O'Toole Blames Planners for Housing Crisis

In a new report with the Cato Institute, Randal O'Toole takes off the gloves and lays the blame for the housing crisis squarely on urban planners.

O'Toole argues that because the housing crisis happened in places like California and Florida that have growth management policies, and didn't happen in places like Texas and Georgia where they do not, urban planning is the true cause of the housing crisis.

From the report: "Urban-growth boundaries and greenbelts not only drive up the cost of new homes, they make each additional new housing unit more expensive than the last. In other words, they steepen the supply curve.

Once growth boundaries are in place, cities no longer need to fear that developers will simply build somewhere else. This gives the cities carte blanche to pass increasingly restrictive rules on new construction. In places like Houston, such rules would drive developers to unregulated land in the suburbs. In the San Francisco Bay Area, the nearest relatively (with emphasis on 'relatively') unregulated land is in the Central Valley, 60 to 80 miles away."

Full Story: How Urban Planners Caused the Housing Bubble

Comments

Comments

yeah, but...

las vegas and phoenix don't have growth boundaries and they're doing just peachy!

also, nice colonel sanders tie.

Nice Colonel Sanders Tie

Isn't that an argumentum ad hominy?...

What an Idiot

If this is what passes for logic and objective analysis at the Cato Institute, then I'm not too worried that our Florida growth management laws and policies are going to be wiped out anytime soon. O'Toole is a clown like Glenn Beck, and his findings are easily dismissed. Why exactly does Planetizen link to his articles? Are y'all that hard up for clicks?

Same Old Stuff From O'Toole

We have heard this many times before.

O'Toole begins by blaming urban planners and growth limitations for driving up housing prices. That is standard market economics - limiting supply will drive up price - and there is some truth to it.

Then he pretends that smart growth, in the form of urban growth boundaries and greenbelts, is the only form of planning that limits the supply of housing.

He conveniently ignores the facts that low-density suburban zoning is a much more common method of limiting the supply of housing, and that smart growth planners want to allow higher densities and more development around transit nodes. Instead, he assumes without thinking about it that sprawl is the only way of increasing the housing supply.

O"Toole might not care about the environment, but he is certainly very good at recycling his old arguments.

The one relatively new point here, which he has only been recycling for a year or so, is that higher housing prices caused the housing bubble and recession. No mention that inadequate government regulation of the banks also must bear part of the blame.

Even Alan Greenspan, who is an admirer of Ayn Rand, has admitted that he was wrong to believe that the market will regulate lending, and now he says that more regulation is needed. But the Cato Institute seems to have a special spam filter on all its computers that filters out any new ideas that don't agree with their preconceived dogmas.

Charles Siegel

Stop taking him seriously

O'Toole has been so widely discredited so many times in so many different ways, I am at a loss as to why we continue to take him seriously. His nonsense ramblings are given undue credence by repeating them as if they were real news, or valid studies.

BASTA!

The guy's a crank! He cleverly structures his arguments--he must be intelligent--but the content is garbage.

The bubble was due to systemic problems, many of which planners identified four years ago, such as spurious financial instruments.

O'Toole should be sent packing and the Cato Institute and places like it should have their questionable academic credentials revoked! The U.S. isn't that hard up for institutes of higher learning that places like Cato should have the color of authority that attends.

If we had that kind of power

This irks me so much, I need to add a comment.

First, planners don't have that kind of authority. Councils and supervisors, aldermen, selectmen, etc. make the decisions.

Second, if we did have that kind of authority, it's HIGHLY unlikely we'd have allowed the overbuilding of sprawl demanded by the building industry and so much loved by O'Toole and his cronies.

Third, if O'Toole's allegations contained even a vestige of truth, then places like California's Central Valley--which is extremely conservative, business-friendly, and regulation-phobic--wouldn't be at the very bottom of the deepest pit of the foreclosure debacle.

He's actually got a point.

Paul Krugman made a similiar point in 2005:

http://www.pkarchive.org/column/080805.html

Now, did planners cause the housing bubble... No. The Federal Reserve caused an asset bubble. It just manifested itself through housing prices, which are highly intertwined with zoning and other regulations (as well as the availability of debt and local economic circumstances - i.e. jobs). Now, planners don't = zoning policy/other regulations, but the public associates the two.

Not just another citizen

Ricardo, I don't know if you know O'Toole, but he's not just another member of the public. He knows very well what planners do and don't do and he is playing any and all uninformed people who read his drivel in order to demonize planners and planning. This is part of a larger strategy.

True

Yes, I am familiar with Mr. O'Toole. The thing is though, that I also share his idea that getting rid of growth management policies is a great idea. However, the difference between him and I is that I think getting ridding of the majority of land use controls is also a great idea (as Charles and stuehren point out in other posts, Mr. O'Toole doens't seem to mind sprawl zoning). Now, I know that both of those idears aren't all that popular in a planning forum, but hey, it's only my opinion. I did, however, think it necessary to point out that he does have a point... although I know as well as you do that he is twisting the facts to suit his own argument/goal.

Chicken or egg

One could just as easily make the argument that Smart Growth is so desirable to homebuyers, that they purposely flock to metros where it's used and bid up the price of the housing supply. It's the free market at work.

Planners vs Planners

How can he blame "planners" in current sense limiting sprawl any more than he could blame "planners" in the 1960's sense when minimum parking requirements were king. They are very different groups, but they could both be considered to "limit the supply of housing". The only difference is one group makes rules he likes, the other doesn't. However, most of the cities he mentions suffer more from the latter variety.

Who said they plan in Florida

Orlando, Tampa, and the Miami-Fort Lauderdale areas are some of the most sprawled out metro areas in the country. The economy of Florida depends on development. Throughout the state's history developers were the driving force in the state's economy. Florida does not have an income tax, there are so many loopholes for corporations to get away with not paying taxes, that you should fire your accountant if your company has to pay the state so much as a nickle. Thus the state has to depend on a tourist tax and property taxes for revenue, and you can't really support a state on taxing key chains at Disney World. Thus more development more property tax revenue for the state. So the idea of having a New Urbanist approach to planning does not fly in Florida. It is because of sprawl that the state's economy tanked. Who wants to buy a McMansion that's 3 hours from civilization? There is an excellent article in the The New Yorker about the housing crisis in Florida.

Houston, Dallas, and Atlanta have stable housing markets, not because of sprawl, but because they have strong and diverse economies. Houston is the epicenter of the energy industry. Dallas is a high tech hub. Atlanta is home to:Georgia Tech, Emory, Morehouse, Clark Atlanta University, and the University of Georgia is not too far away. Atlanta is like the Boston of the South, building an economy centered around its colleges and universities.

What a Crock of Political B.S.

O'Toole's attempt to blame planners for the housing crisis is just more radical right polemics from the highly partisan Cato Institute rather than careful analysis based on facts. I don't have enough time right now to fully demolish his sorry excuse for a research‚ but the roots of the housing crisis go back to the Condo-mania of the late 1970s and early 1980s where condominium conversion wiped out the supply of profitable private sector rental housing affordable to households of modest incomes. On the average, converting to condo doubled the cost of living in those units. Add in all the tax subsidies and other incentives that artificially inflated the homeownership market, and the seeds for a housing squeeze and eventual collapse were inevitable. As a greater proportion of each household's income was devoted to housing, the rest of the economy paid the price, setting the seeds for today's little ol' depression.

All of this was the doing of the private sector. Government became complicit thanks to the lobbying power of the real estate and development industries which have successfully bought both Republican and Democrat elected officials hook, line, and sinker.

How O'Toole can pretend there was no housing bubble in the states without growth management policies is beyond belief. But then again, the truth has never gotten in the way of the radical right. Remember the "Death Squads" that were never in any health care reform legislation!

Daniel Lauber, AICP
Planner/Attorney
AICP President 2003-2005, 1992-1994
APA President 1985-1986
http://planningcommunications.com

The Ponzi State

Is there a way to access that article (The Ponzi State) without subscribing to The New Yorker...?

chrisinsobe

Who said they plan in Southern California?

Yes there are land constraints for residential development in Southern California but they have little or nothing do with "growth management." With ocean to the west, mountains to the north, and military property and national forest to the south and east, buildable land becomes tight when you try to squeeze in almost 20 million people. There is abundant land in desert areas farther to the north and east but those areas are too distant for most people to drive from over congested highways to jobs concentrated in Los Angeles and Orange Counties. Proposals by planners to build dense in-fill housing in those two counties typically meet stiff resistance by local communities. Maybe Mr. O'Toole would prefer the type of autocratic top-down government in countries like China that can overcome such resistance and achieve his unfettered land use dreams.

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