Planners get F on housing affordability

[jtmnkri]

Lots of posts on this website complain about housing affordability, especially in the Northeast and California. It is ironic for planners to wonder why housing costs so much when the biggest reason housing prices are growing faster than inflation is planners' regulations. The Economist article summary below drives home my point.

Planners can't control some housing price drivers, such as mortgage interest rates or household income levels. But planners - more than anyone else - can have a positive impact on the situation. Why don't planners make progress on housing affordability by deleting regulations on new residential development? This would enable housing supply to more closely match demand.

For instance, allow residential developments to go forward without typcial zoning checks, site plan reviews, public meetings, and impact fees. Require government review and permitting only for true public safety issues, like stormwater management and fire safety.


"Government limits on the supply of new homes have ... also helped push up house prices-especially when inflation over a long period is considered.

...[H]ouses are no ordinary good: when demand for them rises, increasing the supply can be difficult. Not only do they take time to build: building them at all can be hard, owing to planning laws governing the use of land, the density of housing and the heights of buildings.

But that has changed drastically in recent decades in the most populated parts of the country, such as the north-east coast and California, according to a new paper by Edward Glaeser and Raven Saks, of Harvard University, and Joseph Gyourko, of the University of Pennsylvania. They studied the housing markets of more than 300 American cities since 1950 and have pieced together evidence of regulation-induced inflation in many places.

...Billions are spent every year on "affordable housing" schemes, either through grants or by requiring a certain portion of newly built units to be sold or rented at below-market prices. This latter requirement is, in effect, yet another a tax on new building. A more effective and cheaper way to make housing more affordable, he reckons, is to loosen restrictions on new construction. It is inconsistent, surely, for a government to offer help with one hand, while holding back the supply of housing with the other."

[jtmnkri]

http://www.nzherald.co.nz/index.cfm?...ectID=10116051

Here's more convincing evidence of my position that planners get F on affordable housing.

[giff57]

"Planners" seldom have much say in the creation of regulations. This things come from public meetings followed by elected official action. So to blame planners is way off base.

[Masswich]

Originally posted by giff57

"Planners" seldom have much say in the creation of regulations. This things come from public meetings followed by elected official action. So to blame planners is way off base.

I think that's true and that most planners are more sympathetic of density and affordable housing then their constituents are- and usually have to back off because they don't have any real power, but...

I have also heard many a planner try to take on affordable housing, usually because they are interested in preserving open space, and that really bothers me. Its like they have been so inundated with people attacking density that they abosrbed it into their psyche.

Here in Massachusetts this is seen in planners who seem to hate 40B (the state affordable housing mandate) and attack it as bad planning. In fact, if municipalities just did their part and did some real planning for affordable housing - one of the key livability issues in this state - then there wouldn't be a problem with 40B. In fact, you can preserve more open space when you plan for density and affordable housing, not less. Why planners carry the water in private conversations for the constituents who don't get it is beyond me.

[jtmnkri]

Originally posted by giff57

"Planners" seldom have much say in the creation of regulations. This things come from public meetings followed by elected official action. So to blame planners is way off base.

Isn't the planner's main objective to influence the built environment by creating regulations?

I worked as an entry level planner for a New York planning firm. The firm's senior planners had a lot of say in creating the regulations - they wrote them. Of course, public meetings and elected officials were part of the process. Still, the planners had the most influence.

[Lee Nellis]

This ground has been covered before, but here we go. Part of the impact planning has on housing prices is that is makes homes worth more. You can easily find a community where you don't have to pay a parks impact fee. But will you have a decent park to use? Likewise for schools, roads, etc. Impact fees raise the price one pays up front. But do they raise the cost? Not unless you are willing to do without the facilities the fees help build. And is a home that has no access to parks, trails, decent schools, fire protection, etc., etc. REALLY less expensive? Not by any reasonable measure.

Calls for the elimination of fees, etc., are not calls to reduce the cost of housing. It costs what it costs. They are calls to have someone else pay.

[Wulf9]

Always an interesting discussion.

If you capitalize the income tax and interest rate subsidies, you will probably find that the capitalized value of the subsidies doubles the price of a house.

Take the monthly payment on a house. Do a present value of a 30 year loan in excel with interest rates of 8% (approx rate in 2000) and 5% (approx lowest rate in 2004 with the Fed subsidy). A $1,200 payment will buy a $163k house at 8% and a $223k house at 5%. That's over 36% increase from interest rates alone. No planners involved there.

In fact, if your house has not increased by 36% or more since 2000, the market says your house value is going down in real terms.

Add to that the federal and state tax deductions and the ability to sell without paying income or cap gains taxes, and the current value of a house is probably 50% the result of government (mostly federal) subsidies. One could argue that the subsidies, not the planners, are the source of excessive housing prices.

[BKM]

We need favella non-zoning. Since we want a third world workforce paid third world wages (heck, Wal Mart's contractor's don't even pay minimum wage), we need to just eliminate ALL regulations and fees (and services, of course).

I would vote that useless country clubs and other amenities of the wealthy be legally established as the target zones for colonization by our new itinerant workforce, our new Ciudad Bushistas.

[Lee Nellis]

Continuing, it is interesting, though not at all surprising, that things in New Zealand are about the same. As Henry George, having watched the impact of a growing population in an area (the Bay Area during the Gold Rush) where there was a more or less fixed land base (as a consequence of technology, without ANY regulations the same increase in land values happened until technology evolved, isn't that interesting?) on land values, told us, the collective monopoly of land values eventually reduces all those who weren't in on the ground floor to "poverty." This isn't literally true, of course, there are other routes, esp. changing technology, to building capital. But what does virtually every successful capitalist invest in as soon as she/he has some money to invest? Real estate (broadly defined, it can include oil, gas, metals). Why? Because it is the one thing you can make a lot of money on without doing any real work. A parcel of land that has MDR zoning here in Williston is worth about $60-70k, REGARDLESS of whether a farm family has poured blood, sweat, and tears into it for generations, or whether it has sat idle, owned by a speculator for a decade or two. We - society, as we pursue our various ends - generate all of the value beyond the ag value. The same size parcel of land with all the same inherent properties in NE Vermont is worth half or less. Why? Certainly not because of anything the owner has done (or not done). Its about demand.

If you want to deal with rising land values' impact on housing prices, which is immensely larger than that of regulations or fees, you tax away the unearned increment of value.

As for the desire to spread those homes out along the shoreline near Auckland (or to sprawl them in any direction, any where), what if your columnist had to pay the full proportional cost of expanding the services those homes require? That IS how a market economy is supposed to work isn't it? Or is the goal here to make those who pay taxes in the city subsidize those who want to move out to the 'burbs?

Regulations and impact fees are not a perfect solution, but how else can society assess the true costs of peoples' activities to them, so they can make reasonable decisions? You can go all the way back to Adam Smith to find someone pointing out that land markets are not the same as commodity markets. Our insistence on treating them the same says more about politics than it does about markets.

[BKM]

I've not read any of his work in detail, but my vague understanding of George's ideas has intrigued me.

Didn't Philadelphia and Pittsburgh try to implement some of the Land Tax concepts to foster redevelopment of vacant land? (i.e., land is not taxed on improvements but only on potential value.)

[Michele Zone]

I have only skimmed this thread slightly. BUT:

I read somewhere that much (or perhaps most) of the rise in housing costs in recent decades is due to improvements in materials. Another reason would be that the average new hom in the 1950's was about 1200 sq. ft. The average new home today is over 2000 sq. ft. Also, only half of all American homes used to have "complete" indoor plumbing (defined as a toilet, a tub or shower, at least one sink, and hot and cold running water -- -many places had only cold running water, or an outhouse in place of a toilet, etc). Now, about 98% of American homes have "complete" indoor plumbing. Homes also used to not have air conditioning as a standard feature and things like microwaves had not yet been invented.

It is true that legally, you can no longer build a shack with a dirt floor. We have talked some in this forum previously about how regulations and the like push up housing costs. In fact, it seems I started a thread on that topic : American Housing Standards – spun-off from the “homelessness” thread

[jtmnkri]

Originally posted by BKM

We need favella non-zoning. Since we want a third world workforce paid third world wages (heck, Wal Mart's contractor's don't even pay minimum wage), we need to just eliminate ALL regulations and fees (and services, of course).

I would vote that useless country clubs and other amenities of the wealthy be legally established as the target zones for colonization by our new itinerant workforce, our new Ciudad Bushistas.

BKM, zoning doesn't preserve minimum housing standards. Pre-construction checks of building plans and post-construction checks of actual construction ensure minimum housing standards.

Remember, not long ago urban planners insisted they had the solution to America's low income urban housing problem. The link below shows what happens when urban planners play housing developer.

And please, Cyburbia contributors, let us stop blaming Wal-mart and President Bush for everything that goes wrong. It is getting pathetic.

[URL=http://web.mit.edu/11.204/www/lecture-notes/Lect3-Ghetto-images/image01.jpg]

[BKM]

Originally posted by jtmnkri

BKM, zoning doesn't preserve minimum housing standards. Pre-construction checks of building plans and post-construction checks of actual construction ensure minimum housing standards.

Remember, not long ago urban planners insisted they had the solution to America's low income urban housing problem. The link below shows what happens when urban planners play housing developer.

And please, Cyburbia contributors, let us stop blaming Wal-mart and President Bush for everything that goes wrong. It is getting pathetic.

[URL=http://web.mit.edu/11.204/www/lecture-notes/Lect3-Ghetto-images/image01.jpg]

You're contradicting your own thread and post.

At the beginning, you claim planners "cause" housing shortages.

Zoning is one of the primary tools used by planning to maintain middle class property values in a community. That includes minimum lot sizes, the expense of planning processes, public works development standards, etc. My point is that as we are quickly devolving (for all but a tiny elite) into, say, South American, living standards-we need to get rid of zoning and other codes and let people build shantytowns.

WalMart was only an example (Sam's Law) of current economic trends toward centralized control that cuts corners wherever it can. they are by no means the only company following these trends (which are inevitable in corporate capitalism).

[boiker]

Originally posted by jtmnkri

zoning doesn't preserve minimum housing standards. Pre-construction checks of building plans and post-construction checks of actual construction ensure minimum housing standards.

Zoning does preserve minimum development standards. It prevents a developer from buliding denser than what is envisioned in the community. It prevents a builder from creating parcels or homes that would be considered "less than desierable" It ensures inclusion of parkland.

Remember, not long ago urban planners insisted they had the solution to America's low income urban housing problem. The link below shows what happens when urban planners play housing developer.

...and planning being a science, shows that theory is not always fact.

And please, Cyburbia contributors, let us stop blaming Wal-mart and President Bush for everything that goes wrong. It is getting pathetic.

They are referencable figureheads that represent some larger problems. "Industrial Commercialism and import dependent economic systems" and "Single-party dominated governmental systems" are bad. Is that better?

[LPA]

Bullet points:

* supply and demand control housing prices far, far more than any 'planning regulations'. But regulations do constrict the supply in the case that...

*...local communities zone five-acre (or bigger) lots for all remaining undeveloped land. Or put half the county in conservation easements and zone the rest for 2-5 acre lots. This isn't something planners encourage, in fact we can usually be found arguing for a high-density core and a well-rounded mix of land uses that would, if implemented, accomodate far more jobs and residents than standard zoning. "Patio Man" shouts these ideas down pretty much every time, which leads to...

*...sprawl. It seems like an obvious point, but as Will Rogers said, the problem with land is they're not making it anymore. And housing lasts a long time. Once you build that McMansion, the lot it sits on is out of the building-site market for at least 150 years. So a fringe county gets a few subdivisions and big-box strips, and at some point the recent arrivals realize there are a lot of building permits already approved, and traffic is starting to get slow. So they get enact slow growth regulations that prevent much new housing from going up in their backyards (i.e. they zone 5-20 acre lots that nobody can afford). But there are still people who need a house. At this point those people have no choice but to go to the _next_ county, resulting in...

*...leapfrog development. This is how towns in WV and PA become suburbs of DC, and suburbs of Richmond get residents who commute north on I-95.

So if you're wondering why housing is so expensive, don't ask planners. If you'd done it our way to begin with, there'd be a lot more housing out there, and because there was a lot more housing out there it would be cheaper.

[jtmnkri]

Originally posted by BKM

You're contradicting your own thread and post.

At the beginning, you claim planners "cause" housing shortages.

Zoning is one of the primary tools used by planning to maintain middle class property values in a community. That includes minimum lot sizes, the expense of planning processes, public works development standards, etc. My point is that as we are quickly devolving (for all but a tiny elite) into, say, South American, living standards-we need to get rid of zoning and other codes and let people build shantytowns.

WalMart was only an example (Sam's Law) of current economic trends toward centralized control that cuts corners wherever it can. they are by no means the only company following these trends (which are inevitable in corporate capitalism).

BKM, come on, I never wrote the word "cause".

If you read my earlier post, I was clear about building codes: "Require government review and permitting only for true public safety issues, like stormwater management and fire safety."

We are not devolving into a tiny elite with the rest living at the South American standard, that is absurd! Can you provide figures or examples to support your anti-American slurs?

In my past job, I spent two years working on a retail real estate development in a low income Mexico City neighborhood. My colleagues from our Mexican partner came from Mexico's elite. I spent most of my time visiting and gathering info about Mexico City's neighborhoods followed by time on the job site working with construction guys. I learned this from my experience: Americans are not "devolving," our country represents the opposite of a tiny elite, and we certainly are not approaching Latin American living standards.

If this website's content is a guide, the American planning profession is devolving. In the Zoning, Land Use, and Current Planning forum, there is more discussion about regulating plastic cows than about housing. I made some initial suggestions about how planners can stimulate housing supply and do their part to make housing more affordable. I am disappointed to read excuse-makers whigning that professional planners "seldom have much say in the creation of regulations" and "usually have to back off because they don't have any real power."

You know what I think planners should do to improve housing affordability. What do you think planners can do to improve the housing affordability situation?

[boiker]

Originally posted by jtmnkri

You know what I think planners should do to improve housing affordability. What do you think planners can do to improve the housing affordability situation?

I believe there is a difference in public and private planning. When your hired as a consultant, you will be listened to. When your hired on the public side you are set to manage policy, rarely create it, and advise on policy. Usually the advice is only taken if it agrees with an elected's agenda.

Planners in the public sector don't have much say in terms of affordable housing. For instance, we tried to create an inclusive zoning requirement for our new development which was shot down in one council vote because the neighborhood didn't want "those people" living next to their nest egg. The usual response is: "educate and educate till your blue in the face". well, We had 4 meetings with the neighborhood associations, builders, residents, and coucil person that would be most effected by the change. All heard our proposal, commended our actions, and strongly said no. If planners are to set policy, In slow-growth areas like mine, the public ones will surely not have success.

[noj]

Originally posted by jtmnkri

...Billions are spent every year on "affordable housing" schemes, either through grants or by requiring a certain portion of newly built units to be sold or rented at below-market prices. This latter requirement is, in effect, yet another a tax on new building. A more effective and cheaper way to make housing more affordable, he reckons, is to loosen restrictions on new construction. It is inconsistent, surely, for a government to offer help with one hand, while holding back the supply of housing with the other."

Now I've come to this thread quite late, and I neither know or pretend to know a great deal about the US planning system. What I do know about, however, is the British planning system. Here we have massive issues of affordability, mainly because we are a very crowded island and land is a finite resource. Affordable housing quotas or provisions are the norm here and normally are required to make up between 30-50% of any new housing development. These houses are then used in a part equity scheme, or sold to local people at a low rate. I used to work for a house builder and it is no issue, as long as the playing field is level for everyone. What simply happens is the land price goes down. Its not a tax on building, the land sellers simply get less for their land. But, they still make a pretty penny out of it.

We tried a laissez faire attitude to planning in the 80's here to a certain extent and we're still trying to recover. Vast acres of low density, identikit housing in unsustainable locations resulted.

[The One]

Originally posted by boiker

I believe there is a difference in public and private planning. When your hired as a consultant, you will be listened to. When your hired on the public side you are set to manage policy, rarely create it, and advise on policy. Usually the advice is only taken if it agrees with an elected's agenda.

Planners in the public sector don't have much say in terms of affordable housing. For instance, we tried to create an inclusive zoning requirement for our new development which was shot down in one council vote because the neighborhood didn't want "those people" living next to their nest egg. The usual response is: "educate and educate till your blue in the face". well, We had 4 meetings with the neighborhood associations, builders, residents, and coucil person that would be most effected by the change. All heard our proposal, commended our actions, and strongly said no. If planners are to set policy, In slow-growth areas like mine, the public ones will surely not have success.

Its all about the politics and our free market(esque) system when it comes to "attainable" housing. To suggest that planners have the power to "fix" this problem is absurd. Do planners have the ability to help create attainable housing.....sure, but as long as there are politicians, it won't matter what we CAN do, only what we're ALLOWED to do.....
Builders gripe about low cost housing requirements (low margins), neighbors gripe about "those" people, even though "they" are teachers, cops and construction workers

[LPA]

Originally posted by The One

Its all about the politics and our free market(esque) system when it comes to "attainable" housing. To suggest that planners have the power to "fix" this problem is absurd. Do planners have the ability to help create attainable housing.....sure, but as long as there are politicians, it won't matter what we CAN do, only what we're ALLOWED to do.....
Builders gripe about low cost housing requirements (low margins), neighbors gripe about "those" people, even though "they" are teachers, cops and construction workers

Or they don't personally have a problem with "those people", but assume everyone else does (including any potential buyer looking at their house) so they act to protect their investment.

[jordanb]

Yeah, "property values" is the rallying cry of the NIMBYs. It's a way for them to be bigoted without being bigoted (because other people are bigoted!) And to oppose projects for which there is no rational justification for opposition. "Yes, I know that project has been designed to produced no significant danger/pollution/nuisance/noise/whatever, but it will still hurt my property values!

Why is it the government's responsibility to protect people's property values? Isn't falling value a risk they willingly accepted when they became real-estate investors?

[BKM]

Originally posted by jtmnkri

BKM, come on, I never wrote the word "cause".

If you read my earlier post, I was clear about building codes: "Require government review and permitting only for true public safety issues, like stormwater management and fire safety."

We are not devolving into a tiny elite with the rest living at the South American standard, that is absurd! Can you provide figures or examples to support your anti-American slurs?

In my past job, I spent two years working on a retail real estate development in a low income Mexico City neighborhood. My colleagues from our Mexican partner came from Mexico's elite. I spent most of my time visiting and gathering info about Mexico City's neighborhoods followed by time on the job site working with construction guys. I learned this from my experience: Americans are not "devolving," our country represents the opposite of a tiny elite, and we certainly are not approaching Latin American living standards.

If this website's content is a guide, the American planning profession is devolving. In the Zoning, Land Use, and Current Planning forum, there is more discussion about regulating plastic cows than about housing. I made some initial suggestions about how planners can stimulate housing supply and do their part to make housing more affordable. I am disappointed to read excuse-makers whigning that professional planners "seldom have much say in the creation of regulations" and "usually have to back off because they don't have any real power."

You know what I think planners should do to improve housing affordability. What do you think planners can do to improve the housing affordability situation?

I was of course being somewhat inflammatory (although I could argue for real many of my points ) The current model of economic development is not producing very many ladder jobs or middle class salaries. But....that's neither here nor there.

Several posters point out the error of thinking "planners" by themselves can "solve" an affordable housing crisis. Many community stakeholders do not want the problem solved. Planning and building laws certainly exacerbate affordability problems, but as leenellis has pointed out, there are other factors beyond simply expediting cheap suburban housing that we need to address as planners.

One major issue you do not address is simply concentration of population. I read an interesting essay by the President of REASON FOUNDATION, of all people, talking about the relative lack of an affordability problem in many places in "the Heartland." His example was Huntsville, Texas, which he described as a paragon of low density suburban dream, low levels of regulations, and affordable housing. He admitted, though, that he was so eager to get out of there because it was a mindless small town with absolutely nothing to do. There are exceptions, including many people on this board, who do choose "small town" life. But, many of the affordability problems are associated with crowding into "desirable," environmentally sensitive metropolitan areas. (EDIT: By no means do I dismiss all small towns as mindless. I was only quoting the author in question. Huntsville was a prison town that that writer found unbearable. Many people do prefer small towns, which is an understandable choice.)

Nor do I believe that the surburban cul-de-sac dream house model should be promoted/facilitated to the point it is "affordable" in fast-growing, dense, expensive urban areas. I'm sorry, if you want a cheap three bedroom rancher, Reno or Boise, or the other David Brooks "Cities of Opportunity" await. Life is full of compromises, and if you want to live in the Bay Area or Boston or Los Angeles, or central Chicago, you may have to pay more and live in a....horrors....apartment or townhouse. Life's rough, man.

California and the urban northeast will NEVER be cheap or affordable. Nor should they be-unlimited growth, or development at reduced building codes-have serious consequences. I live in a very seismically active area, and I'm not sure reducing building codes is a good answer over the long term.

[boilerplater]

I live in a very seismically active area, and I'm not sure reducing building codes is a good answer over the long term.

A misanthrope's response: Sure it is! When the big one hits, with flimsy buildings you'll have greater loss of life, and there will ultimately be less demand for homes in the region.

But seriously, jtmnkri, I can show you plenty of places in NJ where housing is affordable. You just have to live among "those people"! One thing I have noticed that I cannot find logical reason for are the regulations for septic systems in some municipalities in NJ. Its as if they've written them to make the testing process unfairly costly. You have to get your soil tested, but the tests are only good for 3 years. This is on ground that has remained largely unchanged since the last ice age. The only thing that could change the groundwater is development around it, so I could see re-testing if that were the case. Testing means at least $1000 a day for an excavator, a few hundred for the soil tester, and a few hundred to the municipality. Testing can easily run more than one day, and then you have the costs of designing and building the system, easily 30-40K for a small house. The designs are only good for a few years as well. When discussing affordable housing, it is common to think of high-density urban building types, but if you want to make unsewered suburban and exurban homes more affordable, this is a cost you'd have to reduce. Then of course you run into all the associated costs of these types of development, such as commuting and yard maintenance, further raiding a family's budget. The others here make a strong point in that it is the consideration of growing property values as a virtual constitutional right as a major factor in keeping out affordable housing.

[chasqui]

I work with a consulting firm in Dallas which does a lot of work in affordable housing and I used to work as a planner for a city government. I have seen the affordable housing issue from different sides. What different viewpoints!
In the municipal setting affordable housing was like a taboo subject - No one discussed affordable housing except to say "we have too much of it". Personally I felt, and still do, that the most sustainable neighborhoods provide for a mix of incomes. Our Planning Commission wanted the Planning Department to do something to raise the minimum price of new homes built! Yes - raise the price.
As far as impact fees I have to agree with what was said before - the services (roads, parks, water/sewer) cost what they cost - impact fees just change who is paying. Might high impact fees slow new development by increasing the "entry fee"? Maybe. Does this affect affordable housing? Sure - the initial price is higher. Will it make the housing less affordable over the long haul? No - because the services would have to be paid for anyway. As has been stated already, there are many factors which determine housing affordability, as there are many barriers. In my experience I have not seen planners going about trying to create these barriers. I have, however, seen CPC's wishing to reduce housing affordability.

[BKM]

Originally posted by chasqui

In the municipal setting affordable housing was like a taboo subject - No one discussed affordable housing except to say "we have too much of it". . . . Our Planning Commission wanted the Planning Department to do something to raise the minimum price of new homes built! .

Wow. That's a different perspective. Many residents may be thinking this, but the constant drumbeat from the state and in the political sphere is "build more affordable housing. build more affordable housing" (At least until the public hearings, when the complaints about "drug dealers from Oakland moving in" arise.

Of course, our market is a little different. According to realtor.com, there are exactly TWO houses in Vacaville (a city of 100,000 people) that are priced at under $300,000. http://realtor.com/FindHome/HomeList...0&lnksrc=00002