Houston famously has no zoning, but most American cities have some kind of planning and zoning. The Antiplanner’s faithful ally, Wendell Cox, divides these cities into two kinds: those with responsive planning and those with prescriptive planning.
Responsive planning, said Cox in his presentation (3.8MB PowerPoint show) to the Preserving the American Dream conference in San Jose, is planning that zones land in response to market needs as expressed by developer’s plans. Prescriptive planning, such as smart growth, tries to impose planners’ visions on the cities and surrounding countrysides.
Smart-growth advocates often claim that responsive planning is “developer driven,” which in a sense is true. But developers in turn are driven by the market, which is driven by what people want.
Cox shows that prescriptive planning can increase housing prices by the equivalent of 10 years of median family incomes. This high cost is in turn driving people out of the regions with prescriptive planning. Were it not for foreign immigration, the population of regions like Boston and San Diego would be declining at 4 percent or more per year. While Portland is growing, most of that growth is taking place outside of its urban-growth boundary (and the growth that is left is driven by California’s even higher housing costs).
The influence of planning on housing affordability is hotly debated among economists and planners. Cox’s presentation presents several important new concepts that will improve that debate.
A DVD of Cox’s presentation is available for $5 plus shipping; to order, contact the American Dream Coalition.
I’d like to see three things in Cox’s “analysis” that were sorely lacking:
1. The trend of rents for single family houses and apartments in the various areas, and how they compared to the housing bubble price trends. Certainly if there was a major shortage of housing, you’d see the same sort of widespread differentials in rents that you see between rents and local wages in resort areas such as the Monterey Peninsula or Santa Barbara.
2. Some effort to distinguish the price runups allegedly caused by land shortages due to Smart Growth from those caused by the housing bubble speculation. There is no doubt this accounts for a very large share of the runup beginning in 2000, but you wouldn’t know it it looking at Cox’s charts.
3. Some effort to distinguish the price runups resulting from the decades-old practice of downzoning, which is very common in California coastal areas and began to have negative impacts on housing affordability in the 1960’s.
Cox’s entire thesis is dubious until he accounts for these factors. As it stands, his assertions would never pass any sort of peer review. In Northern California, housing prices skyrocketed through most areas, including many far away from the Bay Area (Chico, Redding, Elk Grove, Placer County, etc.) that may have had some bouts of Smart Growth rhetoric, but no substantive restrictions on the land supply.
Developers need governments to protect them from each other. Developing metropolitan areas without honest, competent government regulation would be like playing the World Series with no umpires.
Close to real example – some developers build in the flood plain, some build on the hillsides, some build on the plateaus. Then the rains come and the water from the roofs, roads and parking lots on the plateau runs down and the builldings slide down the hillsides and the buildings in the floodplain are flooded.
Tad:
That is a very true statement. However, said umpires need to know backwards and forwards the rules of the game. In this case, the market. There are plenty of ways to guide the market without inhibiting it. That’s something that planners and anti-planners can’t seem to understand. Planners think the market is a failure. Anti-planners think any kind of guidance is obstruction. Ultimately, both just want control. Well, I’m a planner, and I am not here to control and unfortunately I am well in the minority in my profession, but I will say this: I know the rules.
Tad, Houston has no umpires and LA (both of them) are full of Umps. Which one has the problems?
If the umpires stayed out of the way and the govt. didn’t bail people out, the PRIVATE insurance companies and lenders would pretty much be all the regulators that developers would need.
msetty said: 2. Some effort to distinguish the price runups allegedly caused by land shortages due to Smart Growth from those caused by the housing bubble speculation. There is no doubt this accounts for a very large share of the runup beginning in 2000, but you wouldn’t know it it looking at Cox’s charts.
JK: Why not compare the runups to those in Atlanta and Houston?
msetty said: 3. Some effort to distinguish the price runups resulting from the decades-old practice of downzoning, which is very common in California coastal areas and began to have negative impacts on housing affordability in the 1960’s.
JK: Isn’t downzoning just another way to create land shortages?
msetty said: Cox’s entire thesis is dubious until he accounts for these factors. As it stands, his assertions would never pass any sort of peer review. In Northern California, housing prices skyrocketed through most areas, including many far away from the Bay Area (Chico, Redding, Elk Grove, Placer County, etc.) that may have had some bouts of Smart Growth rhetoric, but no substantive restrictions on the land supply
JK: Care to name a few that have “no substantive restrictions on the land supplyâ€Â, but have rising prices, say to a greater degree than Atlanta and Houston?
(When is the planning class going to admit that they have screwed a whole generation out of their ability to own a home? And have forced many out of their homes due to rising taxes and rising rents?)
Thanks
JK
Gridlock:
Cox’s “analysis” is worthless unless he addresses my points. Cox compares west and east coastal areas with Houston and Atlanta, which didn’t have a cost runup compared to other areas, but still suffered from a large number of subprime mortgages like most places.
It may be that Gridlock Karlock is actually a computer program programed to respond to random text entry, an updated version of the old computer program “Eliza” which replies in a number of set ways regardless of what you type in.
downzoning
Practiced mostly in affluent, often job-rich communities such as the San Francisco Peninsula and Marin County to keep “them” (usually the local work force) from lowering property values by construction of an adequate housing supply. New Urbanists are AGAINST this–because it prohibits the higher density mixed use developments they advocate.
“Care to name a few that have “no substantive restrictions on the land supply” but had rising prices
Chico, Redding, Elk Grove, Placer County, etc. Oh, yeah, Reno, Carson City, Bakersfield, Lancaster, Palmdale, Santa Clarita, Victorville, Moreno Valley, Temecula, etc.
All of these places had absurd speculative runups in housing prices but without any restrictions on land supply, no growth management, or New Urbanist developments. And most are suffering from declining prices and a high rate of foreclosures.
Hey Gridlock Karlock:
Houston and Dallas had THEIR housing bubbles in the early 1980’s, in the wake of the sky high oil prices during that period.
This is explained at http://www.housingbubblebust.com/HM/HM-Main.html
In San Jose land for homes is priced at one million an acre. Adjacent on the other side of the Urban Growth Boundary, not developable, in large parcels can be $50,000 an acre. New office buildings, never used, have been taken down to build housing. Adjacent is the 7,500 acre Coyote Valley under planning proposals for 20 years and can not get a plan approved. Planning and Zoning must have something to do with averaged home prices of $800,000.+ and still increasing today.
Response to John Galt:
Both Houston and Los Angeles have many serious problems.
I lived in Houston for four years when I was taking up space at Rice University. I liked it there. I was sad to learn that they ran a deadly train track near Rice. Houston is farther from the Gulf than LA is from the Pacific and LA has some constraining hills to limit development, so there is more room for Houston to expand.
I really like to breathe and both cities have problems with air pollution so I prefer to live where I live now, Clark County, WA.
The insurance companies and lenders haven’t been doing too well lately, ethically and reputation-wise. I saw a sign in a photo of a Katrina survivor which said something like “Katrina may have been an act of God but State Farm is the devil”. The lenders have lent a lot of money to people who can’t pay it back. They have hurt the borrowers who are going bankrupt, the investors who bought the packaged mortgage derivatives, and economies of several countries.
msetty msetty said:
It may be that Gridlock Karlock is…
JK: Still acting like a grade school child, I see.
Typical planner. Has to resort to name calling when he can’t defend his bad ideas and lies.
Thanks
JK
obviously the livability and attractiveness of places has an impact on the real estate values, to which it is questionable whether Houston and Atlanta are as nice as Portland or California (just one generalized example). We could try to make places more affordable by making them horrible places to live, but is that the best solution or the pareto efficeint solution. (Open up a tannery in my neighbourhood, that would help with affordability!)
It is because places are nice that they allow planners to get a foothold. If they were not nice they would die with all that planning. A chicken and egg issue.
Ahem.
And an interesting blog post commenting on who has more power over land use (a làGlaeser, if we all remember correctly). So the market has issues in Houston too. Huh.
DS
Dan said:
…Now, [a] wide-open approach has come back to haunt Houston, the nation’s fourth-largest city and the only major U.S. city without zoning laws to control development. Plans to build a 23-story condominium tower among the million-dollar homes of two stately neighborhoods here has appalled affluent residents and put local politicians in the hot seat.
…The problem is, without zoning laws to regulate land use, the city can do little to thwart the project other than apply traffic restrictions and write sternly worded letters.
…
The condo-tower dustup is just the latest in a string of odd situations allowed by Houston’s lenient land-use rules. Rowdy cantinas, rock-crushing operations and commercial dumps sometimes pop up in residential neighborhoods. Condo towers sprout next to schools. A pay-by-the-hour motel operates less than a block from a Baptist church.
And an interesting blog post commenting on who has more power over land use (a làGlaeser, if we all remember correctly). So the market has issues in Houston too. Huh.
JK: Err, just how is this better than Oregon’s government planners declaring that a single family neighborhood is now suitable for 4 story condos as far as the eye can see?
Or the planning elite declaring that your single family, large lot, neighborhood shall now have at least one “home†per 1000 sq feet. And if you house burns down, your must replace it with ticky-tacky little houses if you don’t rebuild within one year?
Please give me a break from that “planner knows best crapâ€Â.
PS: Light rail costs too much does too little.
Thanks
JK
The problem is, without zoning laws to regulate land use, the city can do little to thwart the project…
This is not a problem. This is the way the community has repeatedly shown it wishes things to be.
A pay-by-the-hour motel operates less than a block from a Baptist church.
There are plenty of examples of churches operating in seedy areas. For some, it’s part of their mandate. In British Columbia, one church in a more refined setting is being taken to task because it operates a soup kitchen and outreach program, drawing the homeless. The neighbors don’t like it, so they’re trying to bring it to a halt. Zoning might prevent these two operations from operating in the same area, but the fact that this situation exists probably demonstrates a more faithful representation of community desire than anyone would care to admit.
The point being, of course, that the responsive planning in the condo project above is a typical response across the country – density is desired by the market, but a few homeowners wish to retain their property values and so petition the electeds.
Glaeser, who we like to quote so much here when it suits us, calls this out explicitly as a reason for rising housing prices in the northeast (‘this’ being zoning changes enacted to ensure density doesn’t ruin existing [new] home values).
Another subtle point is that the market is calling for high-density housing and not quarter-acre lots so loved and fetishized over by a small minority.
DS
Another subtle point is that the market is calling for high-density housing and not quarter-acre lots so loved and fetishized over by a small minority.
Not so subtle a point; actually the main point. Downzoning has been occuring for decades and running up against market demands, particularly in coastal California. Compared to this, Smart Growth and New Urbanism is microscopic in its impact, a fact that Cox chooses to ignore since it blows his line of argument out of the water.
I see Gridlock Karlock doesn’t like my new pet name for him, and then whines when he has no rational answer to my points. It must be really frustrating when so many ignore one’s rantings and tortured interpretations of various facts.
#11 said : “obviously the livability and attractiveness of places has an impact on the real estate values, to which it is questionable whether Houston and Atlanta are as nice as Portland or California (just one generalized example)”
Glaeser has performed outsanding work separating “the cost of attractiveness”, i.e. Hedonic price, and “regulatory costs”. It appears that regulatory costs are much haigher that hedonic one. These findings are supported by empirical evidences: in 1995, differences in “attractivity” were the same, and price differences were much lower.
And you must be careful of what you call attractivity: Houston, Atlanta and DFW had a stronger demographic trend during the last 10 years, than every metro area in california. So this may be a quite good indicator of superior “attractivity”
Latest point: what is “livability” if you can’t afford a decent housing with median income ? or less ?
Cox thesis is from my viewpoint perfectly valid.
Glaeser has performed outsanding work separating “the cost of attractivenessâ€Â, i.e. Hedonic price, and “regulatory costsâ€Â.
If you want to reverse Glaeser’s “regulatory costs”, you’ll want to reverse human nature. That is: humans are asking the electeds to zone to protect their property values.
Folks fail or “forget” to mention this little bit about Glaeser’s findings.
DS
Dan, just because a vocal minority wants “protection” it does not mean it is good for all. Farmers ask for “protection” and subsidies but that makes food more expensive for consumers and limits development in the world’s poorest countries.
From the steel industry to the car manufacturers, small groups want to lobby the government to “protect” their values rather than allow the market to rule. When the government does it, the majority suffer.
Dan, just because a vocal minority wants “protection†it does not mean it is good for all
I provided no value judgment. I merely related the state of things on the ground. Folks wanna blame th’ regalayshun without stating where it comes from. Well, it comes from homeowners. Let’s keep that straight. Check that: that ruins some arguments here, so I’ll continue to keep it straight.
DS