Seeing 2020 – Where Will We Grow?

By Neil Williamson

NAI Global, an international commercial real estate firm, has commissioned a November 2008 report that indicates the Charlottesville Metropolitan Statistical Area (MSA) , including Albemarle, Charlottesville, Greene, Fluvanna and Nelson, will see population growth of 213% between 2000 and 2020.  (Hat Tip to Tom Seeley via Facebook)  By means of comparison the Virginia Employment Commission projected growth rate of 10.8% for 2000-2010.   

The Where Will Growth Occur? report, written by NIA Global’s Chief Economist Dr. Peter Linneman, PhD, is fascinating in both the statistical results and the other observations found interior to the study.

Drawing on statistical research conducted with the Wharton School’s Albert Saiz, the paper finds, not surprisingly, many Americans prefer to live in warmer drier climates with little or no snow.  While the report considers quality schools to be a preference driver, it is given less import due to the large cohort of the population that is childless.

As one might expect in choosing to relocate tax policy is a large selection driver.  More surprising is the impact of the region’s political climate.

Research underscores that both firms and individuals avoid high-tax locations, as well as those areas with large governments.  In fact, more local government spending always leads to less growth, unless that spending is on highways….

We find that areas with large governments tend to be more interested in protecting the status quo and redistributing income than creating growth opportunities…

We find that areas dominated by either Democrats or Republicans tend to grow more slowly than communities where political control of either party is tenuous.  Thus, political competition, like economic competition, fuels growth.”

The paper outlines communities that have enacted regulatory barriers to designed to hinder population growth.  San Francisco, Santa Barbara and Aspen are singled out as areas that would have likely seen increased level of growth if not for significant opposition to growth (and the resulting regulatory environment).  According to the paper such population controls do have a cost.

Research done using the Wharton Decentralization Survey of Growth Controls has repeatedly found that both lower growth rates and higher prices result from high regulatory burdens.  My colleague Joe Gyourko has persuasively demonstrated that communities with high regulatory burdens have a large gap between housing prices and construction costs, and also that housing production grinds to a halt in these communities.

Considering the factors outlined in the report and our experience with the regulatory burdens in the various localities, The Free Enterprise Forum believes whatever level of growth that occurs between now and 2020 (it will likely be less than 213%) will occur under existing zoning by right or in the outlying counties.  If this assertion is correct, and the job growth remains in the urban core, how will this impact our regional vision for 2020?

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2 responses

  1. 213% is a joke. Sometime in the 80’s they predicted Albemarle would have 150,000 residents by the year 2000. I think Albemarle is still under 100,000. I’d be surprised if we grew by 50% by 2020.

  2. […] news. Really. Access to major air hubs with international connectivity will become increasingly relevant. While […]

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