Speaking of housing (as the Antiplanner was doing yesterday), San Jose State University economist Edward Stringham gave a great lecture at the Preserving the American Dream conference in San Jose a couple of weeks ago. Dr. Stringham’s presentation (3.7MB PowerPoint file) focused on inclusionary zoning, which is the traditional urban planning solution to high housing prices.
Keep in mind that urban planning is usually the reason why prices are high in the first place (though there are a few exceptions, such as Las Vegas, where land shortages are the result of the government owning most of the land in Nevada). But the planners try to deflect the blame to greedy developers. Their solution is to require those developers to sell or rent a fixed share — usually 15 percent — of new homes at below-market prices to low- or moderate-income families.
Economic theory would suggest that developers will pass most of the cost of inclusionary zoning on to the buyers of the remaining 85 percent of homes. This will make new housing even more expensive than it was before, which in turn will lead owners of existing homes to ask more for their homes when they offer them for sale.
You have to make your sex sexier with online viagra pills a lot of complications into your relationship. Indulge in wines and lowest price for viagra chocolates. Risk is included in this process Basically, IVF involves large amounts of order cheap cialis physical and emotional energy, time and money. Some of them are diabetes, high blood pressure, hormone change, body pains, penile injury or other conditions such as Candida-yeast overgrowth and small generic sale viagra robertrobb.com intestine bacterial overgrowth (SIBO). Planners, of course, have little interest in economic theory, so Stringham and some of his colleagues took some careful looks at inclusionary zoning mandates in the San Francisco Bay Area, the Los Angeles area, and Monterrey County. They found that, after a city passes an inclusionary zoning ordinance, the number of homes built declines and the price sharply rises.
Planners still ignored this work and when someone challenged an inclusionary zoning ordinance in Napa County, the state judge found that “the ordinance will necessarily increase the supply of affordable housing.” So Stringham and his colleagues rolled up their sleeves and did an even more detailed econometric analysis of housing and affordable housing mandates. They conclusively showed that inclusionary zoning ordinances in California increased housing prices by 20 percent.
Stringham also points out that most inclusionary zoning ordinances turn buyers of “affordable” homes into second-class citizens. Many California communities say that people who buy such homes cannot sell them at market rates for 50 or more years. That means that they cannot take advantage of the growth in equity that other people enjoy.
If you don’t want to step through Stringham’s PowerPoint show, you can listen to an interview with Stringham on NPR. The first 10 minutes of the show focuses on housing affordability, while the last 20 minutes gives Stringham a chance to explain why the solution is not price controls but to allow more construction.
Keep in mind that urban planning is usually the reason why prices are high in the first place .
Evidence please.
Empirical evidence that takes apart regulation from amenities and job growth is needed to make your case. Cough up that evidence.
DS
Greetings –
I’m just curious, what is the free enterprise response to events such as water shortages (the dustbowl, the current problems in the southeast) if there was no governmental response (as that response requires “planning”). How does the free enterprise system address issues that cross State lines such as water usage?
Thanks
Planners, of course, have little interest in economic theory,
Shall I recount how many times I’ve pointed out the flaws in your…er…’economic education’?
DS
the last 20 minutes gives Stringham a chance to explain why the solution is not price controls but to allow more construction.
Huh. You were recently disparaging just such a development in Boulder, one that provided affordable housing without inclusionary zoning.
DS
InnerHarbor,
How does the free market respond to “shortages” of anything? The price goes up, people use less.
Our society decided, for mostly arbitrary reasons, that water should be a political good, not a market good. Once something is political, people think that they deserve to get it at little or no cost. So when shortages arise, the result is queuing (such as on highways), rationing (often used for water), or other restrictions.
The problem with queuing is that the time wasted is never recovered by anyone (whereas in a market, higher prices are earned by the producer who then has more money to spend increasing the supply). The problem with rationing is that it is often unfair or leads to the resource being used for low-valued uses. Most water in the West, for example, is dedicated to its least valuable use — farming — and farmers who have water rights HAVE to use them, even if they could install more efficient crops or irrigation systems, or lose their rights. This guarantees “shortages” when, in reality, there is plenty of water. Water law in the east is different but often results in similar problems.
Since Randal is unable to answer the call for evidence that planning is usually the reason why prices are high in the first place, let us recall that not too long ago it was pointed out to Randal that this statement is incorrect**, and this according to the researcher he likes to quote a lot. Yet he continues to repeat the incorrect statement. I wonder why?
DS
**The common assumption is that by limiting the supply of developable land, all growth management policies reduce the supply of housing. Basic economic theory suggests that if housing supply is low relative to demand, then the price for it will be high, reducing its affordability. While this reasoning may seem logical, it is far too simplistic. Housing prices are actually determined by a host of interacting factors, such as the price of land, the supply and types of housing, the demand for housing, and the amount of residential choice and mobility in the area. Further complicating this market reality is that growth management policies vary widely by state and by region and are unevenly enforced and implemented.
[…]
We cannot emphasize strongly enough that housing prices depend more on the relative elasticity of demand, especially within metropolitan regions, than on any other factor, including growth management.
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