As tech cities battle affordability issues, suburbs look to pick up the slack

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Seattle’s affordability problems are well-documented: It’s the hottest housing market in the country, with an exploding population that outpaces the number of new houses and apartments being built.

But these issues aren’t limited to Seattle, or to other big cities like New York and San Francisco. Cities all over the country, especially in established and growing tech hubs, are grappling with how to deal with housing affordability, a panel of economists said at a forecasting conference Thursday in Seattle.

“A lot of challenging things are happening, and it’s not only in the Seattle area; it’s a nationwide challenge,” said Chris Mefford, president of Community Attributes Inc., a Seattle-based firm.

Chris Mefford, president of Community Attributes, Inc. (GeekWire Photo / Nat Levy)

Skylar Olsen, senior economist at Zillow Group, showed just how rough it’s gotten in Seattle, especially for those not making Amazon money. People in the bottom-third income bracket would have to fork over 52 percent of their monthly earnings just to afford lower-tier market-rate housing, Olsen said. Even middle-third earners in Seattle are “rent-burdened” right now, meaning more than 30 percent of their income is spent on rent. Once you cross that threshold, it becomes harder to build savings and plan for retirement, let alone afford a down payment in Seattle’s white-hot housing market.

In places like New York and Los Angeles, Olsen said, it’s virtually impossible for to people in the bottom third to afford any market-rate units.

“That’s something Seattle is particularly challenged with, not becoming a place like that, where it’s really out of reach for the lower third of incomes, and we’re moving that way,” Olsen said.

Zillow Senior Economist Skylar Olsen. (GeekWire Photo / Nat Levy)

With cities like Seattle filling up and running out of space, suburban leaders are exploring ways to pick up some slack. At the Economic Forecast Conference, put on by the Economic Development Council of Seattle & King County, the mayors of nearby cities Everett, Kirkland and Auburn discussed the balance they are trying to achieve between a regional approach that welcomes the growth coming to the Seattle area, while also protecting the residents and businesses already there.

“You’re always looking to invite new members of the community to join you, but as my daddy used to say, don’t forget to dance with the one that brought you,” Auburn Mayor Nancy Backus said. “What do you do to ensure that those business and those people who stuck with you during the tough times are thriving in the community and at the same time attract new business?”

Auburn Mayor Nancy Backus, Everett Mayor Cassie Franklin and Kirkland Mayor Amy Walen at the Economic Development Council of Seattle & King County forecast event. (GeekWire Photo / Nat Levy)

Each of these cities has at least one big initiative on the docket to up its profile. Auburn has a goal of becoming the “healthiest” city in Washington state by 2020. That goal came out of a King County study that found Auburn residents experienced the most negative impacts related to health, housing and job opportunities.

Kirkland is redoing its main shopping mall, looking to modernize the 1970s era Totem Lake Mall, adding hundreds of new residential units and more than 200,000 square feet of new retail.

Everett is simplifying its downtown zoning rules. Today, there are 12 different zoning designations for a one-square-mile area. The city is trying to simplify that to down three zones to make it easier to build.

These plans aren’t going to transform their cities over night. But it is part of a recognition among municipal leaders that all of Seattle’s issues are theirs’ as well.

“We are a region, and we need to compete globally as a region,” said Everett Mayor Cassie Franklin. “We need to work collaboratively and bring business and development and growth to our individual cities as well as the region. If we work as team I think we are really competitive.”

All of this planning effort could take some of the growth burden off Seattle, but there’s still one big issue standing in the way: transportation. Cities with strong transit networks have a better chance of spreading out their growth in a way that isn’t a disaster environmentally and doesn’t cause mass gridlock because everyone is driving from the ‘burbs into the city.

That’s why leaders have pushed for expansions of the regional light rail network. Building quicker connections between cities — and job centers — opens up entire swaths of cities and neighborhoods that people might not otherwise consider an option.

Efforts to build more housing and connect cities throughout the region, have begun paying off. Olsen noted that Seattle has been “dethroned” as having the fastest-growing apartment rents as new development begins to make an impact. But, as The Seattle Times points out, development is already starting to slow, and the for-sale market continues to be as active as ever. Olsen doesn’t see the crunch of people coming to town from even more expensive places slowing down any time soon, which means these affordability issues will likely persist.

“In terms of when it’s going to stop, we still look super cheap to people outside, even though if you’ve been here for awhile it doesn’t feel that way,” Olsen said.