Did Smart Growth Fuel the Property Price Boom?
June 15, 2011
Bankers, politicians, policymakers and even home buyers are usually painted as the culprits of the housing bust, but land-use planners don't generally make that list. In a recent paper, though, Wendell Cox, an Illinois-based consultant and an adjunct fellow with the National Center for Policy Analysis, argues land-use restrictions and planning policies like smart growth fueled property prices and became the engine of the housing boom and bust, says the Wall Street Journal.
- Smart growth is generally defined as land-use policies that encourage mixed-use development that reins in suburban sprawl and long commutes by car.
- The aim is to preserve open space and farmland by pushing development toward public transportation and more walkable communities.
Mr. Cox argues that the housing bust was concentrated in "prescriptively regulated" areas, or those with extensive barriers to development. These differ from "responsively regulated" metro areas, which allow development to meet demand. San Diego is prescriptive; Dallas is not.
- From the peak of the bubble in 2006 to the Lehman Brothers' collapse in September 2008, Mr. Cox writes, 11 heavily regulated metropolitan markets accounted for 73 percent of aggregate home-value losses, with an average loss of $175,000 per house.
- By contrast, homes in less regulated markets lost an average of $12,000 per house in value.
Source: Matthew Strozier, "Did Smart Growth Fuel the Property-Price Boom?" Wall Street Journal, June 14, 2011.
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