Housing and Economic Growth

Nations with well-functioning housing markets that are responsive to changes in demand will be more likely to grow faster than nations with strict land-use regulation, says a new report from the Organization for Economic Co-operation and Development (OECD). The report is a part of a series of studies known as Going for Growth that are promoting economic development.

The report (which is also summarized in this presentation) compared housing markets in more than 20 leading nations and showed that those with less regulation tended to have more affordable housing whose prices were less volatile. Some of the data in the report, however, were overly simplistic: the United States and Canada, for example, were each considered as single housing markets, when in fact housing policies and market conditions vary tremendously from state to state, province to province, and metro area to metro area.

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Unfortunately, it is probably impossible to develope a single, easily measurable indicator of land-use regulation that can be used to compare with housing affordability. The Brookings Institution has published a report on land-use regulation among the 50 largest urban areas in the U.S. Researchers at Wharton’s put together a database of land-use regulations for 10,000 cities. A University of Washington economist named Theo Eicher compared these regulations with housing prices in 250 cities and compared them with housing prices, finding that more regulation makes housing less affordable and offering precise estimates of the effects of different kinds of regulation on housing prices.

One important indicator is “how long does it take to get a permit to build a new home?” In Houston, you can buy land and obtain a permit to build, complete the construction, and be ready to move in within less than 120 days. In parts of California, a similar process can take more than 4.5 years, which makes it impossible for builders to respond to changes in demand. The Wharton database doesn’t measure that, but I suspect it is the most important determinant of whether a housing market meets the OECD definition of “well-functioning.”

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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.

29 Responses to Housing and Economic Growth

  1. Borealis says:

    There was a controversial article in the Boston Globe newspaper yesterday that is related to this:

    http://www.boston.com/realestate/news/articles/2011/01/23/if_we_build_it_they_will_come/?rss_id=Boston.com+–+Real+estate+news

  2. Dan says:

    I like the new Eicher talking point: making some assertion and pointing to a paper he can’t get published as evidence (and doesn’t list in his CV). Niiiiice! I also like the cherry-picking of the permit approval times, purposely omitting the argument about ‘differing jurisdictions’ that was such a great argument a few paragraphs before, and purposely not using a standard metric such as ‘average time to approval’ (getting it built has seasonality, labor, material, and other constraints, so ‘approval’ is the best you can do for comparative). Sweeet deception!

    Nonetheless, I really do like Randal’s newfound like of the importance of ‘changes in housing demand’. Maybe now we can get some decent discussion about eliminating single-use zoning that creates a sea of roofs as far as the eye can see and results in forcing people into their cars for the simplest task. Maybe there’s hope yet!

    DS

  3. Dan says:

    Yes, Borealis has found yet another Glaeser that says:

    More than half the land in Greater Boston has a minimum lot size of greater than an acre.

    That is: large-lot single-fam zoning ruins growth. Glaeser repeatedly states that the reason for the lack of growth in MA is because of landowners agitating for large-lot single-fam (i.e. sprawl). Isn’t large-lot SFD an image that the ADC fetishizes over?

    DS

  4. sprawl says:

    Single-use zoning should be the choice of the property owners, not the planners that do not have a stake in the property.

    I’m tired of people telling me how my property zoning must change, to please the planners and transit agencies.

    I originally chose my house because I like it being in a area that was surrounded by other homes and larger lots.

    It sure beat living in the downtown area 20 ft from my neighbors with a apartment staring down into my back yard.

  5. msetty says:

    So, sprawl, you’re in favor of government social engineering, such as large lot zoning, as long as it favors protection of your property values? It sound like the answer is “yes.” You’re obviously afraid that a functioning housing market in your area may result in higher density developments, given the demand for affordable housing and more housing in general.

    I also surmise you favor such government intervention in markets such as ongoing road capacity expansion to favor your chosen lifestyle, as well as off-street parking requirements, government housing rules that favor single family houses over higher densities and investment in older, established areas, the tax break for housing mortgages, and other forms of government intervention that favor your preferences, regardless of whatever other needs and types of housing demand may exist out there?

    This is all quite a hard fit here, given the allegedly “free market” emphasis of The Antiplanner’s blog.

  6. metrosucks says:

    I saw a lot of reasonable data and well-reasoned analysis in Cox’s report. Guess what, the BS & hand-waiving was coming from the leftists on this blog, not Wendell.

  7. FrancisKing says:

    “One important indicator is “how long does it take to get a permit to build a new home?” In Houston, you can buy land and obtain a permit to build, complete the construction, and be ready to move in within less than 120 days.”

    As long as, in their haste, they remember to check for snakes.

    http://www.msnbc.msn.com/id/41201177/ns/us_news/

  8. bennett says:

    sprawl says: “Single-use zoning should be the choice of the property owners, not the planners that do not have a stake in the property.”

    Again, I’m astonished to find that so many here view SF zoning as a result of something outside government intervention. It’s “zoning,” and therefore a function of government regulation. The SF zoning that you prefer in your neighborhood is a direct result of the government planning you say you don’t like.

    You can’t say “I’m against zoning, because I like the zoning I currently have.” That’s akin to “Keep your government hands out of my medicaid.”

    Once again we see that the Antiplanners’ love planning that results is forms and functions that they prefer. Planning that results in anything else??? Well, that should be abolished because it restricts our freedom! Gimme a break.

  9. bennett says:

    I also love the semantic game that’s play by our two opposing sides in this debate.

    Antiplanners’: “Makes housing less affordable…”
    Planners: “Increases property values…”

    I also think its interesting how each side values affordable housing. “Affordable housing” to Antiplanners has a strong correlation with government regulation, therefore making places with less regulation easier for developers to build and less susceptible to bubbles. Houston therefore, doesn’t have an affordable housing problem.

    For planners, “Affordable housing” exists mostly in an equity context. Look at Houston, for example. While it may be easy for builders to get a permit in Houston, there is still tremendous gentrification pressures in Houston due to skyrocketing property taxes and rapid new development. “Affordable” property for those who need it most is being bought up by those who need to turn it fast. Houston therefore, has an affordable housing problem.

    Both sides have a point here. As often, it comes down to the sink or swim/completely self-interested team vs. the communitarian/help those who need the most help team.

  10. Borealis says:

    Actually I think there is a lot of common ground among commentors.

    Most people seem to be against both maximum and minimum lot size for new development, and against changing zoning in existing developments. Many modern developments have home owner associations and property covenants that make zoning irrelevant.

  11. Dan says:

    Actually I think there is a lot of common ground among [most] commentors. Most people seem to be against both maximum and minimum lot size for new development, and against changing zoning in existing developments.

    Agreed.

    Many modern developments have home owner associations and property covenants that make zoning irrelevant.

    They are still built with underlying zoning. Covenants are piled on top of zoning and often are far more restrictive than typical zoning (hence the occasional backlash somewhere). Covenants in a PUD can replace some aspects of zoning, but the PUD is negotiated as an alternative to some forms of zoning – usually to overcome min lot sizes/density restrictions.

    DS

  12. bennett says:

    Borealis says: “Actually I think there is a lot of common ground among commentors. Most people seem to be against both maximum and minimum lot size for new development…”

    Me too.

    “…and against changing zoning in existing developments.”

    Not entirely. I think this is context specific. I’m not in favor of re-zoning large swaths of SF to vertical MU, but I think commercial corridors is specific areas can be increased in intensity. I think residential zoning codes can be amended to allow for secondary dwelling units (granny flats) in SF areas as a way to increase density without compromising the character of the neighborhood, and so on…

    Zoning Codes should be updated every so often and reflect the values and needs of whatever community they regulate. I don’t believe in once zoned, forever zoned.

  13. Borealis says:

    Those are some good additions, Dan and bennett.

    I think I read here that Portland was forcing smaller lot size on any rebuilding in certain neighborhoods. I think most commentors objected to that type of rezoning.

  14. LazyReader says:

    Outside this article but…..What does the antiplanner have in the may of information about the fear’s of Peak Oil, problemmatic or not? If not you someone else at the CATO institute??

  15. LazyReader says:

    Does anyone know the gas mileage of Al Gore’s Limo? Bono’s private jet? James Cameron’s helicopter?

  16. metrosucks says:

    So here is a summary of msetty’s arguments:

    1.Government once regulated and zone in favor of suburbia

    2.People now like suburban living

    3.Government doesn’t like suburbia anymore and wants everyone to live in sardine can lofts in the Pearl.

    4.Because people were once OK with suburban planning/zoning, they must now be OK with new government efforts to re-engineer everything.

    Wow, sounds quite reasonable, if you’re a leftist nut!

  17. sprawl says:

    The zoning in my neighborhood (in the 1950’s) was planned by the developer, that went to the neighbors to have them sign off on a petition, changing the farm into a housing development. The farmers son and grandson, live a block from me still.

    I chose to move here because I liked how the area was developed and agreed with the zoning and like the idea that the zoning could only be changed if enough of my neighbors signed off on a petition, for zoning change.

    That has all changed now, because we have lost local control of zoning changes to the Planners, that don’t really care about my neighborhood and can change my zoning, without my or my neighbors permission.

  18. sprawl says:

    Msetty I surmise you favor such government intervention in markets such as ongoing light rail, streetcar and transit expansion to favor your chosen lifestyle, as well as government housing rules that favor high density developments and investment in density projects, the tax break for Smart growth, and other forms of government intervention that favor your preferences, regardless of whatever other needs and types of housing demand may exist out there?

  19. bennett says:

    sprawl says: “That has all changed now, because we have lost local control of zoning changes to the Planners, that don’t really care about my neighborhood and can change my zoning, without my or my neighbors permission.”

    What fantasy world are you living in where planners are omniscient and can change anything they want without, politicians, buy in from locals, public processes, and more public processes, and then more public processes, public meetings, public hearings, a charrette, public comment periods, followed by more public comment periods, public surveys, and a few more public meetings for good measure.

    Conditions on the ground change. As planners become aware of this they take this data, analyze it and present the findings to the public. During this process you always bump into the “I like it the way it was, don’t change anything” crowd. The problem is change is occurring, and conditions will not remain the same whether there are plans or not.

    The human element can be a bitch, and as a result not all plans/zoning changes/FLUM’s/etc. are noble and good at heart. If conditions in and adjacent to where you live are changing and the government is creating plans to account for said change, my suggestion is to show up once and a while and make sure your voice is included in the process.

    Despite what you may think, public planners do not have predetermined plans. The result of plans in a particular area, more often than not, have much more to do with the attitude of locals, the attitude of local politicians and local conditions.

  20. bennett says:

    metrosucks says: “So here is a summary of msetty’s arguments:

    1.Government once regulated and zone in favor of suburbia

    2.People now like suburban living

    3.Government doesn’t like suburbia anymore and wants everyone to live in sardine can lofts in the Pearl.

    4.Because people were once OK with suburban planning/zoning, they must now be OK with new government efforts to re-engineer everything.

    Wow, sounds quite reasonable, if you’re a leftist nut!”

    Hidden in this analysis is the democratic process. Let’s think about why Portland is Portland and why Houston is Houston. Don’t you think it has more to do with the people that live in those cities than the tyrannical government forces that regulate each city?

    Also, is there really a shortage of suburban style SF zoning out there? If your really worried about the tyrannical government’s war on SF zoning, you shouldn’t be. They’re loosing!

  21. msetty says:

    Metrosucks, a sure sign that your position has little merit is lying about what someone said. I never said “stuff everyone into sardine cans.”

    The point is to allow construction of higher density housing where there is a market for it, that’s all. And yes, there is PLENTY of low density zoning to go around. In fact, there is a huge supply of foreclosed single family housing around right now; at least in Northern California, the availability of such housing increases drastically the farther from the central Bay Area.

    Right wingers–or it is “conservatives”–like you, Metrosucks, would gain more credibility if you stopped lying about what we’re saying, as well as the a priori claims about those of us “left of center” are crazy. Your rhetoric shows you to be a right wing “nut” troll.

  22. bennett says:

    “The point is to allow construction of higher density housing where there is a market for it, that’s all.”

    Funny that a conservative would be upset by removing a government regulation that restricts the freedom of an individual to develop their property as they wish.

    Antiplanners such as Metrosucks are only antiplanners until planning results in their preference. Of course then it’s not “planning” it’s just they way it should be.

  23. msetty says:

    Sprawl, I’m all in favor of road and parking pricing, as well as assessing the act of driving for the all the social, environmental and economic negative externalities that activity is responsible for. That would “level the playing field,” offsetting a century of government social engineering favoring driving and sprawl, and dramatically improving the economics of transit and cities in the process. In this particular overriding principle, my position is mostly identical with the Market Urbanism blog, though I disagree with him in many details.

    Of course, the biggest problem is that people like The Antiplanner and yourself usually deny that such externalities and massive social engineering causes problems, or even exists.

    If you want to deny such things, fine with me. But you’d still be in denial, and fighting the solid economic principle that if someone gets great benefits from something, they should also be willing to mitigate the externalities. That is, though auto apologists chide my side regularly about the supposedly huge benefits of automobility, they don’t want the other shoe to drop, e.g., if such “benefits” are worth, say, $4 trillion per year, then mitigating the $1 trillion+ in annual negative externalities–or whatever the figure is–should not be a problem in the face of such alleged benefits.

    If you’re the least bit objective, you would review a wide selection of documents on this topic can be found at http://www.vtpi.org/documents/evaluation.php.

  24. msetty says:

    Economist Walter Block https://secure.wikimedia.org/wikipedia/en/wiki/Walter_Block“ of Loyola University, also a “senior fellow” of some billionaire asshole-funded, astro-turfed “think tank” called the Mises Institute in Auburn, Alabama, is generally a moral midget in his support of “slave contracts” and virtually all his other ethically-challenged “anarcho-capitalist” beliefs.

    While Block offers few insights, or anything morally defensible as any reasonable people would understand (“reasonable” excluding some people commenting at this blog), or of much value overall, he does offer a very useful description of auto apologists, such as those on this blog: “road socialists.”

    Despite the fact his overall economic and moral views are quite reprehensible, at least Block has made the factual observation that EVERYTHING about the highway/road/auto system has been a massive social engineering product of the government. You may think this is good, or bad; however, I don’t see how anyone can really deny that Block’s factual observations about the road system are correct, what he’d do about it beside my point.

  25. metrosucks says:

    You sound like an extremely intelligent libtard, msetty. Your frequent use of words like asshole completely convinces me that you have at least two or three doctorates.

  26. Scott says:

    msetty,
    Mises is not funded by billionaires. Astro-turf cannot even apply, since it’s educational & not partisan & doesn’t really approach political issue positions. Using your definition of Astro-turf, about all universities would fit that for leftism. Astro-turf is usually used inappropriately inaccuractely anyway, in that people are paid to pretend to like sides. That’s not true for Americans for Prosperity. It is true for many union members.
    http://mises.org/
    http://www.americansforprosperity.org/national-site
    http://fff.org/

    To look at money behind groups, consider George Soros (Open Socirty), he spends about $100 million/year on over 50 lefty groups in the US.
    http://www.discoverthenetworks.org/viewSubCategory.asp?id=1237

    If Block is a “mental midget” you should investigate the school that gave him the PhD. You should also be able to tear apart his writings, with stats, principles & reason, since all your claims must be based on so much substance & your braininess. Be careful when reality smacks your wishful thinking.

    Rather than continuous name-calling like a little dumb girlie, why don’t you mention points that are wrong by presenting facts & concepts?

    Who/what has filled out a slave contract? That’s an oxymoron.

    You really don’t deserve to live in the US. You should move to Cuba, Venezuela, NK or Vietnam. You will enjoy their many social goals, plenty of equality & very very few cars.

  27. metrosucks says:

    Thanks for expanding on and creating a great reply to msetty’s gibberish-laden post, Scott. I have read Walter Block’s work, and he does not make use of the same “colorful” vocabulary to make his points.

  28. the highwayman says:

    Ah come on Scott, AFP has links to Koch, just as O’Toole has links to Koch.

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