Land Use Policies Impact on Housing Prices?

By. Neil Williamson

The June 29th edition of  BusinessWeek has a Housing Market 2012 cover story.  The article accurately points out:

ALL REAL ESTATE IS LOCAL

Of course, the national median price is an artificial construct, since there is no such a place as National Median, U.S.A.

The article selected seven different markets to examine.  The Free Enterprise Forum is most interested in the comparison of three of these markets: Seattle, Saratoga Springs, and Omaha.  Our interest is less focused on how the regulatory environments and market conditions impacted the availability and affordability of homes. 

Saratoga Springs

Saratoga Springs is held up as the “Anti-Suburb” a town of about 28,000 is a part of the Albany area but has a personality far beyond that of  just a bedroom community.  Located in an MSA that includes 17 Colleges and Universities, in addition to the State Capitol located 35 miles to the south, Saratoga Springs, not unlike Charlottesville, is more financially insulated than many other communities.  The tony town has been the beneficiary of over 100 years of state and corporate altruism.

The BusinessWeek article quotes local architect Daniel Neary:

“Architects and planners got together with local politicians to make sure we stayed vibrant to compete” with other communities.

While the article suggests that Saratoga Springs typifies “New Urbanism”, the photograph supports another conclusion.  Standing in front of his four bedroom colonial (on what looks like at least a 1/2 acre lot with a two car garage) Manhattan transplant Jeffery Cannizzo is the exception rather than the rule with a two mile commute to his office.

The Saratoga Springs Metropolitan Statistical Area had a $2,540 drop in  median home price in the last year (2007/08).  The Free Enterprise Forum believes that this less than average drop can be credited to three market conditions: stability of state jobs, strong tourism industry and a flexibile approach to developing a  walkable “New Urbanist” neighborhood that would allow real front yards (as opposed to the porch on the sidewalk) and two car garages (as opposed to alleyway parking).

Omaha

 BusinessWeek cited Omaha’s strong job market and ultra-low unemployment as positive factors in their region’s modest $930 drop in median home price (2007/08).  The Free Enterprise Forum believes other factors cited later in the article are as important, if not more important to the vitality of Omaha:

…boasts an abundance of land and power, an extensive fiber optic network and a favorable tax regime.”

Last year, Omaha added 2,700 new jobs while the U.S. lost 3 million.  Interestingly, the photograph featuring the Omaha family is taken in the driveway leading to a two car garage attached to a 3,000 square foot home.  With two young children in their arms, the couple seem eager to play with the children in their ample front yard.  

Seattle

Trumpeted as having a low inventory of housing, BusinessWeek credits the $42,000 drop in median house price to tight building restrictions and basic geography.  These are the same forces that pushed housing affordability in Seattle through the roof and forced many service workers out of the city and onto the regions overburdened transportation network.

BusinessWeek identifies the geographic challenges as:

Not that there is much undeveloped land to buy.  An isthmus, Seattle is hugged by Puget Sound on the west and Lake Washington on the East. 

With such constraints, Seattle does not have a significant supply of homes on the market.  It would take just five months to move through the entire inventory compared with roughly nine months for the U.S. as a whole …

Seattle’s regulatory environment is among the toughest in the nation.  Geographically (and topographically) challenged, Seattle has positioned itself as the environmental leader of the evergreen state.   By severely limiting construction on steep slopes and restricting land owners ability to develop their property, government has constrained the supply of housing.  The governmental stranglehold has pushed single family housing prices beyond the reach of the average wage earner in the city.  This can result in an increase in dense city living, which in tun can support significant transit operations; the other alternative is the dispersion of the population to more housing friendly environments which results in Herculean commutes into the urban core.   

The article highlights a young professor, who bikes to work and his young family in front of their 4 bedroom home with carriage style garage doors.  In contrast to the other photos in the series, the 1947 home does not have a significant yard but hints at a small fenced side yard for the children.

Three communities, each with a different approach to their housing needs.  An examination of these articles leads me to more questions than answers:

  • Which of the three do you feel best represents the Charlottesville Market?
  • Do you believe local architects embrace the “Neighborhood Model”  in the same fashion as Saratoga Springs?
  • Should we change our regulatory environment to mirror one of these communities?  
  • What role does land use regulation play in our regional housing affordability?
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One response

  1. Fair enough. People should have a preference for housing types.

    Still, I’ve gotta say, I’ve never understood the myth of children playing in lawns you’ve alluded to. Maybe children under the age of 5 will play in the backyard, but any older than that and they invariably grow bored with their own lawn. They want room and equipment for sports, and most importantly other children to play with. They also want a degree of independence.

    I grew up in a suburb with lots of families. We children essentially elected one kid’s lawn as the play area for football games because it was particularly flat and a little bigger than the others. We only played on this lawn and no others in the neighborhood. So essentially we created a de facto neighborhood park, while our poor dads had to keep mowing our individual lawns that rarely were used (when I was a little older, I was paid to mow, which was cool). I sometimes think back and wonder why the grown-ups didn’t just live closer together and share a real park with real ballfields within walking distance of everyone.

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