In a couple of stories yesterday, the Seattle Times writes about a proposal to tax nonresident buyers of Seattle real estate as a way to address the high price of Seattle housing. The Times reports that City Attorney Pete Holmes said such a tax would be illegal.
Meanwhile, over the past month, the Sightline Institute has run a few interesting articles on the cost of housing:
Policymakers sometimes have reservations about altering regulations to cut costs, worrying that they are just handing windfalls to builders without helping affordability. In the larger picture, though, reducing the cost of homebuilding makes all housing throughout the city more affordable by shrinking the average price the market will bear. . . .
There is nothing magical about housing that insulates its market price from changes in its cost of production. Land values do complicate housing economics in some ways, but they do not break the universal economic supply chain that links cost of production, quantity of production, and price.
“Time is money,” goes the saying, and it’s the cardinal truth in the business of building homes. When a city’s regulations stretch the time from blueprint to move-in, the homes end up more expensive. Or they end up never built, because the delay makes them money-losers. In cities already suffering from a shortage of homes, either way, delay sends prices even higher.
. . . real estate professionals with whom I spoke estimated a cost premium for permitted land ranging from 15 to 100 percent. It varies with project scale, type, and location. If permitted land is worth twice as much as unpermitted land, process delay is effectively adding about 10 percent to the total cost of a typical homebuilding project, assuming land typically accounts for about 20 percent of total development costs.
Update: Opportunity Washington has a good post on this topic today.