Bacon's Rebellion

James A. Bacon



 

Time for an attitude adjustment!

Environmental Colonialism

 

 

"Smart Growth" restrictions on development make housing unaffordable to thousands of minority families and perpetuates residential segregation.


 

Edmund Peterson, an African-American policy wonk from Washington, D.C., hijacks a propaganda ploy of American liberals and turns it against them.

 

In the world view of liberalism, racial discrimination is endemic in the United States. Particularly complicit are businesses such as mortgage companies, hospitals and industrial users of toxic chemicals. By showing that minorities receive fewer mortgages, enjoy less access to health care or live in greater numbers near manufacturing plants – regardless of what other factors, like income, may account for the differences -- study after study portrays minorities as victims of society. Mere statistical disparity is deemed proof of institutional racism.

 

Peterson observes that African Americans have lower rates of home ownership than whites. He also maintains that high housing prices in the suburbs block minorities from escaping deteriorating inner cities. Provocatively, he labels the phenomenon “the new segregation.” But he doesn’t blame the usual suspects. The greatest problem for African Americans today isn’t overt prejudice and discrimination, said Peterson recently at a forum of the Virginia Institute for Public Policy, it’s the steady erosion of property rights. The villains aren’t capitalists – they’re liberals!

 

Local growth controls, like those espoused by the “smart growth” movement, restrict the supply of developable land or load up new houses with impact fees, both of which force up the price of houses. Existing suburban home owners, mostly white, capture the benefit of rising real estate prices in the form of increased equity. By contrast, tens of thousands of minority families are shut out of the suburban housing market.

 

Environmentalists comprise a core constituency of the smart growth movement, which opposes sprawl-like development on the grounds that it disrupts wildlife habitat, ruins rural vistas, causes air pollution by making people drive more, and aggravates water pollution by increasing run-off. Most environmentalists like to think that their social conscience extends to matters of race, but their growth-control initiatives build an invisible wall around the inner city. Peterson describes the phenomenon this way: “Jim Crow turns green.”

 

Affiliated with the Center for Environmental Justice, Peterson revels in controversy. It’s amusing to hear him turn the tables on the holier-than-thou rhetoric that emanates from the Left. I must confess, though, I do get weary of hearing the endless refrain of racism, racism, racism, even when employed in defense of free markets and property rights. But Peterson's incendiary turns of phrase do describe the outcome of growth controls even if they don't accurately describe the motives behind them.

 

Robertson raises a vital point for understanding the political economy of development in Virginia and the rest of the United States: Growth controls invariably protect the interests of suburban property owners/voters/taxpayers at the expense of newcomers – not just minorities, but all lower-income families striving to live the suburban dream.

 

Peterson bases his critique on an econometric study commissioned by the Center for Environmental Justice of the National Center for Public Policy Research. QuantEcon, Inc., an econometrics firm based in Portland, Ore., wrote the report. The key finding is this:

 

Poor and minority families pay a disproportionate amount of the social and economic costs of growth restrictions. The weight of increased home prices falls more heavily on minorities, the disadvantaged and the young, fewer of whom already own homes. The “haves” who already own homes ride the price bubble created by restricted growth policies while the dream of home ownership moves further away from the “have-nots.”

 

If growth restrictions like those imposed in Portland, a bastion of the smart-growth movement, had been in effect across the nation for the last 10 years, the report concludes, 260,000 minority families who now own their homes would not own them today.

 

The Portland example is particularly instructive because it is a model that many smart growth advocates in Virginia look to for inspiration. According to the QuantEcon report, housing prices have climbed faster in Oregon faster than anywhere else in the country. Despite the existence of an Urban Growth Boundary in Portland and the funneling of development into mass-transportation corridors, light rail struggles to find riders, infrastructure spending has not slowed, and people are driving their cars more than ever. The icing on the cake: Minorities in Portland and other "smart growth" cities, according to the report, are less likely to own their own homes than minorities in "sprawl" cities.

 

Hypothesizing a correlation between growth controls and housing inflation, QuantEcon developed a “Site Scarcity Index,” measured as a ratio of population growth to developed-land growth. A state with a high Site Scarcity Index, such as Oregon, would have a population that is growing more rapidly than the amount of land developed. The resulting scarcity of land, in theory, should translate into higher home prices.

 

The numbers confirm that there is, in fact, a correlation between a scarcity of developable land and rising housing prices. But the relationship is a tangled one. Land-use policies are not the only factor inhibiting land development, QuantEcon notes. Many metro areas are hemmed in by water, mountains or other geographic boundaries; some have limited supplies of water.

 

Population, Development

and Home Prices

  Site Site Housing Housing
  Scarcity Scarcity Inflation Inflation
  Index Rank (%) Rank
Alabama

0.4 

36

61

23

Alaska

 

 

53

28

Arizona

2.31

2

53

29

Arkansas

0.71

15

60

25

California

0.58

26

11

47

Colorado

1.60

3

105

3

Connecticut

0.37

38

-5

51

D.C.

33

40

Delaware

0.81

12

35

39

Florida

0.56

27

40

36

Georgia

0.52

30

62

22

Hawaii

0.54

29

19

43

Idaho

1.21

5

81

7

Illinois

0.70

16

63

21

Indiana

0.62

20

77

9

Iowa

0.91

10

77

10

Kansas

0.76

13

64

19

Kentucky

0.33

43

78

8

Louisiana

0.34

39

46

34

Maine

0.14

46

18

45

Maryland

0.44

34

27

41

Massachusetts

0.19

45

19

44

Michigan

0.33

42

95

4

Minnesota

0.67

17

68

15

Mississippi

0.45

32

66

16

Missouri

0.61

22

54

27

Montana

0.81

11

75

12

Nebraska

1.23

4

72

13

Nevada

3.47

1

48

33

New Hampshire

0.45

33

7

49

New Jersey

0.46

31

7

48

New Mexico

0.60

25

52

31

New York

0.33

41

16

46

North Carolina

0.61

23

66

17

North Dakota

0.11

47

49

32

Ohio

0.22

44

63

20

Oklahoma

0.65

18

55

26

Oregon

1.19

6

124

1

Pennsylvania

0.10

48

37

38

Rhode Island

0.34

40

4

50

South Carolina

0.39

37

71

14

South Dakota

0.62

21

83

5

Tennessee

0.44

35

65

18

Texas

0.98

9

42

35

Utah

1.05

8

110

2

Vermont

0.61

24

21

42

Virginia

0.55

28

40

37

Washington

0.75

14

82

6

West Virginia

0.02

49

52

30

Wisconsin

0.64

19

77

11

Wyoming

1.13

7

60

24

Note: Housing inflation covers the period 1990 to 2000. Ranking runs from high inflation to low.

Source: “Smart Growth and Its Effects on Housing Markets: The New Segregation,” a econometric report by QuantEcon for the Center for Environmental Justice of the National Center for Public Policy Research, November 2002.

 

The report concedes that other factors influence rising housing prices, most notably growth in per capita income. Wealthier populations can afford to buy bigger houses with more expensive amenities.

 

Among the states most closely identified with Smart Growth – Oregon, Washington, Tennessee, Kentucky, Pennsylvania and Colorado – housing inflation was higher than expected, QuantEcon says. But the report notes that California, Hawaii and Vermont were notable exceptions. In the first two, recessions had pricked housing bubbles early in the 1990s. Vermont may be an anomaly.

 

According to QuantEcon’s methodology, Virginia was expected to experience home price inflation of 51.7 percent during the 1990s, but in actuality turned in a 40.2 percent performance. Clearly, restricting the development of land is only one factor among several that affect the price and affordability of real estate. By itself, that conclusion doesn't take us very far.

 

While I endorse Peterson’s commitment to affordable housing, especially for minorities who have for too long been excluded from America’s mainstream, I am not clear -- either from his report or his remarks last week -- how he proposes to achieve this worthy goal. I certainly share his antipathy to those who, under the “smart growth” banner demand more government power to fix the hash that existing land-use regulations have made over the past 30 to 40 years.

 

Peterson implies that lifting restrictions on “the supply of development sites” is the answer. I would respond, yes, but…. If he means opening up more rural land to development, as Virginia and the rest of the nation have done for decades, then I would disagree. Who does he suppose will pay for all the transportation and infrastructure improvements in the middle of nowhere? Subsidizing developers and land owners on the urban fringe does not equate to free markets.

 

If Peterson advocates lifting the restrictions that inhibit infill development and the redevelopment of deteriorating neighborhoods, then I wholeheartedly agree.

 

Not everyone wants to live in a five-story apartment complex a block from the METRO, like the 2900 Clarendon project I described last week. But a lot of people do. There is large pent-up demand for Clarendon-style projects, which the current array of institutional forces – from zoning codes, the empowerment of NIMBYs, to state funding for sprawl-inducing transportation projects – makes exceedingly difficult to develop.

 

By all means, we should make every effort to increase the supply of housing for young people, minorities and other lower-income groups. Let's not make them, as so many smart-growth advocates seem prepared to do, live in multi-rise apartment buildings and ride the transit to work. Likewise, let's not assume, as the current system does, that they want to move into a single-family dwelling in a cul-de-sac subdivision on the edge of town. Let's create a system that is responsive to consumers -- of whatever ethnicity -- and empowers developers to supply the housing product they want.

 

--February 17, 2003

 

 

Bring Home the Bacon

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For a different take on the affordable housing issue, read Ed Risse's column:

 

Affordable, But No Bargain

 

"Affordable" housing is often a code word for opening up cheap land for development. But home owners pay a price for the perpetuation of dysfunctional human settlement patterns.