477,000 for a house is obscene. And yea I know its cheap compared to California or DC, but its still too much money.
Great story. Too bad guvmet won’t learn from it.
They’d seek to overrule thermodynamics & the weather if they could to achieve their better ends.
Wait a minute–they are!
Skippy -
$470k for a house is even worse when you see how “big” a house you can get for that much here.
It’s bad all over. The price of a double wide mfg. home has thripled out here in West Texas.
Too many people with no place to rent, not enough here-with-all to buy and don’t want to buy anyway, cause they know the oil boom ain’t lasting.
Well, they bought them “trailer houses” like southern’s buy bass boats.
And the price went through the roof and is still climbing.
Everybody with a bare place with water, opened a trailer park and the prices there would make you think you was getting gold plated driveways with diamond crusted picket fences.
But all you get is a sandy place to park the double wide until the work runs out and you can load up and wave goodbye to it in the rear view mirror.
Ain’t America Great!
Papa Ray
Who was it who said, “When legislatures are put in charge of buying and selling, the first thing to be bought and sold are the legislators?”
I gave up a job in Clearwater, FL solely because of the housing costs. Had a cost-of-living adjustment of 8% offered. Let’s see, mortage under $800/mo vs same rate mortage for same size home at $3200/mo. Nope, 8% won’t do it.
Most of that cost is in demand, but a significant portion is regulation. We have horses, so instead of just buying hay and living on a 1/4 acre the Florida legislature has decided I need 1 acre for each hooved mammal on the place. So I’m priced out of 1-acre lots, I need 4 acres even if three of them are under water and merely supporting alligators.
At the risk of paraphrasing Chaucer, better to live like a king in the interior than be a pauper on the coasts.
– Max
Max, the market in that neck of the woods is going to stink for years. You mentioned mortgage, but you didn’t mention property taxes, which will triple or quadruple once you buy the property since the rate of increase is capped and can only take a big jump when the house is assessed at time of sale. Add on top of that hurricane insurance so that you can pay for all the rich people living on the waterfront, all the stupid people living in dry riverbeds that flood with hurricane rains, and all the rest (you classify ‘em) living in single- and double-wides. Me, I’ve been through five hurricanes in my house, no damage, no flooding, no claims, but my rates still tripled anyway–thanks, USAA, wouldn’t want to touch your fat profit margins while you’re holding a few thousand of my dollars in a “subscriber’s savings account.” In short, not a lot of incentive to buy in Florida these days.
It is interesting to read the comments and know that the (snicker) same clear, intelligent thinking (/snicker) shown on the subject of national healthcare is evident here on the subject of housing costs.
One tiny, throwaway reality check for you troglodites. After WWII, when the powers that be decided that individual home ownership was the ticket, and the flood of tract homes began, the 900 Sq. Ft. bungalow was the norm.