Smart Growth & Housing Prices

Is it a stretch to suggest “smart growth” is encouraged by municipal bureaucracies because it causes the price of housing to rise, which in turn increases property tax revenues? Maybe, maybe not.

Our latest salvo on this topic began yesterday on a listserve we proudly belong to, and at least so far, haven’t been banished from. The listserve is operated by, probably the most reputable and useful forum available for urban foresters to exchange information. Problematic, however, is the fact that nearly all of these urban foresters are full time employees of public sector agencies, or to a lesser extent, work for nonprofits.

It is important for everyone in the public and nonprofit sector to understand something – you exist because of private sector profits. Business profits are taxed, and those taxes pay your salaries and benefits. Even if you are part of a nonprofit, to the extent you receive funding, some donor avoids taxes, meaning that the rest of us pay more taxes. That is just simple algebra. It is immutable. And it would be a breath of fresh air – therefore – if the bureaucrats running the public sector would stop making it harder than ever for the private sector to exist!

If the public sector in California is virtually controlled by public employee unions that demand, and get, wages and benefits that are far, far greater than anything enjoyed by people with similar skills doing similar work can ever hope to receive in the private sector, then it necessarily makes anything the public sector advocates somewhat suspect. If public employee unions exercise nearly absolute control over the electoral process and the policy agenda in pretty much every city and county in California, as well as within California’s state legislature, then it’s within the context of this inherent conflict of interests that virtually everything members of the public sector advocate – including “smart growth” – must be evaluated.

Here is the dialogue that ensued, when I responded to a post on’s listserve that announced a 5.0 million new urban trees initiative in the greater Sacramento region:

Ed Ring: Hopefully some of them [the five million new urban trees] will be on lots that were spared from the ultra high density infill practitioners.

Response #1: Ed, you have a blog to share your small-minority marginal views. This forum is to exchange useful information among urban forestry practitioners, not marginal ideological politics. Thank you so much in advance.

Ed Ring: Perhaps your views are marginal. I’ve refrained from offering my opinions – which I believe represent the opinions of the silent majority of hard working people – because they can distract from the noble mission of this forum. But Sacramento is my town. California is my home state. And when it hits me where I live, I need to help educate the rest of you outside of California because you don’t yet see the logical consequences of your mentality in the places where you live. Come to California, and practice what you preach. Take public transit, and live in a subsidized, socially engineered “transit village.” Work in the private sector without a public pension to prop you up when you’re old, and while you’re at it, throw away your car.

I have gone to urban planning meetings on occasion in the Sacramento area, and it seems every time, I see the same thing; a small, regularly attending group of environmental activists, usually abetted by a crew of lawyers representing environmental nonprofits. But in my opinion, their extreme interests in protecting all land, everywhere, from development, are those of a distinct minority – and their emotional rants and extortionate lawsuits have made homes and yards unaffordable for millions of people. But while these tactics hurt ordinary hard working people, they raise home prices and property tax revenues, so all folks in the public sector can keep getting annual cost of living increases, and early retirements with guaranteed healthcare and generous pensions. All workers should have this when they’re old.

When I lived in San Jose in the 1990′s, I personally grew and gave away thousands of trees. I love trees, I love nature, I love life. And what I see is this: Trees take water and space, and using water and space requires energy and carbon. Therefore all trees must be strictly regulated and located only on public land. That is the trend and going in this direction requires ongoing, vigorous debate. One may wish to read these debates with an open mind, and think about where the “smart growth” movement is taking us.

Response #2: Ed has a good point on zoning and land use regulation impact on housing affordability. Over-regulation in Massachusetts is driving up the housing costs and driving some residents out of the state:
Restrictive Zoning Blamed for Housing Costs – Boston Globe

and the original source:
The Causes & Consequences of Land Use Regulation – Harvard

and Nationally: “Changes in housing supply regulations may be the most important transformation that has happened in the American housing market since the development of the automobile, but they are both under-studied and under-debated.”
Why Have Housing Prices Gone Up? – Harvard”

and the classic: “Does America face an affordable housing crisis and, if so, why? This paper argues that in much of America the price of housing is quite close to the marginal, physical costs of new construction. The price of housing is significantly higher than construction costs only in a limited number of areas, such as California and some eastern cities. In those areas, we argue that high prices have little to do with conventional models with a free market for land. Instead, our evidence suggests that zoning and other land use controls play the dominant role in making housing expensive.”
The Impact of Zoning on Housing Affordability

To which Respondant #1 weighed in with this: “There are many studies that show regulation is only one factor in a host of reasons for price increases, and that regulation *per se* is not the dominant cost factor in most markets. This is well understood amongst most land-use people, microeconomists, urban economists, and the like – even in the Glaeser references provided, where he and Gyourko advocate for *zoning reform* to increase the number of units (which is happening).

The context of Glaeser’s assertion in the news article and papers below is that homeowners petition their electeds to make large-lot zoning to protect their property values, so it is actually hard-working Americans that drive up property values in many instances, including in the provided examples below. Further nuance for the Glaeser newspaper article is that municipalities cannot deliver services to higher density due to capital costs, so they zone to prevent having to raise capital for infrastructure.

Glaeser has discussed this many times and explicitly does not advocate the Houston solution.

In the CA case of growth control, it was a conscious choice in many areas to limit supply, as locales were unable to deliver services and ecosystems were beginning to be over-stressed. In other words, growth for growth’s sake isn’t a value that was privileged, thus supply was limited to preserve other values, such as quality of life for current residents.

But back on forum-appropriate topic, the market and demographics is driving small-lot development – by 2050 only ~25% of new demand will be for the iconic single-family house that is increasingly less popular (compare recent price changes for single-fam). It is up to us to find room for trees in this coming land-use shift, especially knowing that by 2050 it is likely almost half of the built environment in the US will have been built since 2000. Our partners in the Public Works departments are putting their streets on road diets (using Context-Sensitive Design), which gives us more opportunities to plant trees. It is up to us to adapt to the change that the market is helping to drive. Fortunately, we know that both markets and agents respond positively to trees, so our task is made somewhat easier.”

Wherein Ed Ring dove right back in with this: “Smart Growth’s Hidden Agenda.”

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