Redfin, the tech-powered real estate brokerage based out of Seattle, collects all kinds of data about cities, from the available housing, pricing, and what citizens want out of their city over the next decade.
At a community event the company hosted Wednesday evening called “Shaping Seattle’s Future: Creating Livability for All,” Redfin CEO Glenn Kelman shared some of the data his company has collected over the years and explained what it reveals about living in Seattle.
“Seattle is going through this amazing boom,” Kelman said. “People from all over the world are coming here for fantastic, high-tech jobs, and we have not figured out how to accommodate them.”
Having too many people and too few places to live is a primary reason why Seattle is facing a housing crisis that has a number of different dimensions.
Kelman started off by talking about the exodus of tech workers from the Bay Area to Seattle who have come north seeking more affordable housing. When Kelman decided to return to Seattle from San Francisco more than a decade ago, his friends were skeptical — now he says they are “trying to escape the madness of San Francisco.”
“I don’t even feel like I can afford to walk down the street there,” he said of his old neighborhood in San Francisco. “So I have a vested interest making sure that we keep Seattle different.”
Analyzing data collected by Redfin over the past 18 months, Kelman found that the percentage of people working in San Francisco who are looking for homes in Seattle has doubled because they can no longer to afford Bay Area prices.
“And it’s not just looking, it’s buying,” Kelman added. “Seattle is becoming the permanent location for many tech workers.”
The problem with the relocation of workers from the Bay Area to Seattle is that there is already a shortage of real estate in Seattle, Kelman said. When wealthier tech workers come in, they can afford to buy the houses that remain, exacerbating the housing crisis for the average citizen.
Redfin looked at home availability at the beginning of each new year and found that fewer and fewer homes are for sale in Seattle, while the city’s population only continues to increase.
“The fundamental problem is that we don’t have enough housing,” Kelman said. “We don’t have enough middle-class housing, we don’t have enough low-end housing, we don’t have enough high-end housing … It’s a supply problem. We keep waiting for more inventory to come onto the market, but builders can’t keep up.”
And the problem isn’t only availability. Home prices have also outpaced salary, so even when there is available real estate in the city, citizens can’t afford to buy it anymore. Instead, people who want to stay in Seattle must rent. But because landlords know this, they have raised rents through the roof, Kelman said.
“We have to watch the ratio of home prices to income,” Kelman said. “It’s back to the uncomfortable place that it was in 2006-2007, when homes were six times people’s income, but without the easy credit [of that time period]. Half of America can’t get credit anymore.”
Compared to the general population, tech workers are able to afford homes since their salaries have kept pace with real estate prices. However, even for techies, home prices are still about four times their annual income, meaning it’s tough for everyone to afford housing these days.
In addition to data about home prices and real estate availability, Redfin also collects data on how customers feel about livability in their cities via polls on its website.
Redfin asked users how long they could afford to stay in Seattle and only 36 percent of people believed they would be able to afford to live in the city 10 years from now. Even Mayor Ed Murray, who spoke at Wednesday’s event, admitted that with today’s real estate market conditions, he wouldn’t be able to afford the home he purchased 20 years ago.
For tech workers, the percentage was slightly better — 48 percent thought they could afford city prices in a decade, which is still low, Kelman noted.
Redfin also asked people to predict what the city would look like a decade from now. For the most part, people believed they would be priced out of their homes and that economic diversity would give way to a city crowded with high-end housing, unavailable to regular citizens.
“Only a quarter of those polled think that the city will be more economically diverse,” Kelman noted. “And only one out of 20 think that housing will get more affordable, despite our efforts to change that.”
Part of the problem, Kelman said, is that people shy away from the denser development that could allow more people to stay in the city.
“Basically, we gotta go out or up,” Kelman explained. “And I’d rather go up. We’ll have much more livable city.”
If Seattle doesn’t build up, the city will sprawl out like Los Angeles, he said, while people will get pushed further and further from the center until driving becomes a necessity.
“All the folks who vote against having big skylines, I just think you have your head in the sand,” Kelman said. “What we really need to do is think about this idea that somewhere, people have to live, and we’d rather have them closer to their jobs, in the city.”
Kelman also said that denser development helps encourage economic diversity. He noted that American cities with integrated areas of wealthy and poor citizens have greater economic mobility than cities where the rich and poor are clustered in distinct pockets.
“If you’re walking down street and you meet someone who makes more money than you, or your kid meets someone who makes more money than you, that’s good,” he said. “If you live in a gated community 50 miles away from the city center, that’s bad.
“The most important thing we can do is just put people together,” Kelman continued. “That’s why cities are bastions of progress. When all sorts of different folks live right next to each other, they are not able to vilify each other as much and they start to see how they can be different and how that might be good.”
Kelman then shared some of Redfin’s data on the distribution of high and low-end housing. In San Francisco, almost all of the housing fell into the “high-end” category at 88 percent, indicating low economic diversity and integration in its neighborhoods. But in Seattle, most of the housing is still affordable or in “balanced” areas, at 59 percent and 31 percent, respectively, Kelman said.
But to maintain an integrated city with economic mobility, people need to work hard to preserve affordable housing and make it a priority to build more affordable units as the city develops, Kelman said.
Kelman ended his talk on an optimistic note, saying that while Seattle faces a housing crisis, the city also has the opportunity to handle expansion strategically in a way that can provide a model to other booming cities in the nation.
“It’s going to have this amazing prosperity,” Kelman said of Seattle. “It can be a beacon for all the other cities going through the exact same change that we are. There is a way that we can grow and still build lots of houses and not screw up the character of our neighborhoods. There is a way that we can do it.”