Growth management is arguably the biggest planning disaster of the last decade. Though it didn’t kill as many people as the ineptly planned war on terror, it cost far more money and led to enormous financial and social pain all over the world.
We said that growth management made land and housing more expensive (link goes to excerpt from The Vanishing Automobile). Planners denied it, even though increased land and home prices greatly contributed to their stated goals of getting a greater share of people to live in multi-family housing or on smaller lots.
When housing became unaffordable, planners blamed “greedy developers” and imposed affordable housing mandates on new developments, which simply made the overall housing market less affordable.
We warned that growth management was causing housing bubbles that put the “whole world economy at risk” (first link goes to excerpt from The Best-Laid Plans; second link goes to The Economist — registration required). Planners ignored the warning.
When the housing bubble burst, people blamed the Federal Reserve for keeping interest rates too low. But Houston (which does not have growth management) enjoyed low interest rates as much as San Francisco (which does), yet San Francisco had a housing bubble and Houston did not. As we repeatedly showed, there is an almost perfect correlation between states and metropolitan areas that used growth-management planning and housing bubbles.
When the collapse in housing prices led to an economic crisis, people blamed the Community Reinvestment Act for leading lenders into making zero-down and other high-risk loans. But the CRA was passed in 1977, while political pressure to reduce loan requirements (such as minimum down payments) began only after growth management made housing unaffordable in heavily populated states like California, Florida, and Massachusetts.
Lenders who made loans now regarded as risky counted on the fact that housing prices tend to be fairly stable even in recessions. What they didn’t realize — because planners told them it wasn’t true — was that growth management makes prices far more volatile — prices that might fall by 10 percent in a recession without growth management can fall up to 50 percent in an area with growth management.
Now planners are promoting the idea that people are better off renting. Yet homeownership has proven benefits for children and other family members, especially low- and moderate-income families that can’t afford the services needed to raise children in high-density environments.
Over the past decade, rail transit planning disasters cost taxpayers about $100 billion. The war on terror planning disaster cost American taxpayers about $1 trillion and also cost America much of its international prestige.
The growth-management planning disaster cost far more. It unnecessarily added around $5 trillion to the cost of housing. Responding to the financial crisis also added something like $3 trillion to the federal deficit to date with more to come and also cost capitalism much of its international prestige. While it is hard to weigh these costs against the unknown number of lives that were unnecessarily lost because of inept war-on-terror planning, it seems like that the negative effects of growth-management planning will be around for a lot longer than those of these other planning debacles.