Growth Restrictions Send Housing Prices Skyward
May 18, 2000
Home builders and real estate agents point to restrictive land-use laws as a major factor in driving up housing prices not only in California's Silicon Valley -- famed for its astronomical prices -- but in metro areas across the U.S.
The result is that many of America's middle class families are being priced out of the housing market.
- In 20 of the 45 largest metro areas, the proportion of homes that a family earning a median income can afford dropped by at least 2.6 percentage points -- and as much as 9.3 percentage points -- in the last five years, according to building industry statistics.
- In addition to San Jose, Calif., the heart of Silicon Valley, the squeeze is being felt in such cities as Seattle, Denver, Chicago, Minneapolis-St. Paul and Boston.
- Experts say that land accounts for about 35 percent of the purchase price of homes and communities that now require fewer houses per acre are inflating home prices.
- The restrictions mean that fewer houses are being built at a time when demand is soaring -- in many instances ensuring that prospective purchasers are forced into bidding wars to get the home they want.
In California, where the crunch is the most severe, the legislature is considering a bill that would let cities and counties order a report on the impact of anti-growth initiatives on land use and affordable housing. The report would then be made public prior to referenda requiring the preservation of more open space.
Source: Haya El Nasser, "When Growth Gets Limited, So Does Housing," USA Today, May 18, 2000.
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