Small May Be Beautiful, but Coercion Is Not

A new report from Oregon’s Department of Environmental Quality urges the state to give people incentives to live in smaller homes or disincentives to live in larger ones. A Life Cycle Approach to Prioritizing Methods of Preventing Waste from the Residential Construction Sector reviews the energy costs of various styles of homes and comes to the startling conclusion that larger homes require more energy than smaller ones. (How much did it cost to figure that one out?)

The report therefore recommends that the state “place incentives on smaller homes or disincentives on larger homes.” Why? If someone needs a bigger home, and they are willing to pay for it, why should the state care? Despite the coy use of the term “incentives,” what they really mean is coercive measures to arbitrarily make larger homes more expensive to force more people to live in smaller houses.

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The Case Against Time Magazine

Time used to be a news magazine with (for part of its history) a strong anti-communist slant. Apparently, news doesn’t sell anymore in the Internet age, as Time is now more of an opinion magazine.

So when last week’s cover story was titled, “Rethinking Homeownership,” the Antiplanner assumed this would be another smart-growth diatribe against urban sprawl with the usual talk about how “some people just shouldn’t own a home.” There’s a little bit of that: “Homeownership contributed to the hollowing out of cities and . . . fed America’s overuse of energy and oil.” But mostly it is just a lament that there have recently been lots of foreclosures.

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Financial Reform or Social Engineering?

Everyone agrees that, by lowering credit requirements, Fannie Mae and Freddie Mac played an important role in the recent financial crisis. Now the Obama administration has promised to reform those “government-sponsored enterprises” (GSEs).

However, as faithful Antiplanner ally Ron Utt warns, Obama’s idea of reform is more focused on changing American lifestyles than on preventing more financial debacles. Administration officials speak darkly of the “underside to homeownership” and hint that there are some people who should rent, not own. According to Utt, the hidden agenda is to promote more compact cities.

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Are the Rich the Biggest Defaulters?

Last week, the New York Times published an amazingly shallow article saying the “biggest defaulters on mortgages are the rich.” This contention is supported by a single pair of data: the owners of about 14 percent of homes worth more than $1 million are delinquent on their mortgages, while only “about” 8 to 9 percent of homes worth less than $1 million are behind in their payments.

The problem is, what is the Times‘ definition of “rich”? As one of the paper’s columnists pointed out a few days later, “Just because you have a million-dollar mortgage doesn’t make you a millionaire.” And if you live in a state that has a lot of growth-management planning, such as California or Florida, chances are good that you own a house worth more than $1 million simply because the median price of homes in many cities in these states was close to that much (or, in a few cases, more) at the peak of the bubble.

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The Antiplanner’s Library: Visiting Paradise

One of the Antiplanner’s co-speakers during a couple of events in Honolulu is David Callies, a law professor and author of two books on Hawaii land-use law: Regulating Paradise and Preserving Paradise. Hawaii passed the first statewide growth-management law in 1961, and still has about the strictest land-use laws in the nation. Not coincidentally, it also competes with California in having the nation’s least-affordable housing.

Regulating Paradise, a 1984 book that Callies is currently updating, shows that the 1961 law (sometimes called Act 187) is only one of several laws that have limited development of the state. Landowners in some parts of the state have to comply with as many as 30 different sets of regulations, from historic preservation to coastal zone management.

The original purpose of the 1961 law was to protect farmland. But Callies points out that this backfired. By limited urban development to about 5 percent of the Hawaiian Islands, the law made housing so expensive that farmers could not pay workers a living wage and compete with other tropical countries that grew similar crops. As a result, Hawaiian agriculture is in decline, and the only justification for the land-use law is to provide scenic views for upper-middle class urbanites.

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Florida vs. Klein

Is it ironic, or just self-serving, that Richard Florida, the man who urged cities to attract the so-called creative class with policies that made housing unaffordable, now writes a Wall Street Journal article (link to full article for non-subscribers) arguing that “homeownership is overrated”? Pay no attention to the facts behind the curtain, which are that growth-management policies encouraged by Florida’s ideas created an affordability crisis, which led policymakers in Washington to pressure lenders to loosen mortgage criteria so people could buy overpriced homes, and that growth-management also made prices more volatile so that eventually a large share of American homeowners would be underwater.

Florida can get away with his brazen approach because most of his followers don’t understand economics well enough to follow the above train of logic. As George Mason University economist Dan Klein points out in the very next day’s WSJ, when asked if “restrictions on housing development make housing less affordable,” 60 to 70 percent of liberals and progressives incorrectly answer “no.” By comparison, only 16 percent of libertarians and less than 23 percent of conservatives said “no.”
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This raises some interesting questions. Does economic ignorance lead people to lean left? Or do progressives cultivate economic ignorance? Klein doesn’t speculate about the answer. However, I suspect that some people find economics to be more intuitive than others, and those who don’t easily understand it are more likely to be attracted by flim-flam artists such as Richard Florida.

Let Them Rent Tenements

A couple of weeks ago, Barney Frank (in explaining the financial crisis) said that we shouldn’t push “low income people into owning homes that they can’t afford.” Last week, an economist wrote in the Wall Street Journal that “the poor are better off renting.”

All of this pious blaming of the meltdown on poor people misses the point: the mortgage crisis wasn’t caused by poor people buying houses they couldn’t afford. It was caused by middle-class people buying homes made unaffordable by urban planners. As previously noted here, most foreclosures in the last couple of years happened to people with prime, not subprime, credit ratings, suggesting that most were middle class, not poor.

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Growth Management: The #1 Planning Disaster

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.

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Subsidies More Than the Homes Should Cost

A story caught my eye that the state of Oregon is giving “$70.5 million in loans and tax credits to contractors throughout the state that will help fund 444 units of affordable housing.” That’s almost $159,000 per “unit.”


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Portland’s Uptown Tower received $128,000 in subsidies per housing unit.

The article doesn’t say how much is tax credits and how much is loans, but a news release from Oregon Housing and Community Services indicates it is mostly tax credits and grants. The total funds listed in the press release fall short of $70.5 million, but the grants and tax credits provided to individual projects often exceeded $100,000 per home.

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