Virginia contractors are moving dirt again.
by James A. Bacon
The United States appears to be experiencing another building boom — it’s amazing what 3% mortgage rates will d0 — and urban geographer Joel Kotkin is crowing that most of that growth is occurring in the low-density, suburban fringe of America’s metropolitan regions. In a recent blog post in New Geography, he puts it this way:
Over the past decade … areas five to 10 miles further from the core expanded their populations by 1.1 million. Areas further out, 10 to 20 miles, added 6.5 million residents. Areas beyond 20 miles from the urban core saw the largest growth, 8.6 million – 40 times the growth in the urban core and nearly four times the percentage growth (18.0 percent).
The boom in far-flung, single family dwellings flies in the face of the “dream imagined by planners, pundits and real estate backers … proclaiming the end of the single-family home and heralding the rise of densely populated urban cores.” These “planners and retro-urbanists,” he asserts, want to “coerce” Americans to live closer to the core against their preference for the lower density surburban life.
I won’t dwell on the fact that Kotkin’s numbers conflate six years worth of development trends before the 2007 housing bust with four years that follow it, thus obscuring the inflection point in metropolitan growth and development. Let us accept the fact that some growth and development is still occurring on the metropolitan fringe. Whether or not the center of gravity of growth has shifted somewhat back toward the urban core, as others (and I) maintain, is an issue that we can leave to another day.
What disturbs me is that Kotkin views the renewal of construction on the metropolitan fringe as evidence of deep-seated consumer preferences for the exurban life. While decrying the social-engineering of California greenies and smart growth advocates, who seek to restrict the building of single-family homes and subsidize mass transit, he is sublimely oblivious to the vast apparatus of zoning codes, transportation policies and federal housing subsidies — which amounts to a different form of social engineering — that continue to under-write traditional suburban-sprawl development.
When writing about those who forecast urban revitalization, Kotkin erects a straw man. He doesn’t quote anyone by name. He certainly doesn’t quote Christopher B. Leinberger, who arguably has done more than anyone to make the case that post-2007 economic and demographic forces favor the revival of urbanism. But Leinberger’s argument does not resemble Kotkin’s caricature in the slightest. I bring that up because I have just finished reading Leinberger’s 2009 book, “The Option of Urbanism,” and it’s on my mind.
Leinberger, a developer himself, fully acknowledges the large obstacles to what he calls “walkable urbanism.” Outside core cities, zoning codes across the country still outlaw urban forms of development. Any developer wanting to build a mixed-use project must run a protracted, expensive and risky process to obtain a special use permit. Standard sprawl-style development is still the default setting. Making the problem worse, Leinberger says, is the fact that Wall Street, which bankrolls the Real Estate Investment Trusts and publicly traded development companies, still prefers commodified real estate products — the 19 standard real estate product types — prevalent in green-field development. Developers who want to do in-fill or re-development, which by their nature consist of one-off projects, find it much more difficult to raise money. Finally, federal policy continues to favor single family dwellings. As Smart Growth America has documented, 84% of the $2.2 trillion in loans, loan guarantees, tax benefits and direct subsidies that the federal government directed to the real estate sector between Fiscal 2007 and 2011 went to single family housing.
Therefore, to cite the building revival of single-family dwellings on the suburban fringe as evidence of a consumer “preference” is ludicrous. Federal Reserve Board policy has driven interest rates down to record lows, making housing more affordable. After six years of recession/slow growth, there is a pent-up demand for housing. Due the reasons cited above, the real estate sector continues to supply a lot of the same old product, which people are buying because the options are so limited. The kind of walkable urbanism that Leinberger talks about remains in scarce supply relative to demand, which drives up the price. People buy what they can afford — drivable suburbanism — even if in many cases it doesn’t match their preferences.
If the real estate industry is still delivering a lot of drivable urbanism, it’s because (a) that’s what the big developers know how to do, (b) that’s what’s easier to finance, and (c) that’s what’s zoned for and (d) that’s what’s subsidized. A fraction of the population does prefer drivable urbanism, but there is more than enough of that product on the market to meet their needs. A significant fraction of the population also prefers walkable urbanism. Under the current political economy at the national, state and local levels, their needs are not being met. For those who believe in free markets and consumer sovereignty, the answer is to create a level playing field in taxes, regulations and direct subsidies.
Walkable urbanism in Virginia. I opposed Governor Bob McDonnell’s transportation tax package on the grounds that it would raise more money to squander on road and highway projects that would support Business As Usual development. My side lost, so I won’t carp about it anymore. My goal now is to ensure that the money is well spent. We have a choice, people. We can build more roads to support more sprawl — as we have in the past and continue to do — or we can invest our money in projects that support re-development, maximize the use of existing infrastructure, and create more fiscally sustainable human settlement patterns.
