In Seattle, both market and “affordable” housing short-change renters, push home buyers to the limit and greatly benefit developers. Initiative 135 challenges these inequities by increasing housing and enabling housing equity across Seattle’s divisions of income and race.
The median price for a single-family home in Seattle exceeds $1 million. To get this home, you would agree to a $200,000 down payment. Then your annual mortgage would exceed $56,000 a year for 30 years. Seattle’s median income is slightly over $100,000. At $100,000, you will be left with $44,000 to cover all other expenses including food, transportation, taxes, utilities and health care.
How about the 160,000 families with incomes of less than $100,000? Most are just priced out of home ownership. As a result, the majority of housing units in our city are rented. The average rent is almost $2,200 a month, or $26,000 a year. On top of that are utilities, internet access and damage deposits. That $2,200 apartment is most likely a one-bedroom, so good luck with fitting in kids.
Over one-quarter of households in Seattle make less than $50,000. Those Seattle residents — the ones we depend upon to provide child care, deliver food and make our lattes — have less than $24,000 left after rent.
So how about Initiative 135 and the social housing it proposes? Don’t we already have housing subsidies for low-income people? In fact, the largest housing subsidies are for homeowners, thanks to writing off mortgage interest from income taxes. That’s a $30 billion tax deduction.
Seventeen percent of these benefits go to the top 1 percent of income earners. Eighty percent of the benefits go to households in the top quintile. Four percent goes to middle class families.
The Seattle Housing Authority (SHA) owns 8,000 units of housing. This housing is primarily for people at or below 30 percent of the median income. The typical wait time for a unit is three to four years. Another approach enables residents with incomes preferably no more than 30 percent of median income or below — $38,300 for a family of four in Seattle — to receive a Section 8 voucher to secure housing on the private market. Section 8 tenants pay between 30 and 40 percent of their income for rent. Government funds make up the difference. But the vast majority of people who apply don’t get this voucher, as federal funding has languished. Some eligible people are put on a waiting list. Most aren’t, as the waiting lists are closed.
Section 8 subsidies only reinforce the cost of market rate housing, as the government simply makes up the difference between what renters pay and what housing developers demand. Who benefits? Developers do. They make about 14 percent on new housing construction. The share of housing bought up by institutional investors — read: Wall Street — in the Seattle area has tripled. In 2020, U.S. residential values increased by $2.2 trillion. About $1.2 trillion of the gain in home values went to the top 20 percent of the population. Amazon pays a maximum of $350,000 as its base salary. When Amazon and Microsoft jump up professional pay and these professionals go on the market to buy a home, the bids just go up and up. The market doesn’t even work for them; they have to outbid each other for a limited supply of housing. Of course, if you are a working class family, you can’t afford to buy a home and you get no public help with rent or home purchases.
So how about we break away from housing as a market good and realize it is a social good, to be provided through private and public funding? With Initiative 135, renters will pay no more than 30 percent of their income for housing. Renters include very poor people right up to people with incomes of $145,000 for a four-person family.
Where does the money come from for housing development? That’s not spelled out in the initiative, but other governments have set an example. Montgomery County in Maryland gives their housing authority $3 million each year. The housing authority issues a bond on that revenue stream to develop housing. Grants from federal, state and local governments and even private entities (hello Gates Foundation and Amazon!) can augment this. Then when rents begin to come in, the social housing authority can issue more bonds and accelerate the housing development, all while maintaining affordable housing and acting as a more and more powerful brake on the cost of market housing.
In the little town of Winthrop in the North Cascades, social housing has taken hold in a big way. Currently, the Methow Housing Trust is building 42 single family homes with affordable mortgages and 22 rental apartments for people who work in Winthrop but can’t afford to live there.
This development will house fully one-third of Winthrop’s current population, both homeowners and renters. There’s no reason this can’t happen in Seattle, if we can find the political will.
Read more of the May 25-31, 2022 issue.