I previously posted about a growing antiplanning movement in Britain and a conference held on the impact of planning on housing prices. Someone sent me a PowerPoint show (7.2 MB) that was given at the conference that graphically demonstrates the problem with finding a place to build a home in England.
Click the image to see a larger picture.
The show is a bit large but worth the download. It was presented by Kate Moorcock Abley, who is affiliated with Audacity, one of the groups that put on the conference. Audacity’s director, James Heartfield, will be speaking at this November’s American Dream conference in San Jose.
Speaking of San Jose, I recently came across a 2002 study by California home builders about why housing is so expensive in Silicon Valley. I can’t find the study on line, but here are its findings.
online prescriptions for cialis You may buy Vardenafil online from the ease of shopping online. Aged Men After 50s As you age, your body parts become weak and so does quality of your life at its best. sildenafil buy online Too much exposure levitra prescription on line to diverse whether situations possibly will make the tablet inefficient. Kamagra has attained great reviews since it viagra online sales allows clients t activate their sexuality instantly after taking the jelly.
The study compared the cost of a 2,200-square-foot, three-bedroom house in San Jose and Dallas. The biggest cost difference was the land: a 2,400-square-foot lot in San Jose cost $232,000, while a 7,000-square-foot lot in Dallas cost only $29,000.
The next-biggest difference was the cost of the permitting process. Due to the lengthy and expensive permitting process in San Jose (and the risk that permits might never be granted), home builders there needed $99,750 “profit” per home, while Dallas home builders were satisfied with $9,900 in profits.
Labor was also a big factor. High housing prices increase labor costs, so San Jose home builders paid $143,000 in labor costs for a three-bedroom home while Dallas home builders paid only $100,000.
Finally, impact fees were $29,000 per home in San Jose but only $5,000 per home in Dallas.
Those who say that urban-growth boundaries are not “the” cause of unaffordable housing are right. The problem is urban-growth boundaries plus an onerous permitting process plus impact fees plus other regulatory costs. It just so happens that places with growth boundaries usually have lots of other regulations as well.
The shortage of buildable land has no effect on price of housing – we know that is true becasue the planners tell us. Of course they also tell us that adding thousands of people to the neighborhood reduces congestion.
Thanks
JK
Land no cure for housing crisis
Increasing the supply of land available for construction would do little to bring down house prices, the Campaign to Protect Rural England has said*.
According to a study** for the CPRE, rising house prices are a reflection of bigger incomes and mortgage loans.
The research tracked house prices, completions and housing land supply over periods of 10 years or more.
It suggests that proposals to relax planning controls could “unleash a new wave of urban sprawl” in the country.
[…]
John Slaughter from the Home Builders Federation told the BBC that it was a “myth” to suggest the industry had an agenda to dismantle the greenbelt.
Construction firms had adapted “very effectively” to increased building on brownfield land in recent years but in future may in some areas need to consider greenfield development due to shortage of land.
“There is, in principle, plenty of land there,” he said.
“The key issue is actually bringing it flexibly to the planning system so it has got permission to build on.”
DS
* http://tinyurl.com/2efsq5
** http://www.cpre.org.uk/filegrab/planning-for-housing-affordability.pdf?ref=3128
Antiplanner,
I spent about 9 weeks in the UK between December of last year and the end of April 2007 on three separate trips on behalf of my company. I’ve taken out of town trips to London and Oxford (distance – 67 miles), as well as London and Dover. I’ve also been to the Duke of Marlborough’s Palace, as well as to Stonehenge and the Cotswolds. I can tell you that there is plenty of open space everywhere you look in Britain.
Here is one blogger who talks about how much land is urbanized in Britain and how much is under greenbelt statutes:
http://timworstall.typepad.com/timworstall/2007/04/high_uk_housing.html
Mean current prices in the UK for housing nation wide are 200,000 pounds, while in London they are 300,000 pounds. The average rate for renting an apartment in London is 400 pounds per week. The housing to average income ratios in London are now over 10:1. The latest hysteria is that all of the old local pubs which have been around for centuries in London neighborhoods are closing because pub owners are finding that they can put their property to better use if they shut down the pubs and convert them into housing.
My colleagues there are all solidly upper middle class people and every last one of them are worried about what is happening to housing prices. At the same time, many Brits fall to the hysteria that their poor little island will all be paved over if they don’t keep everyone squeezed into their 5,000 square miles of urbanized area (out of 94,000 square miles).
One day one of my colleages made the outrageous statement that “we can’t just let London sprawl out like Houston! It would reach all the way to Basingstoke!” I kept thinking to myself that if these control freaks would only develop 1,000 square miles of land at low density (maybe 2,000 – 3,000 or so homes per square mile), then most of their self inflicted housing problems would probably be solved. And no, London would not need to come near to Basingstoke to achieve this.
And while they were at it, why don’t they buy out some property in London and widen those 1-2 lane streets in the inner areas so that traffic can flow at a rate that’s faster than 10 miles per hour during rush hours!
Thank the Heavens I’m back in Houston.
Pingback: Tuesday links 07-24-2007 : Real Central VA
so basically, in san jose the land is $200k more expensive per lot then in dallas. labor costs are about 40k more per unit. so its planning thats at fault? one would have to create a link between land value and planning and labor costs and planning to do that. but that connection has not been made.
it would be nice to know what the total fees are instead of that “we need x in profit” figure which is essentially arbitrary without the numbers backing it.
basically, the only thing that (loosely) corresponds to planning is the impact fees. labor costs alone account for some of that difference.
it would be nice to see how planning affects home value, and what sort of planning leads to what sort of outcomes.
it would be nice to see how planning affects home value, and what sort of planning leads to what sort of outcomes.
Voilà.
DS
Dan: Viola
JK: Nice find Dan:
From: brookings.edu/metro/pubs/20060802_Pendall.pdf
6. Housing prices are highest in the Growth Control and Exclusionary regions.
For at least 20 years, the main metric that has been used to determine the impactâ€â€and the
acceptabilityâ€â€of land use regulations has been the cost of housing (and usually the sale price
of owner-occupied housing). While this study does not evaluate whether particular regulatory
approaches cause higher housing costs, it does identify those that associate with systematically
higher self-reported housing values and contract rent.58
As reflected in Table 5, by far the highest housing prices in the U.S. are in the Growth Control
metropolitan areas, owing mainly to the sky-high prices of the San Francisco metropolitan
area. The average rent there in 2000 (around the peak of the dot-com bubble) was $970, about
$75 higher than the average in the Virginia suburbs of Washington, DC (the next highest
region). The average house value in the San Francisco metropolitan area that year was nearly
$425,000, a value $130,000 higher than in the next-highest New Haven area. Rents and home
prices in metropolitan Denver, the other Growth Control family, are much lower than in San
Francisco ($680 average rent, $220,000 average housing value), but the most “growth controlledâ€Â
parts of the Denver metropolitan area (Boulder County) have high prices that are
balanced by lower prices elsewhere in the metropolitan area. Thus it appears inarguable that
the Growth Control regulatory family, which combines a series of locally imposed and generally
uncoordinated urban growth boundaries with widespread building permit caps, associates with
high housing prices.
The other Reform families associate much less strongly with high housing prices. Average
rent in the Growth Management family is $640, and average home value is about $185,000.
The Containment and Containment Lite families had still lower rents ($554 and $580, respectively)
and house values (about $170,000 and and $160,000), on average. The High Density
family also has very high housing prices because of New York City. Salt Lake City has more
modest, but still higher than national average, housing costs.
The Exclusionary places also tend to have higher prices than the national average. Boston’s
Exclusion with Restriction leads, with average rent of $677 and housing value of nearly
$250,000 in 2000. Basic Exclusion and Extreme Exclusion have somewhat lower average rents
of $598 and $618, respectively, and housing values in the $170,000 to $180,000 range. In Middle
America a large share of the rental housing stock is old; new development at the urban
fringe has left large amounts of housing vacant in many central cities. Contract rents in these
regions, consequently, are the lowest of any regulatory family on average ($522).59 Average
house values are also very low at around $145,000.
The less regulated environments of Dallas-San Antonio and Houston have the lowest average
house values of the metropolitan areas we examined at $115,000 and $125,000, respectively.
But their rents, at about $550, are higher than the average contract rent of just $520 among
the Middle America metropolitan areas. The Austin metropolitan area was much closer to the
other two areas in Texas in 1990, but the fast growth of well paid technology employment raised
Austin’s average rent to $663 and its average house value to almost $165,000.
Thanks
JK
thanks DS for the post lunch read.
the last paragraph of that paper sure is anti-antiplanner!
it would be nice to see how planning affects home value, and what sort of planning leads to what sort of outcomes.
Voilà.
I’ve repeatedly linked to the original Glaeser and Gyourko paper. In the original paper, rather than a paid piece for a think-tank, the added implication is that in the NE the reason for the prices is from pressure by homeowners to rezone in such a way that property value is held. I’ve pointed this out numerous times on this site, in addition to pointing out what they say — and repeat in this paper — that
IIRC I’ve also linked to a Boston.com news arty saying the same thing explicitly:
In addition, CA has consciously tried to limit growth, as growth has numerous impacts on the state. Their growth controls are just that – growth controls. That’s what they do: control growth. That’s really not so hard to understand.
All this is an outcome of the community’s desires.
That’s how it is. Get over it.
HTH
DS
In the original paper, rather than a paid piece for a think-tank…
I haven’t read the original. Did the authors slant the paid piece?
That’s what they do: control growth. That’s really not so hard to understand.
It is so easily understood that I’m not sure to whom you are speaking. I don’t think any of the anti-planners have argued otherwise. That aside, do we all agree that regulation increases house prices? It seems clear to me that even privately governed neighbourhoods seek to enhance the value of their properties.
All this is an outcome of the community’s desires.
Unlike many libertarians, I maintain that there is a great deal of consent built into existing regulatory systems, particularly at the local government level. So long as those regulatory systems stay within bounds of their constitutions, acts, or whatever binds them, their decisions are legitimate. Yet despite the built in consent, I would be hard pressed to defend existing conditions as reflections of the community’s desires. Firstly, community desire isn’t static. Secondly, given that elected officialsgain by concentrating benefits and spreading costs, there is every reason to expect that the goals of a motivated minority will prevail. If where you work is like where I work, you have likely seen this for youself.
That’s how it is. Get over it.
Not on your life! ;^)
Anti-planners want a lot of the same stuff as pro-planners; we just disagree with you on the delivery system. If we can convince communities to prune back their governments, then I don’t see why someone who supports the will of the community would object.
Well, that’s an excellent response davek and I’ll back off a bit. I have indeed seen this for myself, esp in my old town in Western WA where we had these lot sizes and in effect they zoned out folks who wanted to come in. In the town I lived in the min lot sizes were even larger.
In fact, these types of lot sizes are usu. made to control growth, and in WA they’re emplaced outside of the UGB to as a surrogate UGB to keep people out or to protect farmland (as was the case where I was); whether this works or not is for another time. Certainly 15, 20 years down the line things change, but now you’re talking about asking people to move so more can come in, likely in opposition to why the occupants moved there in the first place. Then you’re into this inflammatory space. My overarching point here is that people move to these places because of their characteristics. And in the newspaper arty, folks on 2 acre lots likely give to campaigns, so their interest is maintaining the status quo.
Oftentimes we wish for easy solutions to these issues, but IME there are no easy solutions in complex socioeconomic and socioecologic systems.
DS
Dan That’s how it is. Get over it.
JK: Good God! Another Dan post that gets it (Dan doesn’t get it, but his post does):
Dan’s post selections
Only in particular areas, especially New YorkCity and California, do housing prices diverge substantially from the costs of new construction.
‘’the housing affordability crisis in Boston is manmade, created fundamentally by regulation.â€Â
‘’we’re hurting the region, we’re hurting the country, by not letting the region develop to its economic potential.â€Â
On 85 percent of the land in Lincoln, Whitehead said, the minimum lot size is 80,000 square feet, or nearly 2 acres.
Glaeser’s criticism of large lot sizes is ‘’pretty much on target.â€Â
According to the study, 95 communities zone more than half of their land for lots of at least 1 acre; 27 communities zone 90 percent of their land for lots of at least 1 acre; and 14 communities require minimum lot sizes of 2 acres on more than 90 percent of their land.
In addition, CA has consciously tried to limit growth, as growth has numerous impacts on the state. Their growth controls are just that – growth controls. That’s what they do: control growth.
JK: There you go. All of Dan’s points say that government regulations are main cause of high house prices That fact is unchanged by whether or not those regulations are popular.
Thanks
JK