The Marquee on Meeker Apartments, 2030 W. Meeker St. in Kent, will feature 492 apartments and 12,000 square feet of retail. The first phase of 288 apartments is expected to be completed in early 2020. Developers are targeting people in their 20s and 30s to rent their high-end, urban-style apartments. Steve Hunter/staff photo

The Marquee on Meeker Apartments, 2030 W. Meeker St. in Kent, will feature 492 apartments and 12,000 square feet of retail. The first phase of 288 apartments is expected to be completed in early 2020. Developers are targeting people in their 20s and 30s to rent their high-end, urban-style apartments. Steve Hunter/staff photo

Housing study pokes holes in conventional wisdom

High construction and land costs will incentivize developers to build luxury units.

A new housing analysis challenges the conventional wisdom that deregulation and rezoning will automatically lead to more stock and cheaper prices.

The analysis, titled “Housing, Urban Growth and Inequalities,” was published by Utrecht University in the Netherlands and penned by Andrés Rodríguez-Pose and Michael Storper. In it, the pair said there is no clear evidence in either the U.S. or Europe that housing regulation is a major source of differences in home availability or price in cities.

Failure to regulate the housing market can lead to lost economic growth and create problems such as segregation, homelessness, barriers to social mobility and long commute times as lower-income earners are forced from city and job centers. The authors said the idea that housing will “trickle down” to lower earning workers has not happened. High construction and land costs will incentivize developers to build luxury units.

This has been seen locally as well in a report published last year by the King County Regional Affordable Housing Task Force. The report showed the median price for a house in Seattle was around $706,000 and houses on the Eastside were more than $100,000 more expensive last October.

Of the people moving to King County, 60 percent of new households between 2006 and 2016 were earning $125,000 or more per year, while 18 percent earnedless than $50,000 annually. This meant developers focused on building luxury housing while many lower-income residents were either priced out or became severely cost-burdened. Many of these residents found it difficult to save and were often only one unexpected bill away from homelessness.

Blanket changes in zoning are unlikely to increase migration to cities or increase affordability for lower-income households in wealthy areas, the report’s authors argue. However, these policies can increase gentrification within prosperous areas while other major factors are ignored, like the employment demand and low wages and skills.

“We now argue that policies such as blanket upzoning, which will principally unleash market forces that serve high-income earners, are therefore likely to reinforce the effects of income inequality rather than tempering them,” the report said.

Upzoning would trigger new housing construction in neighborhoods where highly paid workers want to live, including gentrifying areas. This would let more high-income people move to cities, which would produce more expensive housing for them. While this would allow them to avoid competing with lower income residents, it would pressure landowners to redevelop existing affordable housing in desirable areas. The paper argues this is the definition of gentrification.

“While building more affordable housing in core agglomerations would accommodate more people, the collapse of the urban wage premium for less-educated workers means that the extra housing would mostly attract additional skilled workers,” the paper said.

If left to its own devices, the market will simply build housing that benefits landlords, landowners and property developers, according to the report. It argues that housing markets are not like normal markets. Increases in supply do not directly translate to decreases in price because housing comes with so many hidden costs and barriers to access.

The housing crisis in the U.S. as well as Europe is due less to over-regulation of housing than low wages and income inequality, the report said. Wages and skill levels for many workers are stagnating and employment levels could fall further due to automation. The report said that for most workers, a college degree was the basic qualification to survive or earn livable wages within major cities.

More in News

A $10 million dollar mail fraud scheme out of Renton

One ex-employee from Microsoft is being charged with stealing company money

A crash between a semi truck and another vehicle occurred around 4:45 a.m. on July 16 on State Route 202. Photo courtesy of Rick Johnson/Washington State Patrol
Renton man killed in head-on crash along Redmond-Fall City Road

The driver’s name has not been released.

Carol Ann Witschi leaving Renton early

Councilmember’s resignation may leave seat vacant till election

VoteWA is a $9.5 million program that came online last May and is meant to unify all 39 county voting systems in the state into a single entity. Courtesy image
WA’s new voting system concerns county elections officials

VoteWA has run into some problems in recent months as the Aug. 6 primary election draws closer.

‘Feedback loops’ of methane, CO2 echo environmental problem beyond Washington

University of Washington among researchers of climate change’s effects in global temperatures.

Jury awards $140k in sexual assault of woman at Federal Way massage business

LH Foot Massage was found to have been negligent, causing two clients’ sexual assaults.

Photo by Haley Ausbun. Hundreds of people who passed away without family to bury them were remembered Wednesday, July 10, at the King County Medical Examiner’s Office Indigent Remains Ceremony at Mount Olivet Cemetery.
Left behind but not forgotten — county buries indigent remains

Funeral for those left with the medical examiner held in Renton

Yevgeniy “Zheka” Malteyev, from Renton, is believed to have died Thursday, July 4, from a tragic fall off a 300-foot cliff. Photo courtesy of Greg Paperin.
Death of Renton man shakes local hiking, soccer community

A memorial fundraiser for Yevgeniy “Zheka” Malteyev raises over $25,000

Renton City Council races heat up

Part two of The Renton Reporter’s three-part candidate series

Most Read