land use

Wendell Cox had an interesting article this week on his new findings on land-use regulation and housing prices. Long a critic of smart-growth planning, Cox’s new study puts a quantitative face on what excessive land-use regulations do to housing prices:

The overwhelming majority of new housing in the United States continues to be detached and is built near or on the urban fringe (Note 2). For new detached homes, the Index is 1.0 in six metropolitan markets (Atlanta, Dallas-Fort Worth, Houston, Indianapolis, Raleigh-Durham and St. Louis). This indicates that land use regulation is less restrictive and does not add more than normal to the price of new homes (Note 3).

In the other five metropolitan markets, the land and regulation cost ratio has risen above 20%, resulting in a higher Index. The Index is 2.4 in Minneapolis-St. Paul, 3.9 in Seattle, 4.5 in Portland, 5.7 in Washington-Baltimore and 13.2 in San Diego. It is estimated that more restrictive land use regulation raises the price of the least expensive detached houses from nearly $30,000 (in Minneapolis-St. Paul) to more than $220,000 (in San Diego) than would be expected if these metropolitan markets had retained less restrictive land use regulation (Figure 2).

Ironically, smart-growth proponents are still peddling the myth that “sprawl” is the main problem, rather than their misguided central planning. Take this new report from left-wing environmentalist and “[un]affordable housing” advocates, which claims that any of the benefits of cheaper housing on Virginia urban peripheries are outweighed by increases in transportation spending.

Of course, their analysis doesn’t consider the fact that the vast majority of Americans prefer to live in detached single-family homes on larger lots, as opposed to apartments in dense urban areas. This is particularly true of families with children. While demonizing cars, the report’s author fails to note that car ownership significantly increases employment opportunities and pay (and that this is particularly significant for lower-income minorities). His solution? Continuing the same aggressive central planning that made housing too expensive in the first place, that disproportionately harms the poor, and that likely helped drive the housing crisis.