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A Smart Growth 'Rent Belt'?

Posted by: Chris Steins

25 January 2007 - 1:00pm

Wendell Cox and Ronald Utt suggest that smart growth abuses are creating a "Rent Belt" of high-Cost areas.

Housing affordability problems are concentrated in regions where anti-growth land-use regulations have limited the supply of building lots, according to the report.

"High-cost housing encourages business and households to move elsewhere and undermines the regional economy. The solution is to attack the root cause of the affordability problem (restrictive land-use regulations) and increase the supply of building lots."

From the conclusion:

"A better solution is to attack the root cause of the affordability problem—restrictive land-use regula­tions—and increase the supply of building lots. If such a policy were implemented in any of the impacted areas, home prices in now-unaffordable regions like Los Angeles, Washington, New York City, and Miami would begin to return to affordable levels. Efforts to turn back such regulations are underway in a number of communities. The most notable is a recent ballot box victory that forced Oregon to relax its regulations.

The overly regulated metropolitan areas seem likely to experience considerably less population and economic growth in the future than would have occurred if their land-use policies had not broken the historic relationship between house values and household incomes. To restore higher levels of eco­nomic growth, such areas will need to liberalize their land-use policies.

In the meantime, affordable metropolitan areas that have not grown as strongly in recent decades face a unique opportunity for renewal and expan­sion. Such areas—many in the long-dormant Mid­west—will need to ignore the siren song of excessive land-use regulation to take advantage of their potential."

Full Story: Housing Affordability: Smart Growth Abuses Are Creating a "Rent Belt" of High-Cost Areas
Source: The Heritage Foundation, January 23, 2007
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A Smart Growth Rent Belt?

Submitted by James Lopes on Mon, 01/29/2007 - 14:05.

The Wendell Cox point of view stands somewhere in the Friedman supply side of economics, and the theory does not factor in the benefits of government regulations or the demand side of land use. Land costs have escalated steadily in the more benign climates of the U.S. for decades, and the coastal belts are touted as the best places to live. These higher costs are not due to the Smart Growth movement, which is just getting going. In fact,it endorses higher density and smaller, efficient and inexpensive housing. The movement doesn't have much to do with growth management, except in protecting resources from being trashed.

So, what is the real culprit for high housing costs in these high-demand areas? It's the demand of millions of affluent, newly affluent and cashing-out-equity Americans, trying to move into these Shangra-La's. For the millions of these people in the U.S., some number of them are seeking to move to La La Land, and of the over 10 million people in Southern California, at least 1 million are probably wealthy enough that they can afford to sell to those outsiders and move to the more pristine coastal areas, exurban or urban. The coasts cannot zone enough land to accommodate this huge national, and perhaps international demand. And, they don't have the resources to serve it anyway, which brings us back to sensible growth management. Protecting our water supplies, urban facilities and services from abuse is paramount for use in growth management, and other mechanisms are available to address the needs of the rest of us, including Smart Growth!

Jim

Ridiculous

Submitted by ElphinKnight on Fri, 01/26/2007 - 07:23.

This report is rife with "could be", "perhaps", and variety of other phrases one can use to imply false correlations - and there are plenty in this "study". I'm a strong proponent of relaxing zoning (or throwing it out for something else), but making the case with such obvious fluff and ridiculous assertions is not the way to do it.
- Brandon

Impact of Zoning Study

Submitted by Ricardo on Fri, 01/26/2007 - 09:56.

Here's a link to the Glaeser & Gyourko study cited. It's pretty interesting, especially as it was published in 2002 before much of the rampant speculation took hold.

http://post.economics.harvard.edu/hier/2002papers/HIER1948.pdf

Just thought a few people might like to check it out.

Some of the conclusions are:

1) That the physical cost of construction hasn't really gone up.

2) Land prices have gone up, but not as much as they should have given the cost of new housing minus the construction cost.

3) The difference between the physical construction costs plus the land price and the final housing costs is basically the cost of land use regulations (which include strict controls and permitting delays etc.). While not perfectly defintive, as places with strict land use controls are correlated with higher housing costs, the authors conclude that the rising cost of homes are attributable to strict land use regs...

Glaeser study illustrates key problem with Cox study

Submitted by Michael Lewyn on Tue, 01/30/2007 - 07:51.

Glaeser may well be right in suggesting that high housing costs are caused in large part by land use regulation.

And Cox agrees (for excellent reasons). But where Cox goes wrong is in equating "smart growth" with "land use regulation."

Not all smart growth policies increase land use regulation, and (more importantly) not all land use regulation is smart growth. Sometimes, smart growth means less regulation rather than more.

For example, Cox correctly targets minimum lot size regulations as a contributor to housing costs. But minimum lot size regulations (at least in more urban areas) are hardly "smart growth." Instead, they are pro-sprawl regulations, in that they use the power of government to reduce density, which in turn reduces walkability by reducing the number of people who can live within walking distance of shops and offices.

So "smart growth" in this context actually means less regulation and thus increased housing supply and lower housing cost.

Other impact of NE zoning study.

Submitted by Dano on Mon, 01/29/2007 - 13:33.

Glaser also points out that LU regs for lower density are made by wealthy homeowners seeking to protect their property values.

Best,

D

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