While Seattle is in the midst of a building boom, most of that building is going towards luxury housing, or at the very least housing geared towards attracting the city's growing tech worker populace. The concern is that with so much unaffordable housing, how will everyone else be able to live in Seattle?
Per FYI Guy Gene Balk, the answer could come in the form of the "filter-down" effect.
"What really matters is not whether new housing is created at a price point that low- and moderate-income households can afford, but rather, whether the overall housing supply increases enough that the existing housing stock can ‘filter down’ to low and moderate income households."
The gist is pretty simple. As newer housing pushes into the market, older housing can't keep the same prices and must become more affordable in order to maintain occupancy. Much like a car driving off the lot, an apartment building begins depreciating in value as soon as someone moves in. A five-year old building can't often justify charging the same rents as a brand-new complex, just like a 20-year-old building can't charge close to what it did when it opened.
In Seattle, rents decline for each subsequent decade that a structure was built, the data show, until they bottom out in the 1960s-era apartments. A new apartment rents, on average, for 71 percent more per square foot than one built around the time of the Seattle World’s Fair.
The biggest decade-to-decade depreciation in rent occurs between apartments built in the 1990s and 1980s — an 18 percent drop in the per-square-foot price. Cain says that’s due, at least in part, to the dated style and materials typical of buildings from the 1980s — plush wall-to-wall carpeting and oak cabinets, for example, that are distasteful to many modern-day renters.
Of course, there's a point where things go from outdated to "vintage" and "charming." Kindof like how the mid-century modern designs of the 50's are in high demand these days.
Certainly, there are other factors at plat beyond age and depreciation. If a building has a great view, that's going to keep that value no matter what. Buildings can also be renovated, remodeled, and remade. There are plenty of Pioneer Square redos out there charging big bucks to justify that. Not to mention that while prices may come down over time, a quick look around Seattle shows that you'd hardly call the prices of most older downtown Seattle units "affordable."
Balk does point out that the building boom should help Seattle avoid one fate; turning into San Francisco. There, prices and rents have skyrocketed in large part because they simply didn't build enough new units to keep up. Seattle's certainly got that going for it.
· Today’s luxury apartments may be tomorrow’s affordable housing [ST]
· Why Do Downtown Seattle Developers Want Us To Live Alone? [CS]
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