Someone Teach Him the Laws of Supply & Demand

With its “vibrant mix of residential, retail, commercial and green space,” Arlington County, Virginia is exactly where a lot of Millennials in the Washington DC area would like to live–at least according to one such Millennial named Harrison Godfrey. However, many can’t, as the median home price is $550,000, which is far more than two professionals who each earn $50,000 a year can afford.

Godfrey has apparently never taken an economics class. At just 26 square miles (compared with an average of 450 miles for the rest of Virginia’s 94 counties), Arlington County is in reality a small city. According to the 2010 census, it is 100 percent urbanized with a population density of 8,000 people per square mile.

By comparison, the urbanized portion of Montgomery County, Maryland is just 3,500 people per square mile. In other words, there really isn’t any more room to build in Arlington County, at least not without displacing a lot of people who live there now–which would probably mean some of the ethnic minorities that help make the county “vibrant.”

The next county south, Fairfax, is more than 80 percent urbanized to a density of about 3,400 people per square mile. Building there would mean displacing a lot of wealthy suburbanites. The next county to the west of Arlington, Loudoun, is only 20 percent urbanized to a density of 2,700 people per square mile, so there’s lots of room for growth. However, the county board has zoned most of the county for 20 acre lot sizes, preventing any new subdivisions.
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Arlington, says Godfrey, “requires long-term planning and investment, which is why it’s important for millennials to engage in the new planning process unveiled by the county council.” Actually, he has it backwards: it is planning that got northern Virginia into this mess. Moreover, government planning is always going to be more responsive to the desires of the people who already live (and vote) in a place than to those who want to move there (but may never do so which means they’ll never vote there).

Arlington is just one example of a community that has become unaffordable thanks to planning. The Antiplanner’s faithful ally, Wendell Cox, has just published his latest International Affordability Survey, which looks at urban-area-by-urban-area affordability in six English-speaking countries plus Hong Kong, Japan, and Singapore. As Cox notes in a related article on Huffington Post, until a few decades ago, nearly all of these places were equally affordable. Now, thanks to planning, some are far less affordable than others while some remain as affordable as ever. As a New Zealand economist cited by Cox notes, “the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land.”

Godfrey’s expectation that government subsidies and careful planning will somehow make Arlington more affordable is doomed to disappointment That’s exactly what places like Boulder and San Francisco have been doing for decades, yet the only thing that has (temporarily) made such places more affordable is a devastating economic crash.

While that’s not a prescription for Millennial happiness, what we can hope for is a downsizing of the federal government that will reduce the competition for DC-area housing. In the meantime, Godfrey should take unaffordable housing as a sign that perhaps he would be more productive living in some other part of the country.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

12 Responses to Someone Teach Him the Laws of Supply & Demand

  1. OFP2003 says:

    I rented in Arlington County when Vice President Gore launched an initiative to dramatically reduce government regulations and government size. I actually included that as “risk factor” in my calculations as to whether to continue to rent or to buy. That is kind of when I learned not to listen to Mr Gore.

  2. letsgola says:

    How odd that urban growth boundaries would contribute to housing unaffordability, but single-family residential zoning – by far the most prevalent land use restriction in the US, probably even in Arlington County – somehow doesn’t.

  3. msetty says:

    You’re wasting your time, letsgola, in pointing out actual facts that falsify the a priori conclusions here. The high demand for “close in” housing such as in Arlington doesn’t increase housing prices there either, you see.

  4. metrosucks says:

    Oh msetty, you forgot to add “F.Y. in advance, Metrof—-ky.”

    You see, people like letsgola and msetty just hear “I want to be able to walk to the store”, and ignore all other things people might want from their home and neighborhood. For example, good schools, low traffic congestion, affordable housing prices, etc. Of course, this feeds into their narrative that everyone secretly wants to live in Manhattan and only the evil D.R. Horton sprawl conspiracy keeps them from fulfilling their density dreams.

    Sure, if I could have everything I wanted, I’d like a 5000 square foot lot with a 2500 sqft home 1/4 mile from the grocery store and a mile from work. But, real life is a compromise.
    The truth is, being able to walk to the corner store is not very high on peoples’ priorities. An affordable, decent house, good schools, and other such things are, oddly enough, much higher on those lists. Something conveniently ignored by all the smart growth loonies.

  5. Frank says:

    The argument that urban growth boundaries increase housing prices by reducing supply ignores the fact demand for a single-family house close in is high. As the AP points out:

    “By comparison, the urbanized portion [insert place name here] is just [insert population density here]. In other words, there really isn’t any more room to build in [insert place name here], at least not without displacing a lot of people who live there now”.

    Although infill—where it’s allowed by law—can add inventory without displacement. But it diminishes the privacy of single-family homes; might as well live in an apartment if your SFH is in such a dense area that your lawn is gone and you can look out your window and see—and hear—the neighbors in their dwelling just a few feet away.

    To support metrosucks’ assertion (again), walkable neighborhoods are not as high a priority for most people (by a ratio of 1.5 to 1) as living in a single-family home.

    Why?

    Because density sucks. Being stacked like rats in a cage in a massive building with thin walls and little privacy sucks. It sucks so bad that people would prefer a longer commute to have a single-family home and the increased privacy it provides.

    Certainly msetty (given his choice of living on a sprawling grape farm miles from town where he must drive very far to get anywhere) and other planners who comment here agree that density sucks and that they, like the majority of Americans, prefer single-family homes. With a yard. Close to a school. Otherwise they’d be paying $1600 + ($162 for parking) to live in a 482 ft2 (assuming the landlord isn’t lying about the size) studio in Capitol Hill.

  6. Ohai says:

    Someone actually planned Arlington, Fairfax and Loudoun Counties? I always thought they were the result of unplanned, chaotic evolution: Cow paths turned into dirt roads, dirt roads turned into eight lane commercial strips. Forests turned into farm fields, which turned into culs-de-sac and McMansions, etc . . . Northern Virginia is practically exhibit B—next to perhaps Los Angeles—of how not to build yourself into a sprawling, car-dependent hellhole, which is another way of saying it’s exactly the kind of place the Antiplanner would approve.

  7. letsgola says:

    If only we had prices to help people figure out how much land and how much house they want.

    And FWIW, I love DR Horton! But for some odd reason, they don’t seem to have any cheap subdivisions available in Arlington County.

  8. letsgola says:

    BTW, this my neighborhood. Single-family houses get replaced by apartment buildings when the market makes it profitable, the horror! http://goo.gl/maps/oWmPe

  9. Frank says:

    “If only we had prices to help people figure out how much land and how much house they want.”

    If only government would get out of the price fixing business. Real estate has been heavily affected by the Fed’s and government’s collusion to fix the price of money and housing.

  10. gilfoil says:

    We need to distinguish between good government regulation and bad regulation. Good regulation, like requiring single family home zoning, does nothing but formalize what people want to do naturally. It simply protects people’s natural instincts to live as far away from other people as possible. Bad regulations, which allow multi-family zoning, force people into stack-and-pack housing and turns them into socialist parasite busybodies in “vibrant” neighborhoods infested with brew pubs and yoga studios.

  11. gilfoil says:

    letsgola, your google streetview that’s exactly the type of hell hole some of us are trying to avoid. There is inadequate street parking on this street due to the out-of-place multi-family building that looks as though thugs or bicyclists might live there. So glad I left LA before it turned into that.

  12. CapitalistRoader says:

    BTW, this is my neighborhood, where tiny, 1000 square foot single family houses are torn down to make room for modern 3500 square foot houses. The wonder! http://tinyurl.com/ko9xlxc

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