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Wednesday, July 27, 2005 - Page updated at 12:00 AM

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Bruce Ramsey / Times editorial columnist

War against sprawl spawns higher prices, fewer choices

I bought my house a generation ago, when prices were climbing 2 percent a month. That was faster than the increases in my pay, and I felt an urgency to pound a stake in the ground while I still could. It was a good decision, and those who make the same decision today may be just as smart.

Still, there is unease.

I bought my house from a neighborhood hairdresser. Next door was a cop. Now I live next door to a Boeing manager and across the street from a Microsoft manager and an airline pilot. Same house, same street, different neighborhood. Houses have increased in value eightfold.

Demand is the obvious part of it. Prices here are pushed up by the success of Microsoft, Starbucks, Amazon and Amgen. Dollars are worth less than 25 years ago, and people have more of them. Interest rates are oddly low, and bankers push ever-more-addictive forms of credit.

But why are Seattle-area houses so much more expensive than houses in Midwestern cities of the same size? Do Microsoft, et. al., explain the difference? Partly, but there is also the matter of supply.

Land here is limited by Puget Sound, two large lakes and the Cascades. We have limited it further by restricting the building of new houses — to save flat land for farms and steep land for trees and wetland for fish and fowl. Jim Hebert of Hebert Research, Bellevue real-estate analysts, says the reason for the Seattle area's distinctively high house prices is restriction of supply. "That's not just an opinion," he says. "That is what the data show."

Scott Noble, King County assessor, says that from the mid-1980s, the number of new houses built in King County has barely increased. To explain the especially high real-estate prices in King County, he says, "it appears that supply is a more important factor than demand."

Supply is constrained by the county's Urban Growth Boundary, set under the state Growth Management Act. It is also constrained by the decisions of 40 different governments in King County. Several have been trying to increase minimum lot sizes — Newcastle to 7,500 square feet from 5,000, and Bothell to 9,600 square feet. Sammamish has had a building moratorium.

Each of these decisions limits the number of building lots. The lots go to the highest bidder, which tends to be the builder of the biggest house. Ordinary folk flee to Pierce and Snohomish counties, following the rule of, "Drive till you qualify." Our public thinkers respond to all this by proposing new ways of restricting "sprawl," a word they use to describe houses newer than their own.

When I bring this up, they say, "Do you want to build houses all the way to the Cascades?" And I reply, "Do you want the average house to cost a million dollars?"

Probably, the answer to both questions is yes.

By the assessor's calculations, house prices have risen by 12.7 percent a year in King County from 1985 to 2003. Taking the June 2005 median of $375,000 and the same 12.7-percent rate, in 2019 the median house in King County will be worth a million dollars.

That will be a world in which only high-profit employers survive, because only they will be able to pay employees to live here. It will be a world of old families with capital gains, new families with stock options and high-salary, two-income households with 40-year mortgages.

It will be a world in which many more young couples raise their families in apartments, even though they would rather not.

We are choosing for them — and we are choosing based on our feelings about "sprawl" and not their desires for a backyard. At least it is partly on those feelings. There is also the relevant fact that the more we restrict the building of other people's houses, the more the value of our own goes up.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His e-mail address is bramsey@seattletimes.com

Copyright © 2005 The Seattle Times Company

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