In many parts of the country, high housing prices are at crisis levels. The war on sprawl is to blame for this.
Many state and regional governments have been convinced by planners since the 1960s that they must limit urban sprawl. This was called “growth management planning” and an urban growth limit is the most popular growth-management tool. Without these limits, development was virtually forbidden.
For instance, about 99 percent Oregon lies outside an urban growth zone. In most of those places, families cannot build houses on their own land unless they own at least 80 acres, actually farm it, and have thereby earned $40,000–$80,000 per year (depending on soil productivity) in two of the last three years.
The nation’s first law on growth management was passed in Hawaii by the legislature in 1961. The state was the nation’s most expensive housing market by 1970. Housing affordability can be measured by the ratio price to income. This is simply the median property price divided by the median household income. The ratio for Hawaii was greater than 3 in 1970. It was lower in all other states, however, at 2.4. California had a ratio that was 2.
The 1963 California Legislature gave the cities power over development that occurred outside of their boundaries. Many cities drew urban growth lines in the 1970s to limit new development. This was due to slow growth. In many California cities, the ratio of price to income was above 3. Some were higher than 4.
Oregon passed growth-management laws in 1973 and 1985. New Jersey and New Jersey also adopted them in 1986 and 1986 respectively. Washington and Maryland followed in 1992. After all of these laws were put into effect, housing affordability fell.
New England’s counties have been abandoned by most states. This effectively gives the city control over land use regulations on county lands. Many cities restricted the use of land that was not within their jurisdictions in many instances. In Massachusetts, Rhode Island, Connecticut, and elsewhere, housing prices rose.
Colorado has not passed a law on growth-management, but in 1997 the Denver Regional Council of Governments established a urban growth boundary. Denver’s price-to-income ratios increased from 2.2 in 1990, to 3.5 by 2005. A few cities like Fort Collins, Missoula and others adopted their own urban growth limits, which made housing in these areas more costly.
A 1975 Environmental Law article by John McClaughry Reason contributing editor) called these laws and plans the “New Feudalism.” He pointed out that although they permitted private land ownership, the plans also transferred rights for development to the government.
In the beginning, the war against sprawl was intended to safeguard farmlands. The United States actually has 3x the amount of land for agriculture than it uses to grow crops. The decline in cropland acres is not due to urbanization (which covers just 3 percent) but rather because most crops are growing faster per-acre than the population.
The energy crises of 1970s provided a later reason for the rules. A book entitled “The First Energy Crisis” was published in 1973. Compact City suggested denser cities could save energy. However, the Department of Energy has more recent information. Buildings Energy Data Book It is evident that multifamily housing requires more energy to create and manage than single-family residences. The department’s Transportation Energy Data BookPeople who live in dense areas drove less than those living in lower-density places. However, because they drove in congested areas, they used less fuel per capita and emit more greenhouse gases than those living in low-density areas.
Planning advocates blame everything, from teenage suicides to obesity on low-density suburban areas. These claims are false. Smart Growth America’s 2003 study found that urbanites are a little heavier than those living in cities. However, it did not consider a bias. Overweight individuals often prefer to live where driving is more convenient.
Planning advocates claim that increasing density solves housing affordability issues. It was actually growth management that caused urban areas to become expensive. Furthermore, higher density is positively associated with housing cost.
After growth boundaries have been drawn, it is easy to see why land within these boundaries becomes so expensive. According to a 2017 study, the cost of an acre of land within California’s urban centers is more than 10x that in areas that are growing fast. Existing housing is expensive due to the high price of land. The high cost of housing makes it more costly to build new homes.
California is home to some of the most expensive and densely populated urban areas in America. 95 percent was contained within 5 percent of the state’s total land area thanks to growth management. California had twice as many urban areas per capita than other states. The median home price was six times the income of the family with a household. In some cities, it was even higher than 10.
Planners suggested “affordable housing”, which could be in mid-rise or high rise developments. However, these “affordable housing” costs are several times more per square foot than single-family houses because they require elevators and steel or concrete.
Nicholas Arenson, a California housing developer testified before the San Francisco Regional Planning Commission. He stated that two-story housing was most affordable. He said that three-story condos and townhomes cost between 30 and 50 percent more per sq. foot than single-family homes and are “sold at a discounted rate to other single-family houses.” The average cost of a mid-rise development with four to seven stories is two to fourfolds more per square footage and are “sold at an additional discount,” while the cost of high-rises can run 5.5 to 7.75 times per square inch as single-family houses.
Multifamily communities are often made up of very tiny housing units, sometimes less than 1000 square feet. This is to make them appear more affordable. Many are also subsidized by low-income housing tax credits and other sources. In areas that are not experiencing growth, cities encourage developers to create apartments and condominiums of 1,000 square feet.
Many planners—and many libertarians—blame single-family zoning for high housing prices. According to them, oligopoly in housing caused high prices. However, an oligopoly cannot work if it does not control the whole supply. To stop the creation of new housing on the urban fringe, you will need to have a different set of regulations.
Nearly every city in America except Houston has had single-family zoning for 60–110 years, and housing remains affordable in areas that don’t use growth management. Single-family zoning in Dallas makes home prices virtually indistinguishable to those in Houston. However, growth management makes housing more expensive, even if it doesn’t have single-family zoneing. It increases labor and land costs, as well as construction costs.
If you are determined to reduce housing costs, these growth-management rules must be followed. We need to reinstate the property rights of rural landowners and end New Feudalism.