How to fix restrictions on building

Stephen Smith, a well-known urban blogger, writes in the comments to Interfluidity:

Finally, I think you’re not giving us enough credit for thinking through the political challenges to urban land use deregulation. I’m well aware of the entrenched interests opposing it, and the most promising solution I’ve seen is to shift the level of governance upwards. Washington and Oregon have much stronger state-level planning laws than California, and permit about twice as much housing as a result, with much lower urban housing prices. Ontario also has strong provincial planning, and Toronto has a torrential housing stock growth rate and very low housing prices compared to similar US cities. And in Japan, the central government has a huge hand in land use regulation and localities are relatively powerless, and Japan is literally the market urbanist promised land, which a mind-blowing housing stock growth rate in Tokyo, to the point where their private railroads are profitable and one is able to undertake an incredible capital expansion project, practically without subsidies.

The pointer is from Reihan.  And here is a story from my own northern Virginia: “The century-old congregation decided to sell its building, parking lot and grounds to the Arlington Partnership for Affordable Housing, which will tear down the stone structure and replace it with 173 affordable apartments.”  Bravo.


I think the commentator misses the best part of post he responds to. A tactical retreat to the state level in the hopes of sneaking one by the residential real estate cartel is of limited use. If you really want to break it's back you need to decouple the desired services from ownership of the land. The most important one, which the interfluidity author mentions but kind-of buries, is exclusionary schooling.

It is for this reason that vouchers, ostensibly a conservative idea, is actually a radical one. Vouchers by their nature create large and fluid catchment areas which are a great tool for deadweight loss to housing.

It's no panacea, but if the regulation is shifted to the state level, there is a different constituency making the decisions. Suburban and rural voters would benefit from more urban development, because the state would have more property tax revenue. The negative consequences (congestion, market dislocation) will be borne solely by urban residents, but they will be outvoted. Also, urban developers can make political contributions to suburban and rural legislators, to encourage them to permit more urban development, but urban residents can't vote in the election of suburban and rural legislators.

"Exclusionary schooling" is definitely not the reason for restrictions on development in New York City.

I agree with the conclusion of your final sentence, but it is worth noting that for all NYC is the largest school district in the country it nonetheless has extremely tiny catchment areas and the real estate distortions that creates. Look for example at the recent PS 199 rezoning kerfuffle or the insanity around PS 321 in Park Slope.

Suburban and rural voters would benefit from more urban development, because the state would have more property tax revenue.

Only in loci where you have state property taxes. Sales taxes are the mode for financing state government.

True, that varies by state.

Michigan has had per-student, state-level funding, vouchers, charter schools, and districts that accept out-of-area students for many years. Overall, it is a good thing -- giving students a way to escape terrible schools -- but it is less revolutionary than you might guess. Yes, more poor kids can go to school in rich districts, but this is not magic -- what is likely, unfortunately, is that they'll join the poor kids already there on the wrong side of the 'achievement gap'. And it certainly doesn't seem to have done much to reduce or eliminate real-estate price differences between desirable and undesirable communities and neighborhoods. Also, keep in mind that due to transportation, in most cases, the adjoining district is as far away as is practical for a student to transfer. And there are some odd side effects like funnel districts.

Does this Michigan system provide free convenient transportation from, say Detroit or Flint, to any of the better suburban schools?

It's not that important to have affluent and impecunious youngsters in the same school. It is important to maintain order in schools, which means hoovering up the incorrigibles and turning them over to detention centers run by the sheriff. The purveyors of the Official Idea in this nation's teacher's colleges could never abide such an idea; neither can the har-de-har public interest bar, neither can their allies in the judiciary, neither can minority politicians.

And then when they are 21, uneducated, and have spent years where the only option is to network with future criminals?

If they'd like to be 'educated', they can sit down, shut up, and quit beating up other kids in the bathroom. Not rocket science. Acts. Consequences.

"giving students a way to escape terrible schools" - interesting choice of words... To take it literally, has it ever been determined what was wrong with those schools: was it the paint, or the radon emissions from the ground? Perhaps we could fix "the terrible schools" rather than abandoning them?

Seriously, how do you think the middle-class people with kids feel after they have paid through the nose for houses in good school district, when they see the inflow of pupils "fleeing terrible schools"? The rich will send their progeny to private schools, of course, so it's all good...

If the inflow is derived from ordinary working class kids, it shouldn't be a problem. The problem arises when you start importing slum incorrigibles. The institutional architecture and institutional culture have to incorporate the ability and willingness to sequester ill-behaved youth.

It is seldom a problem because good students do well in the schools we call bad.

In some cases, the schools themselves are physically bad. Sick Building Syndrome is a thing.

With declining enrollment in some districts (e.g., Chicago, Detroit, Cleveland), it might make sense to shut the physically bad schools and shift students into the physically better schools.

Parents complain bitterly when their local neighborhood school it shuttered but sometimes you need to consolidate services for the good of everyone.

Did you read the article about the Ferndale district? It is running a couple of high schools that enroll students who live in Detroit almost exclusively. How do the Ferndale residents feel about that? Mixed opinions, apparently -- but the extra money that those students bring with them has helped solidify the finances of an inner-ring suburban district that had been losing students (and the funding that goes with them). What was wrong with the Detroit public schools that the incoming students they were escaping? I couldn't begin to do justice to THAT topic in a short blog comment, but Google can certainly help you out there.

The problem with public schools is the unions and politicians. Put a private school right next to a public school and guess which kids perform better in low income neighborhoods. You don't need to bus kids just use a little competition.

"Separate educational facilities are inherently unequal." -- Guess Who in 1954

A clerk working for Earl Warren, who couldn't think two steps ahead any more reliably than could his boss.

As opposed to Art Deco the smartest and wisest man that ever lived and ever will live. I guess before you start drooling in your second childhood you first get to experience a second teenage period where once again know everything and are unbearably self righteous.

Betwixt and between my second childhood and second adolescence, I can contemplate what an outstanding job Arthur Garrity and Russell Clark did running the school systems of Boston and Kansas City, respectively. Doing so does not even require being smart or wise, merely observant.

The most important one, which the interfluidity author mentions but kind-of buries, is exclusionary schooling.

Not really. In an ordinary sized metropolis, suburbs vary according to the ratio of bourgeois residents to wage-earners, but you have sizable populations of both any place but the toniest suburbs (which sort comprise about 11% of the metropolitan population where I grew up). The real distinction is between the suburbs and the central city, because the slums are in the central city. The slum kids amount to perhaps 15% of the population of school age children in an ordinary metropolitan settlement, and prices and consumer preference are the major factors inhibiting their settlement in non-slum neighborhoods. Not much need for 'exclusion'.

Note also you have district schooling in small towns and rural areas, without much variation one to the other in social strata to be found therein.

"Bravo?" Do you live in/own a single-family home next door to the new, 173 affordable apartments?

Did the citizens, home owners, residential real estate cartel have the opportunity to vote on any of it? Authoritarianism is good because (in your mind) you're morally correct.

What happened to that all important conservative dogma of the right of the property owner to do what he likes with his property? That goes out the window of all sudden when it comes to the all important issue of keeping brown people out?

Then you won't mind while I start work on my lead smelter, neighbor.

There must be a Coasian solution to all this...

The NIMBYs don't actually want to pay for property they wish to appropriate the use of, perish the thought.

"What happened to that all important conservative dogma of the right of the property owner to do what he likes with his property?"

I think this is a classical liberal digma; the conservative dogma is local authority and the idea that centralized power and "excessive" individual freedom usually go hand-in-hand - this (shift the power upwards in the hope that the "central" power will give more freedom to the individuals) seems a good example of the traditional conservatives claim to be against.

No, it goes out the window when you have externalities or when you need to provide public works. Not rocket science.

(poor) people, of course, being the externalities Art Deco is referring to in this context.

No, you have impecunious people everywhere except the toniest neighborhoods. The externalities would be features of the construction itself and its uses. (This is perfectly obvious to anyone who's not bound and determined to be a repellant jackass).

Look people have to live to somewhere. The reason to push development up to the state or national level is that though people have to live to somewhere they do not have to live in your local neighborhood but if everyone keeps new homes out of their neighborhood new families have no place to live. Some of the best neighborhoods were bult when people could still subdivide and build densely.

Don't grow up. It's a trap!

Tyler thinks that providing housing is simply about building the housing. His housing would have no water, sewer, roads large enough, no police and fire, etc, because those are the things that the local community votes on. And I left out schools for the 300-500 children that might live in those 173 affordable housing units, assuming the "affordable housing" is for working families. And what of the 350 or more cars? Or will public transit be so good that no car is needed to get to work no matter the schedule. Are the voters going to vote for adequate public transit service?

Why did you not buy a buffer for yourself?

"Authoritarianism is good because (in your mind) you’re morally correct."

Some might see this more as a story about property rights. An unfortunately rare case of where a property owner has been able to profitably use his land without interference from busybody neighbors.

Take away the government grants, charitable immunity, and deductibility for donations and let me know how profitable the Arlington Partnership for Affordable Housing is.

Not sure about the profitability factor, but an argument in favour of such subsidies/credits is that distributing disadvantaged people more evenly, in geographic terms, avoids problems of ghettoization (organized crime, lack of role models, etc).

If you want to do something about 'ghettos',

1. hire more cops, deploy them optimally, and let them use best practices. It won't turn slums into Scarsdale, but it will allow you to reduce the homicide rate therein to the metropolitan mean of 1980; and

2. Suspend the collection of property taxes in your most impecunious census bloc groups (comprehending, perhaps 15% of the population of your metropolitan settlement) and institute abatements for bloc groups one strata up.

3. Transfer the control of the police department and the child protective service to a metropolitan authority. County governments will do in most places.

4. Replace public schools with voucher-funded philanthropies, with regents' examinations for quality control. The sheriff's department can maintain day detention centers for incorrigibles no one else will take. County governments can issue the vouchers, setting the global budget for publicly-financed schooling and setting the redemption rate. If people wish to use tuition-funded schools or to home school, grant them a rebate for their voucher about equal to their contribution to local school costs as manifest in their property and income tax payments.

5. Have state governments distribute unrestricted grants to county governments according to a formula which takes account of population and per capita income; about 3% of state gross domestic product for the global amount will do. Have county governments do the same regarding municipal governments; about 1% of local personal income will do. The grants can function as a revenue riser on which more impecunious municipalities can stand.

6. Change your bloody electoral system to promote competition in local elections and to promote sorting of attention among voters. Have all non-judicial offices elected for four year terms, have a regular quadrennial electoral calendar (federal offices in year one, general local offices in year two, state offices in year three, and specialty offices in year four), require rotation-in-office, make selective use of jungle primaries and proportional representation, and make use of ordinal balloting.

@ArtDeco It is good to have a conservative commenting here among the Classical liberals and Democrats. You make some arguably good points.
I also think more and better policing is needed more than anything else (more things, better schools etc.). Better the corner of house top and crust of bread with peace that plenty with constant fear an turmoil.

Interesting ideas.

Why do you need affirmative housing ?.Simply if you cannot afford to live there, you shouldn't live there. I can't afford to live in Beverly Hills. Should I have a right to live there ?

from here
" The reason most economists are skeptical about price controls is that they distort the allocation of resources. To paraphrase a remark by Milton Friedman, economists may not know much, but they do know how to produce a shortage or surplus."

This is what happened here: from the article : "Two years ago, 3,600 people ­applied for a chance to rent one of the 122 apartments at the then-new Arlington Mill affordable housing building"

Affordable housing is awardable housing. Opportunities for graft, which is why the Democratic Party fancies it.

Yes but you should not have supply controls either.

Toronto average home sale is $631K according to this article. Toronto median household income in 2013: $72.8K. Source. Interesting definition of "very low housing prices."

And here is a story from my own northern Virginia: “The century-old congregation decided to sell its building, parking lot and grounds to the Arlington Partnership for Affordable Housing, which will tear down the stone structure and replace it with 173 affordable apartments.” Bravo.

According to Zillow median home value in Arlington VA is $607K, so it's pretty clear buyers in Arlington are not paying to live near poor people.

This is Yglesian economics, i.e., pure wishful thinking. You can throw up all the multi-story Sec. 8 housing you want. Property values will tumble and owners will de-camp to push up the median home values to $600K in some other place. Again, this is one of those areas where academic economists need to let their wives give a guest lecture to their classes.

The housing near that church is well below the median home value in Arlington. Lots of garden-style apartments filled with immigrants actually.

Bravo, indeed. Prices discriminate so we don't have to.

+1 Simpsons reference

If that's true, then maybe the highest and best use for this property is low-income housing, and the church was maximizing its financial return like any other landlord. And maybe the Arlington Partnership for Affordable Housing is behaving like any other developer, seeking the cheapest land compatible with its intended use.

And the economics is that more housing lowers rents, no matter which population shifts where.

Just think how cheap the rent would be on the Upper East Side if they built more multi-story apartments!

East of Lex is considerably cheap than west of Lex in no small part because of looser zoning.

Those Upper East Side apartments are reducing rents in Idaho.

Why does anyone think this? Hong Kong is 2.5 times as "built up" as Manhattan yet its rents are even higher.

The correlation between density and housing cost burden actually runs in the direction that the higher the density, the higher the cost burden.

This is actually basic economics - if you rationed the supply of food so there was less of it per person, it would not be logical to assume that everyone would spend less on food as a consequence. It is abundance of something in its supply, that reduces the cost burden even as people consume more and more of it.

In urban land, this is true of "sprawl" - as long as there are no obstructions to this, people have been consuming more and more land without the cost of housing going up. Urban productivity has increased faster than rural productivity, urban incomes have increased faster than rural land prices have increased, hence it is logical that the urban economy can take more and more land into its supply at a lower real cost than before.

But if you have this effect, and the market also demands more floor space in some important location, that floor space will be affordable because of the options available in the urban economy as a whole. This is what New York used to be like, when the surrounding urban area was sprawling freely at low density. Now it has come up against de facto green belts in "rural" zoning in surrounding municipalities, and its land price curve is starting to behave more like London's or Hong Kong's. Under these conditions, upzoning increases land price faster than actual extra floor space is provided, and affordability declines.

There's a big difference between you wanting to live in Beverly Hills and families trying to get out of the ghetto.

Definitely agree about the Toronto affordability factor.

Not a big difference. The problem is that municipal and metropolitan authorities police the slums lightly when they should police them heavily.

According to Zillow median home value in Arlington VA is $607K, so it’s pretty clear buyers in Arlington are not paying to live near poor people.

They're likely paying for shorter commutes. Arlington's all condos and bungalows. Nothing grand for your $607,000. The Arlington resident in my family can walk to work, which is why he's there. Try to get from Alexandria to Fairfax at the wrong time of the day; you'll be traveling at about 12 miles per hour.

Toronto and Vancouver are in the midst of a tremendous single-family detached bubble. Those prices will fall, I promise you. Condo prices – the majority of what's built – are a lot lower, and have been flat for years as single-fam prices has skyrocketed.

(Some of this is related to their urban planning styles – they allow a lot of infill condos, but few infill townhouses. So, you can build huge towers on arterials, but you can't tear down a single-family detached home on a side street and replace it with, say, three townhouses, as is common in Houston. So the stock of condos is allowed to rise much more than the stock of single-family homes, attached or detached.)

There is a town in Orange County CA called Costa Mesa. It has always been the anti-Irvine, with looser rules. This year builders are suddenly putting up $600k condos on a street that only ever was (and still mostly is) auto repair shops. A bit surprising even there.

Perhaps a bellwether.

I'm all for it as long as it's Not In My Bank's Books (NIMBB)

The vast majority of all recent mortgages end up on some or other government balance sheet. All hail the not-so-free market. But it is all in the service of the American Dream of rugged individual homeownership so it's all good I guess.

Yup, too many automobile-related businesses:

Possibly. Further down the street they used to build a lot of fiberglass sailboats, until they discovered how much longer than wood they last. More reliable cars, less rent from repairers.

I'm kind of surprised that the incentives for building more aren't on the radar of those involved in blue areas, where it probably matters more (in the sense that San Francisco and New York are affected more than redder areas are by lack of affordable housing). More people living there means more voters, and it also means things like more construction jobs, patrons for businesses, taxpayers, and so on. Maybe the effect is just too small to matter, at least over a shorter period of time, or maybe the entrenched NIMBYism is just too strong, or maybe I am just not aware of efforts already underway. But really, you'd think a coalition of interested real estate developers, labor unions, politicians, and so on would come together to get something bigger and broader through.

You do realize San Francisco exists because Oakland exists? (And also some strategically and very intentionally located state parks.)

Don't listen to what wealthy liberals say, watch what they do. Everybody is conservative about that with which they are familiar.

Similarly don't listen to what conservatives say, look at what they do. They are all against government spending except when it ends up in their own pockets.

No, San Francisco exists and Oakland exists. The classes which occupy both cities exist. However, the discrete properties of the classes and the loci are not fixed. Oakland's murder rate is a function of institutional deficits.

Exactly. San Franciscans would be running riot had the City Fathers not wisely deployed large numbers of heavily armed police to keep a lid on things.

No. You have a lumpenproletariat in Oakland which needs policing. You also have a large wage-earning class in Oakland which needs protection from that lumpenproletariat. What you have every place under the sun in this country is an unwillingness to hire and deploy the police necessary to contain that lumpenproletariat. There is no iron law which says Oakland has to be a ruin. Leaving it a ruin is a policy decision.

Forcing K-selected groups to pay even more taxes to protect r-selected groups from themselves, rather than just moving away from them, is admittedly difficult.

"F***k you losers" is such an inspiring principle for public policy.

@Art: It's working pretty well for Donald Trump these days.

Art is right about this: working poor are the ones who benefit the most from tough policing. And, speaking of Trump, working poor are harmed the most by Open Borders.

Vote Trump.

As a current resident of Oakland and a former resident of San Francisco I can speak to this matter with a modest degree of personal experience.

Both cities are experiencing a large influx of higher income people thanks to the tech boom. San Francisco's urban poor are concentrated in rent controlled/public housing ghettos that are segregated from the rest of the city and heavily policed. Huge swaths of SF are almost entirely white/Asian and have relatively little official police presence. When I lived in the Sunset (a largely Chinese middle class neighborhood), I didn't see a single cop car for a year. There was no need for city police as there was essentially no crime. The locals policed themselves and had an informal neighborhood watch to keep an eye on suspicious characters.

The low income service economy workers in SF commute long distances and enjoy subsidized benefits paid for by the city's "Healthy San Francisco" service charge; a special tax added to restaurant bills to fund health insurance for the uninsured. Hundreds of millions are spent every year on the homeless and the lumpenproles. The city has enough high income people that it can manage a city-operated welfare state.

Oakland doesn't have enough rich techies yet to afford a city-operated welfare state. But the downtown is gentrifying rapidly. Every year about 3,000 African Americans leave Oakland and are replaced by a larger number of White/Asian/Hispanic people. Average rents are soaring and it's now about as expensive as Boston.

Locals are complaining bitterly about gentrification AND new construction. They don't want new condos to "change the character" of the community (a.k.a., bring in lots of yuppies). The consequence is actually an acceleration of gentrification. Home prices are growing by 10%/year, rents are rising even faster. For the first time since the 1950s, whites actually outnumber blacks in Oakland.

Fighting against gentrification in Oakland is not only hopeless, it actually accelerates the rate of change. Either the locals don't understand that or they are being mislead by people who DO understand it and want to push out more of the proles. Either way, this city is going to look radically different over the next decade...

>> K-selected groups to pay even more taxes to protect r-selected groups

The schema never applied to sub-populations but rather entire species, and in any event is no longer considered an accurate or adequate model.

You'll have to find some other cover for your prejudices.

I've always been in favor of forbidding white policemen from going into minority neighborhoods. We should extend that to include firefighters and paramedics as well.

Nobody should ever be a victim of white privilege ever again.

The schema never applied to sub-populations but rather entire species, and in any event is no longer considered an accurate or adequate model.

Even if it were, blacks reproduce at replacement levels.

I don't know that Japan is a good example when talking about real estate. Aren't the prices of real estate there affected by Japan's 20 year recession, which was itself caused by a real estate bubble? I've also read that the Japanese real estate market has a lot of mafia connections ("Sell your land to $MegaCorporation, *or else*.")

Japanese housing production is many times that of your average US city (despite the nation's sagging population!), and the housing stock growth rate of entirely built-out Tokyo exceeds that of even Houston. If that's a 20-year recession, it sounds pretty good to me.

It's interesting how the culture works in Japan. When I lived there people I knew did not want to buy a previously lived in home. Its also hard to find any older homes in the country that are still lived in- a striking difference compared to the states and especially Europe. I had not heard previously about the high housing stock growth rate, but it makes sense based on those observations.

Also, renting an apartment is such a pain that people move much less frequently than you find in the states.

Japanese people don't invest in their homes because they know that the next owner will tear it down. The new owners tear down the homes because they know the previous owners didn't invest in maintenance.

It's a huge waste of capital and a big cultural issue that can't be fixed easily.

That's one way of looking at it. Another is that it creates lots of well paying, working class jobs in construction (I don't have the numbers handy, but a much larger proportion of Japan's workforce is employed in construction than in other developed countries); allows the Japanese to move towards low-carbon, transit-oriented areas (the current trend is away from car-oriented rural areas and less dense metro areas and towards Tokyo, and to a lesser extent, inner Osaka, Nagoya, etc.); and gives them nice, new homes with modern amenities like air conditioning and elevators.

Japan already has a shrinking workforce and growing labor shortages. Diverting workers into constantly demolishing and rebuilding homes is like paying workers to dig and refill holes.

Insert broken windows fallacy reference.

I have long argued that getting on and building houses rather than not building them, in the context of the UK, would have multiplier effects through the entire economy. While Japan's average home only lasts 37 years before demolition, John Stewart (2002) calculates that at current rates of replacement, houses in the UK will need to last 1000 years.

There is certainly a LOT of room for Steve Smith's argument there... but is it possible to have a "too short" period for the "using up" of physical housing capital? I have not formed an opinion on this; I just think the opposite error far more glaringly in need of correction.

Japanese houses were traditionally built to be consumer durables with a useful lifespan of a few decades so it's not surprising that there is a lot of construction in Tokyo as dilapidated old houses are scrapped.

Just "by the way", have you read any of Peter Matanle's stuff on Japan? It is extraordinary in such an already-densely populated nation, that as the population decline and ageing is starting to really take effect, they are abandoning rural towns and exurbs first, the urban fringe next, and concentrating in the cities. Is there any other culture that could be predicted to do this at any time? But see my comments below on how the Japanese urban land market is incentivized in favour of transit-orientation - what if this effect did not exist and people were priced out rather than priced in (as in Anglo cities)?

With in three hours, Art Deco is in the lead with 12 posts and The Anti-Gnostic is not far behind at 10. Perhaps these are the exceptions that Tyler noted or perhaps they are the central examples of those with not much to say.

I would wager under the heading of 'not too much to say' would be the stalkers whose contributions begin and end with insulting other commenters for no apparent reason.

Can't help but take the bait, eh?

My own pet policy here is for the federal government to take the top X cities (10? 20?) in terms of income inequality, and preempt their zoning laws that inhibit growth in favor of land use deregulation.

In other words, those cities with the most inequality are to be punished by losing their right to regulate land use, as we can surmise that land use regulations are a major contributor to inequality in those cities.

Instead of fighting inequality through taxes and spending (liberals ideas), we would be fighting inequality through deregulation.

Who says these top 20 cities are the ones with zoning law issues?

"most inequality are to be punished" Why? Nothing provably wrong with inequality.

"we can surmise that land use regulations are a major contributor to inequality" Strawman alert. We get it, you want to beat up on inequity and this is somewhere to post about it.

Prof. Cowen boldly coming out in favor of a new Dissolutions of the Monasteries Act. It's bold, but is it bold enough to overtake AT's commanding clickbait lead? Only time will tell.

People do not realize that real estate development is aided by powerful government and economic forces. Developers become millionaires overnight with one big development. Government rewards developers with guaranteed mortgages for including Section 8 housing. Most of the tax code was written by real estate developers and the National Association of Realtors. See .

You're right that associated commercial industries are a big factor, but you are barking up the wrong tree with multifamily residential. That's a tiny industry as compared to both single family residential and commercial.

It's not just developers either, there's lots of money to be made in buying, selling, and issuing and servicing mortgages (but not holding them, that risk is turfed off to the federal government).


There is no such thing as “Affordable.”

“Affordable” is no more than a label for combinations of political ingredients used for the political or social objectives of some (at the costs of others, or diminutions of opportunities of others in seeking their objectives) to displace the roles of normal relationships and circumstances in an open commutative social order.

Are houses five times average annual salary, 10 time, 20 times more than average annual salary?

It is more than a label.

They're affordable for people making 5, 10, 20 times the average annual salary. The word you're looking for is cheap, but we feel the need to wrap it in euphemism.

In a way, this whole question should be re-cast in terms of "economic rent" versus "consumer surplus".

A housing market with a median multiple of 3, has consumer surplus in housing, same as in cars, TV's, phones, food, clothing, etc

UK cities with their long-standing Green Belts, have had a divergence in the price of land per square foot, compared to the typical "consumer surplus housing" city (of which there was many in the first world before urban planners starting thinking they needed to save the planet - but now they are to be found almost entirely only in the US south and rural heartland). Cheshire et al have been calculating this divergence and found it to be a factor of 100 to 300 by 1984. Last year, they found the upper bound, in London, to be 900.

I don't see how anyone can obfuscate this to make it "normal" or "acceptable" or even "not destructive". Real actual production - and growth (production = demand; Say's Law) will be strangled in the long term. Acemoglu and Robinson in "Why Nations Fail", point to "extractive institutions" as the reason for the lag in, say, Latin America. Land rent is probably the single biggest offender in "extractive" zero-sum, dead-loss wealth transfers.

Good critiques of Thomas Piketty's thesis point out that ALL the concentration of "capital" he is complaining about, is in fact in "land value" - it is pure poison to intelligent consideration of the issue, to conflate this with "returns" to "all capital", as if the producer / entrepreneur who has deployed capital to provide consumer surplus in competitive markets is somehow part of a guilty class gouging the rest of society. The returns to capital under these conditions have consistently been modest and there is no contribution from this, to the inequality that Piketty is making a cause celebre.

Henry George advocated land taxes as the solution, Karl Marx advocated nationalization - but few people have noticed that transport technology making land accessible to the urban economy and able to be transferred from lower-bidding uses (eg rural) without well-placed rentiers extracting a form of monopoly economic rent; actually solved the problem in many countries for some decades and brought consumer surplus to housing. Actually consumer surplus in pretty much all goods, is dependent on low transport costs and superabundant land and resources as part of an expanded integrated economy. Import protections and licensing of suppliers, for example, nullify the effect of low global transport costs and return the "protected" market to a condition where once again, someone can extract economic rent. We seem to understand this better in "goods" than we do in "land". Of course land cannot be "freighted" and is fixed in location, but transport system cost-effectiveness nevertheless has an effect on the competitiveness of its "supply" for different uses - if it is not hindered by urban planners or unintelligent local zoning or accidental monopoly land ownership (such as government owned land around Vegas and Phoenix).

How's the statewide California Coastal Commission's record of approving new construction near California's immense coastline? I see that the The Edge of U2 finally got approval from the CCC to build 5 houses on 156 acres he owns on a Malibu ridge after only ten years of expensive maneuvering. Now all he needs are LA County and Malibu municipal permits.

But Steve, if we let one of those other people build a mansion on the California coastline, how can we ensure that MY beach front mansion will retain its 8 figure price tag?

Seems like I'll need to call up my friends at the Audubon Society to make sure there's an endangered species with a nest somewhere on those 156 acres.

Of course, the premise is that land use regulations encourage inefficient use of land, that absent those regulations, developers would build much higher density, cheaper, housing for the common man, housing closer to jobs, and people would congregate in more efficient, high density urban areas, close to work. Sorry, but folks like the suburbs, they like the exurbs, they like sprawl, they like the freeways, they like their SUVs. Let the 1% have their housing free of regulations, but let real Americans choose the freedom of the burbs.

They love their handouts, especially if you allow them deny they are handouts.

Stephen Smith uses Washington and Oregon as "good" examples for housing "supply" and in consequence; "housing affordability".

Yet on the scale of housing supply and housing affordability, Washington and Oregon are merely "not as bad as California". The primary reason is that they have not halted fringe growth to anything like the same extent.

Fringe growth is really the only thing that matters; the evidence is obvious. The most rapid housing supply of all and the most affordable median multiple level, is in cities that allow the most ex-fringe housing. Ironically, because of the way this suppresses land prices in the entire urban area, a city like Houston actually builds far more multi-family units (as a proportion or even in outright numbers) than any city with "plans" that assume multi-family units and "intensification" to be the main ingredient in "supply". The total housing supply in Houston is proportionally, an order of magnitude greater than that of Portland, or Seattle, or New York, let alone any part of CA.

Stephen Smith is out of date if he regards Toronto as "affordable". It is a more "late" bubble market, but nevertheless that is what it now is. The underlying problem is that the "planning" makes the supply of land predictable and therefore "game-able" by speculators. Even in Spain, where they built too much housing in their bubble, "supply" did not translate into affordability until after the crash - for the very reason of the predictability of the "planning". The ability in so many parts of the USA, for "new development" to occur in a chaotic fashion, is actually genuine free market competition ensuring absence of gouging. It is not just TX, either, by a long shot. The Demographia Reports have dozens of median-multiple 3 cities in 20+ different States, year after year after year. Kansas, Arkansas and Indiana have the highest housing supply elasticities according to Saiz et al.

I hasten to add that the low density mandates in many US suburban areas are absurd and are surely an unintended consequence of government interference, probably in education policy and school zoning. Glaeser himself says as much. Minimum lot size mandates are the default exclusionary mechanism.

But there is no evidence they are the cause of reduced market-wide affordability. Land prices are obviously elastic to allowed density. A 1/8 of an acre lot in a UK or Australian city costs several times as much as a 2-acre one in Houston; and Hong Kong with 66,000 people per square mile has a median multiple of 17.

Even in Boston, which has a de facto growth boundary or Green belt (in the form of rural zoned municipalities surrounding it) the inflation of land values is suppressed by the low density mandates, to the point that even the typical average very large lots are no more expensive than the typical average tiny ones in UK cities.

It is counter-intuitive to the extent that no economist is noticing it, but obviously land prices (per square foot or whatever) in a land market with a rationed overall footprint, are elastic to allowed density, and the relationship is exponential and runs in the direction that the price inflation is exponentially greater than the increased allowed density.

Wow, never knew such a thing existed. At first thought it seems like an astronomically stupid idea for a whole host of reasons.

Are there good arguments in favour?

All the soft crap that the NIMBYs always deploy - above all "character".

You mean you never knew large minimum lot size mandates existed? "Astronomically stupid" is right.

You see, over the long term, in cities where fringe development is pretty much freely allowed, land values fall relative to incomes, because urban productivity has risen so much faster than rural productivity. So to be effective as an "exclusionary" measure, minimum lot size mandates have gotten larger and larger and larger.

However, having a growth boundary changes all this and inflates the land values inside the boundary so they rise faster than incomes. In fact when you have a phenomenon like dozens of cities around the world going from a historically normal house price median multiple of 3 to 4, to 6 to 12 within a decade (like LA, SF, NY, Seattle, Toronto, Sydney, Melbourne, Auckland, etc) even as upzoning has occurred and average lot sizes have plummeted; what has really happened is that land values inside the boundary have inflated 10-fold or 20-fold. The trend never reverses, either - Cheshire et al in the UK comparing the potential land values in UK cities with benchmark US cities, estimated that by 1984 the factor of land price inflation was 100 to 300 (consequent on the Planning Act of 1947). Their recalculation last year showed the upper bound - in London - to now be 900.

The disparity between urban land markets behaving like this, and those in the still-free-fringe-growth US cities, has to be noted to have macroeconomic consequences. Joel Kotkin is possibly the best writer so far of the narrative concerning the USA's "growth corridors" - high profile examples of the sort of thing that is happening, is Boeing opening a factory in North Carolina and Airbus opening one in Alabama.

The clearest explanation of "why" this sort of shift in productive economic activity (as opposed to consumption and services economies) can be found in William Fruth, "The Flow of Money: How Local Economies Grow and Expand".

Consumption and services economies might appear to be successful temporarily, but are based on ever-increasing household debt. Can this urban model last forever? The mainstream punditry has to wake up eventually, to which model has come to "own the future". Kotkin is just ahead of the mainstream, that is all. But even Richard Florida has now admitted that the "planned, creative, vibrant urban" city has failed on many counts, not the least in opportunity for everyone and anyone growing up in a family outside of the top 10% socio-economic cohort.

One of the USA's strengths is that people with initiative have somewhere to flee to. This is not an option in many countries - there is no affordable growth city at all in Australia, for example. Let alone the UK (but if a language change can be tolerated, some of the small- medium size cities in France or Germany are an option for the frustrated Brit).

Japan is an amazing outlier. Imagine any Anglo market with that little land, for 120 million people...!

Why is Japan's property cycle so "long" that they have only really ever had one long inflation and one long unwinding, since WW2?

If the UK or California had 120 million people, their approximately 15-year cycles would have been even more volatile than they have been.

The government "powers" that Stephen Smith refers to, does include compulsory acquisition / eminent domain, acquiesced in by the voters. This is a major difference with any Anglo market. They have had automobile based suburban growth (not now that the population is falling and aging) but nowhere near sprawly enough to keep land prices as low as in US free-growth affordable cities. But they fetishize "newness" to the extent that they tear down housing and replace it on average within 37 years.

Maybe this swallows capital to the extent that availability of capital to be sunk in land price appreciation, is constrained?

The other factor that might be at work, is that transit-oriented property is all owned by either the government or the transit enterprises, and it is developed and operated in such a way as to "price in" trip attractors and ridership to the transit-served property. It is illegal to subsidize the transit fares, even with operating profits from the property - this policy is pure genius and their whole transit system would be nowhere near as successful without it. The way we do it in Anglo markets, we subsidize the transit fares, and the private owners of sites charge "extractive" rents and the whole system finds an equilibrium with the vast majority of prospective tenants at transit-oriented locations, "priced out". Subsidy increases and other "investments in transit" are captured always in increased rents for private property owners and only minimally in increased "transit oriented" functioning in the urban economy. The Japanese approach reverses this malign effect, and the transit system "attracts" tenants to the properties served by it and then makes its money in the fare revenue.

This of course tends to anchor all urban land values "downwards", in a similar fashion to the "anchor" in many US cities, of cheap rural exurban land being competitively available for development. The latter is an anchor "at the fringe", but the Japanese one is at the densest parts of the city.

The same basic consent and inspection process applies whether building a new home, commercial building or structure, or for renovations, additions, alterations or demolition.If the proposed building work requires a building consent but is straightforward, the process is simple. More complex building work will require more planning to ensure it is safe and complies with the law.
Sell Home New York

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