Seattle rents are down but affordable housing is still missing
Affordable housing. It’s a loaded phrase, am I right?
There’s a new report out today that says Seattle area rents “drop significantly.” I thought to myself, ‘Well that’s good news,’ and clicked the link.
It turns out that a “significant drop” equals somewhere between $40 – $100 a month depending on your neighborhood. This is after an average rent increase of $550 over the last five years. So maybe they mean “significant” in terms of it actually going down, not significant in the dollar amount?
Let’s look at this another way. Most financial experts say that your rent or mortgage should not exceed 30 percent of your before-tax income. The argument is that this will leave you enough money to, you know, eat and stuff.
The same article is saying that the average rent in the metro area is about $2,100 a month. And some places are much higher.
So how much money does one need to earn to comfortably afford a $2,100 a month apartment? Let’s do a little math, and the answer is at least $84,000 a year. Seattle’s median income is actually $80,000 a year, so things are pretty close, right?
Not so fast. That average is a bit skewed by the fact that 1 out of 5 people are making over $150,000 a year which dramatically pulls that average up.
Now according to the Bureau of Labor Stats, if you’re Hispanic, your average is $49,000 a year. And if you’re black, your average is $37,000.
So using our formula on housing from earlier — a Hispanic renter needs to find a place where the rent is $1,225 a month, and a black renter is looking for a $925 apartment. Anyone seen those floating around? Me either.
So what’s the solution here? I honestly don’t know. Is it the government’s job to ensure that there are apartments that everyone can afford? A version of this was attempted before in America: The Projects. Most people have concluded that warehousing all the poor people into one concentrated neighborhood turned out to be a bad idea.
Modern economists and city planners believe that the best solution is to sprinkle in the income classes across the same neighborhoods. That theory seems more correct to me, but who exactly is responsible for building and maintaining these below-market rate apartments? Who should we ask to take the loss of revenue?
Right now the city tries to use incentives as the carrot, and taxes and fees as the stick. But that’s not producing enough units.
So the real question is: Do we want our local governments to get into the real estate game?
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