Sunday, January 1, 2006

Regulation and Housing Costs

The Boston Globe today has an interesting article (registration required) on a forthcoming report by Harvard Economics Professor Edward L. Glaeser on the impact of regulation on housing prices in the Boston area.  Some excerpts:

The report, which is based on a two-year survey of land-use rules in the 187 cities and towns within 50 miles of Boston, points to locally mandated lot sizes as large as 2 acres and overly restrictive wetlands and septic rules as the most significant barriers to housing construction. It also cites local prohibitions on irregularly shaped lots and ''growth caps" limiting the number of units that can be built in a year. . . .

Glaeser proposes several possible solutions, all of which would give the state a greater role in local development. He says Massachusetts could withhold state money from communities that block development, or create a single entity or regional entities that could overrule local officials. It also might limit lawsuits against developers by forcing losing plaintiffs to pay the developer's legal costs, or replace local land-use regulations with impact fees -- set by the state -- that developers would have to pay to cities and towns. . . .

Glaeser found that large minimum lot sizes have the most potent impact on price: An additional acre in minimum lot size raised the median sales prices of homes in a given town by 19.5 percent in 2001. When communities increase minimum lot sizes by a quarter of an acre, about 10 percent fewer homes are permitted, Glaeser found. When towns impose wetlands rules that are stricter than what the state requires, new construction appears to fall by about 10 percent, and stricter rules for septic systems decrease construction by 4 percent.

Ben Barros

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Once again the dark forces of socialism sneak one past the watchful gaze of the defenders of freedom. This time their vehicle of choice is centralized planning under the guise of affordable housing, inclusionary housing or any number of code words promulgated by would be social controllers calling thermselves urban planners.

The study authors repeat the same set of errors that every other dishonest planning advocate attempts. Housing in low density ecologically diverse places command a premium because they protect the stated and revealed preferences of their residents. Further, the municipalities themselves recognize full well that low density CSD (Conventional Suburban Development) is a cash positive policy and that the high density urbanist fads of the moment not only need upfront but ongoing municipal subsidies to exist. The very essence of unsustainable development the would be masters pretend to oppose.

It amazes me when everytime the conclusion of the agendaists is that there isn't enough housing choice that their answer is a new larger and more powerful government body to restrict choice at the local levels.

Posted by: Robert Cote | Jan 2, 2006 11:07:07 AM

This previous comment by Mr. Cote has got to be one of the most ridiculuous things I have ever heard.

Mr. Cote seems to assume that low-density single-use conventional suburban development represents something like "the free market." Nothing could be further from the truth. Low-density single-use zoning and conventional suburban development -- to use his type of phrase -- represents the "dark forces of socialism."

The collective power of the state (expressed in zoning regulations) imposes minimum quality of a good for individuals to purchase (minimum lot sizes) and which results in restricted choice (only single-family detached dwellings on large lots) and inflated prices. Sure sounds like the opposite of a free market to me.

Those of us who are urban planners find the arguments of those like Mr. Cote to be confusing. When we say expand housing choice by letting developers build their higher density-mixed use developments -- which, incidentally, many desire to do -- we are urging a greater free market over the socialism of suburban zoning!

Isn't the great irony that the strongest proponents of suburban zoning are usually white-middle-class suburbanites, who tend to vote Republican! Ah, but when it comes to their own property values, they have no power using the collective power of the state to confer upon themselves a capital gain through arbitrary restrictions on the competitive, free market! If conventional suburban zoning isn't rent-seeking behavior then I don't know what else is!

Posted by: Kurt Paulsen | Jan 3, 2006 12:37:40 PM

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