Home prices and rents surge in metro areas. Threat to economic growth? What role does growth management play?

Housing affordability has become a near-daily headline issue for metro newspapers. Stories of young families unable to buy homes or tenants squeezed out by rising rents are all too familiar. In addition, as we’ve written, housing affordability quickly becomes a problem for employers. Last month we cited research from California that found,

In a 2014 survey of more than 200 business executives conducted by the Silicon Valley Leadership Group, 72 percent cited “housing costs for employees” as the most important challenge facing Silicon Valley businesses.

Metro Seattle can’t be far behind. And not just Seattle. The Seattle Times today reports

It’s not just Seattle that’s seeing eye-popping housing costs: Across Washington, home prices are rising faster than in any state in the country — the first time that’s happened in a quarter-century.

Soaring costs from Bellingham to Spokane have propelled the state to a record for home prices, surpassing its pre-recession peak for the first time. Just in the last few years, Washington has zoomed up the list of priciest states in the nation and now sits in the top five overall.

Moreover,

“Rents and home prices are increasing at the same time now, and we’ve never seen that,” said [real estate broker Eric] Johnson, whose family has been in the Spokane real-estate industry for half a century. “Right now, there’s nowhere to live.”

On cue, the Puget Sound Business Journal reports,

Since the end of March, rents in King and Snohomish counties increased 4.1 percent as the vacancy rate dropped to just under 3.9 percent, according to a new report by Apartment Insights of Seattle. The vacancy rate is the lowest it has been since the company started tracking the Seattle market in 2005. Over the last year, rents increased 10.1 percent.

The Times story also noted,

Frank Nothaft, CoreLogic’s chief economist,..said the state has also been relatively slow to build more housing compared with the surging demand from buyers.

The housing crunch has also exacerbated tensions between some local governments and planning authorities. The Seattle Times reports, 

Regional growth plans call for small cities in King County’s rural areas to take just 5 percent of the growth during the next 20 years, while large cities including Seattle, Bellevue, Kirkland and Redmond absorb 73 percent.

That’s put Duvall and four other small cities in King County at odds with the Puget Sound Regional Council (PSRC), the four-county planning authority whose policies seek to limit sprawl and reduce the carbon emissions associated with more highways and long commutes.

The council has told the cities they must revise the growth and employment forecasts in their comprehensive plans or risk losing a share of the $700 million in federal transportation funds the agency will administer over three years.

That’s not going over well with local officials.

“They are usurping our authority,” said Londi Lindell, city administrator for North Bend. “City councils are the legislative bodies authorized by the state to adopt local land-use regulations.”

Growth management inevitably fosters conflict among parties with differing visions, responsibilities and constituencies. In our foundation report, we cited challenges identified by Gov. Gary Locke’s competitiveness council in 2001. From the council’s report,

Washington’s environmental regulations are important to the environment and the health of citizens. The competitiveness council does not seek to weaken Washington’s environmental safeguards. Instead, it seeks a culture change within the regulatory agencies to help businesses get things done.

We framed the challenge this way:

While regulations ultimately reflect Washingtonians’ policy preferences, they should be regularly reviewed to see if, for example, the benefits justify the added costs of compliance.

There’s an obvious benefit to public policies that allow for an adequate supply of affordable housing to meet the growing state and metropolitan demand. The PSRC has said it will “convene a working group” to address the small cities’ concerns. There’s no question that regulatory policy has played a role in driving up housing costs. Figuring out how to mitigate the effects without incurring unacceptable environmental consequences should be the goal.