The Tim over at Seattle Bubble posted an excellent piece yesterday comparing the increase in rent to the increase in housing prices.  My only disappointment in reading it, was that he abruptly ended it with "I think that sums it up", when I was just getting interested in where he was going with it.  From my perspective, it is not a simple 1 + 1 = 2 auto-sum-up as he suggests.  So I will offer a few comments here, adding to his thoughts.

In addition to Tim's observations of a 35% increase in rent cost over a 12 year period vs. a 240% increase in housing costs during that same period of 12 years, Seattle Moose commented on a 240% increase in a 7 year period, on a house in Denny Blaine. Of particular note were Seattle Moose's comments regarding the California influence, on areas with the highest appreciation levels, at least for Seattle proper. I think his observations are "spot on" as they say, and found his comment even more interesting than the original article.

When it comes to housing choices, all segments must be included.  In other words, there must always be a place for a minimum wage earner to live.  Maybe they need a roommate, or even two or more roommates, to get by on that income.  But every city, and to a lesser extent surrounding areas, must have affordable housing available for all people.  Not necessarily to buy...but at least to rent.

Here's an interesting tidbit.  When I was single, I rented a one bedroom apartment for between $600 and $650 a month.  So add that to "The Tim's" equation, and then let your jaw drop down to your feet!  We're talking 1978!  So clearly expecting the housing market to follow the rental market, as in "I think that sums it up" is just silly.  Why?  Because of the land value!

Not to be too Scarlett O'Hara about it, but let's let Gerald O'Hara's quote "Do you mean to tell me, Katie Scarlett O'Hara, that LAND doesn't mean ANYTHING to you!?" fall on The Tim's maybe deaf ears, for a minute.  The value of a house that is about to be torn down IS reality, when expressing opinions regarding rent prices and purchase prices.  The land value is what is growing at these paces and not the house at all.  An old house will rarely rise above replacement cost.  Land, on the other hand, is not reflected in rent prices, at least not the cheap prices being quoted in the Seattle Bubble article.

When the value of the land itself, goes up 10 times, and the house gets old or functionally obsolete, it is not the cost of living inside the structure that you own vs. the structure that you rent, that can be compared in any way, shape or form.  So "that sums it up" may make a whole lot of sense to a 20 year old...but not to an adult who thinks past today's monthly housing payment and factors in the rising cost of the land's value.