Sunday, March 14, 2010

US sprawl is not a market outcome.

A discussion is going around the internet about John Stossel's "libertarian" piece on the virtues of sprawl. John Norquist, on the other hand, labels sprawl a "communist plot," and Matthew Yglesias notes how bulk zoning requirements promote sprawl.

A point John likes to make is sprawl is at least in part the result of government housing finance policy. The New York Times this morning:

I.R.S. requirement keeps the agency from acquiring mortgages made in buildings where more than 20 percent of the square footage is commercial — space that is used for, say, a hotel or a doctor’s office.

Mixed use development is not going to happen if it can't get financed. Most of Paris, London, large swaths of San Francisco (i.e., some of our best urban places) would not qualify for US housing finance rules. And of course, single use zoning would ban them all.

But most insidious is that zoning is used as a tool to keep low-to-moderate income people out of suburbs. The town next door to mine--San Marino--has zoning requirements so onerous that it is not possible to build small housing there. Even my town, Pasadena, which at least has a bunch of apartments, prevents construction of granny flats on lots smaller than 15,000 square feet. These rules keep out the poor, which reduces expenditures on social services, which makes property values higher, which keeps out the poor, which...

Of course poor people must live somewhere, and so they live in cities with old housing stock that was built before the era of stringent zoning. So cities with old housing stock are placed at a fiscal disadvantage, which induces people with means to leave, which puts them at a greater fiscal disadvantage, etc....

5 comments:

Casey said...

Writing about the real estate industries lobbying efforts in the 1930's: "The [National Association of Real Estate Brokers] favored a trickle down model of housing distribution, where excess production of suburban housing would free up dwelling units at the lower end of the housing market for low-income families displaced by slum clearance." ("A City Without Slums: Urban Renewal; Public Housing and Downtown Revitalization in Kansas City, Missouri", Kevin Fox Gotham, page 12.)

blueberry said...

It's hard to look for good house nowadays. Wealthy people can only find the best homes. That's bothering me a lot.
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Dot Loop Admin said...

Thanks for posting. I'm now curious to read John Stossel's piece. I am not sure how anyone can justify sprawl as being an overall good thing. It creates a much more divided and insulated society. Not to mention the environmental or economic impacts.

Jeremy said...

I'm not too familiar with US local politics on sprawl and stuff. It's interesting what you've posted because in a way I feel Calgary's also trying to push out the low income people to areas where... it's really hard to get around.

I just know a little bit about Portland and then the opposite, Houston. That's about it from me.

Elena said...

Nice discussion going on here, Keep us update on other products also.

Thanks !!
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