Thursday, October 20, 2005
Sprawl and housing prices
A new study claims to show that policies that encourage people to live in inner cities rather than the suburbs will reduce, not increase, housing prices. But the study does not show this, and the author's claim that it does is misleading.
The paper, written by a California State University public policy professor and a policy analyst with the California legislature, claims to be a response to, among others, Harvard Professor Edward Glaeser and Wharton Professor Joseph Gyourko's paper, The Impact of Zoning on Housing Affordability. Glaeser and Gyourko compared housing prices with levels of land-use regulation and found that more regulation made housing less affordable.
The problem is that the California study does not compare housing prices with regulation. Instead, it compares housing prices with the percentage of people who live in an urban area's central city. Yet this percentage is more a result of historical happenstance and state laws than of land-use regulation.
For example, Texas grants cities strong powers to annex adjacent land without permission from the residents. As a result, a high percentage of people in Texas urban areas live in the central cities of those urban areas. But most Texas cities have a very low level of land-use regulation so, as Glaeser and Gyourko would predict, housing in those cities is very affordable. Yet the Texas data would also support the California paper's claim that a large central-city population (i.e., less sprawl) makes housing more affordable. Obviously, there is no cause-and-effect relationship between the California definition of sprawl and housing prices.
Of course, supporters of smart growth will use the California study to justify more land-use regulation. Opponents of such regulation should be ready to respond by showing that the study does not provide any support for such regulation.
The paper, written by a California State University public policy professor and a policy analyst with the California legislature, claims to be a response to, among others, Harvard Professor Edward Glaeser and Wharton Professor Joseph Gyourko's paper, The Impact of Zoning on Housing Affordability. Glaeser and Gyourko compared housing prices with levels of land-use regulation and found that more regulation made housing less affordable.
The problem is that the California study does not compare housing prices with regulation. Instead, it compares housing prices with the percentage of people who live in an urban area's central city. Yet this percentage is more a result of historical happenstance and state laws than of land-use regulation.
For example, Texas grants cities strong powers to annex adjacent land without permission from the residents. As a result, a high percentage of people in Texas urban areas live in the central cities of those urban areas. But most Texas cities have a very low level of land-use regulation so, as Glaeser and Gyourko would predict, housing in those cities is very affordable. Yet the Texas data would also support the California paper's claim that a large central-city population (i.e., less sprawl) makes housing more affordable. Obviously, there is no cause-and-effect relationship between the California definition of sprawl and housing prices.
Of course, supporters of smart growth will use the California study to justify more land-use regulation. Opponents of such regulation should be ready to respond by showing that the study does not provide any support for such regulation.
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