Don’t forget the direct monetary interest of the cities in driving up prices. Just wait until the city extorts a large cash payment (excuse me, solicits a donation) for a project that’s nowhere near your development and thus, ethically speaking, has no reasonable relation to it, though your project won’t be approved without your generous voluntary donation. Add “impact fees” on top of that. California cities get around Prop 13 by charging over $100k per house in impact fees, which are a pure cash windfall to the city because the developer is paying for the additional water, sewer, and electrical infrastructure on top of that. Then they turn around and charge extra property tax on the now inflated sales price.

However, it seems to me that this analysis will help voters put their priorities in the right perspective. Because it all depends on how you ask the question.

If you ask the typical suburbanite:

“Do you want the hills next to your house to remain green?”

The anwser will probably be yes and they may also gladly sign a petition to propose more land use restrictions in the next election ballot.

However if you frame the queestion in terms of its impact:

“Would you work an additional 3 years without pay to keep the hills next to your house green?”

Then I’m not sure that you would get the same enthousiasm.

Because having to pay an additional $200,000 for the average, say, Seattle resident means exactly that, working an additional 3 years without pay, that is, to simply pay the planning premium and its resulting housing supply restriction. Even if one has in mind to someday move, the residents of the place you will one day move to are equally promoting land use restrictions that will increrase the cost of housing in this new place you want to move to.

Often people believe that it is always somebody else that will bear the burden of the regulations that they, as citizens, support and promote. This is not only unethical but it is also incorrect. Land use restrictions come back to affect the very voters that support and promote them, and in a very immediate way; an extra $200,000 on their houses, another 3 years of work, or retiring perhaps at 60 instead of 55. The impact on one’s life is staggering.

http://www.boston.com/realestate/news/articles/2006/11/05/smaller_homes_are_nonstarters/

The Anti-Planner is on the right track but not seeing the whole picture. Even without urban growth boundaries, restrictive zoning and land use laws push up the price of housing (and have for decades). In particular Minimum Lot Size restrictions push up the price of homes.

Myriad other zoning and land use regulations (which have no other purpose than to generate a higher tax base and ration what kind of people can live in a place), push up the price of homes, infrastructure costs, etc.

Remember that regulations cost money. If a developer could simply buy the land, file the change and title, have an architect draw up plans, and then build it and lastly sell it it would be less expensive. The problem is in getting the projects approved by the city. There are all sorts of costs involved in that, primarily being time. For example, a recent condo project had to revise their plans years ago. Part of was in an area the city had designated as being historic. It turns out they couldn’t tear down the house and had to incorporate it into their plans. That has direct costs (the cost to restore and remodel the house (in this case up to commercial standards so it can house a restraunt), costs to change plans, etc). It also means that less condos are being built. There’s a chunk of land where another 5-10 condos could have been. That means less supply in the city and less units to which the costs of building and maintaining can be spread across.

But the real kicker is time. This project took 5 years to complete. In that span of times we’ve gone from a housing market where you couldn’t go wrong to where nothing seems to sell. The risks are huge. And yes, they didn’t have to the project in the first place. But if they didn’t, that would mean 200-300 less housing units.

It is not the speculator it is the entire market, a market that has a lot of government intervention into it.

No wonder there are so many problems in this country with the general lack of understanding of economics. D4P, you should read something like: Economics in One Lesson (and some others) — start with that one. When you are done come back and re-post here.

http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1203109796&sr=8-1

Ok, how about looking at it this way…

Let’s say that you would love to own my house. If I am willing to sell my $500,000 house for $250,000 who will I sell it to, you? I will have my choice of literally thousands of buyers. Do I just pick the first one that shows up at my door? Do I pick the one that looks like me? Do I pick the one who tells the best story?

In most instances I would probably sell to a speculator because they would probably be most likely to contact me first since it would be their business to check listings every 5 minutes and they could get in their car and be at my house in 10 minutes where you are probably at work. They might have a very polished story and be excellent at “closing the deal”.

After selling my house for $250,000, the new owner would most likely just turn around and re-sell it for $500,000.

What did I accomplish? Did I lower housing prices or just make the investor $250,000 richer? Is what I did any different from selling for $500,000 and walking up to a stranger on the street and handing them $250,000?

I was thinking Eugene instead of Corvallis, apologies for the confusion. Wu at OSU.

DS