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Friday, October 02, 2015
‘Smart Growth’ Drives up Housing Costs
By NCPA @ 1:14 PM :: 4152 Views :: Development, Land Use, Cost of Living

Putting People First

NCPA, October 2, 2015

A study reveals that urban containment, or smart growth policies, have been shown to drive the price of housing up, significantly reducing discretionary incomes, which necessarily reduces the standard of living and increases poverty.

However, the trend to intensify land use regulations is becoming stronger and more insistent, even though it makes the alleviation of poverty, improvement of living standards and upward mobility more difficult.

Urban containment policies seek to substantially increase urban population densities and transfer urban travel from cars to public transportation but these policies could lead to lower standards of living and greater poverty.

The new study finds that:

  • About 90% of the costs in low-density cities are attributable to personal vehicle use.
  • Previous studies dismiss the housing affordability consequences of urban containment policy.
  • Urban containment policy has also been associated with greater housing market volatility.
  • More stringent housing regulations could cause an annual loss of nearly $2 trillion in GDP in the United States.

The data also show that between 2000 and 2014 there has been a migration of nearly 4.6 million people from the most compact urban areas toward more dispersed areas. None of this is surprising; it only indicates people are seeking upward mobility in cities with lower costs of living.

In the more dispersed urban areas the chances of being able to afford a single family house are greater because of lower house prices relative to incomes.

The main goal of urban planning should be to improve the lives of people, thus policies should be based on their impact on the standard of living and poverty eradication. Recent evidence shows that liberalization of land use regulations helps attain these goals.

Source: Wendell Cox, "Putting People First," New Geography, September 28, 2015

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