Asymmetrical Information

Kind of amusing that the article suggests that he must be at least somewhat of libertarian because, gasp, he thinks rent control is "bad, bad, bad." That's pretty uncontroversial among economists; Paul Krugman wrote a good column on it back before President Bush's election drove him over the edge.

I've certainly seen other people, such as Thomas Sowell, at least remark on the strange enthusiasm of city liberals who claim to support affordable housing yet completely support strong evironmental and zoning regulations. I don't know anyone who had really studied the subject academically, perhaps that's what you meant.

Similarly to the rent control thing, the author finds it strange (and proof that he's not a righty or hard core libertarian) that Glaeser has an enthusiasm for the traffic tax. Not that surprising in an economist, either.

Very sad how ignorant people are of economists. Also sad on how poorly economists are able to get their message out on things on which the vast majority agree. Paul Krugman's column had a lament on how people only care what economists say on things where reasonable economists disagree, not on things where vast majorities agree.

Read Who really wants Affordable Housing? No one (except people who rent.) if you are interested in the subject. There is nothing new --- anyone in the real estate business knows -- about the insight that many people gain from restrictive zoning.

Btw, isn't it fascinating how a truly significant post (this one on Glaeser) gets very few comments while a minor one (the prior one on abortion) gets a ton. I don't think it is only a matter of what a person finds "interesting." I think it's intellectual accessibility.

The housing issue -- if one is to comment meaningfully -- requires some real knowledge. But everyone can comment on such a personal issue as abortion, or politics in general for that matter.

Of course Jane's comment on the possible correlation between liberals and high housing prices was a nicely-done provocation but it didn't seem to work. Mayber it's just so obviously so. Or obviously false.

Tyler Cowen should have a spin on why certain posts get comments and some don't.

The work of Prof. Glaeser suggests that most of the population growth of the country will occur in areas with less restrictive zoning policies. That will be partly due to the fact that people with children will tend to live in areas where housing is less expensive. This bodes well for the future of the Republican Party. Married people with children overwhelmingly vote Republican.

It is ironic that the policies of the Democratic Party are mainly about the self-interest of the upper middle and upper classes.

Bullman,

I don't get that one. If those who tend to vote Republican (children with kids) move to Rupublican states (with lax zoning laws) how does that benefit the Republican party?

"I don't get that one. If those who tend to vote Republican (children with kids) move to Rupublican states (with lax zoning laws) how does that benefit the Republican party?"

Well, the low price housing/republican states should show a net increase in population, thus increasing the electoral votes of those states, thus increasing their ability to influence national elections.

Further, businesses will follow, as restrictions on business / plus lower cost work force will make those same states more atractive. So the money will also follow. This is already happening in several North Eastern states.

So we will all become Republicans. So? Then we'll have bitter fights within the Party.

Btw, do you know what happens in places with less restrictive zoning when there is lots of population growth? People then call for tighter zoning to protect their property values. Restrictive zoning is NOT a left/right issue. Everyone wants their own home to be protected. It happens as soon as there is prosperity.

Liberals pay lip service to affordable housing then drive up prices with environmental restrictions.

Btw, do you know what happens in places with less restrictive zoning when there is lots of population growth? People then call for tighter zoning to protect their property values.

Generally, yes. But *something* has kept Houston, or Charlotte (or the rest of NC) from having tighter zoning, despite massive population growth.

I agree that one would expect (and there probably is) a negative feedback cycle at work, but some places certainly seem to have less of an effect than others.

The other question is whether this affects demographics-- do people not just move to where housing is cheaper, but also instead of moving choose to decrease the number of kids that they have because of housing costs, etc.?

The only place I know in North Carolina with restrictive zoning is, yep, famously liberal Chapel Hill, which combines wealth with liberals.

David Sucher has an interesting speculation: that Republicans in red states will at some point turn "environmentalist" in order to protect *their* property values. But maybe these Republicans will seek to do that by building gated communities rather than by restrictive zoning.

In Durham, NC, politics is controlled by four PACs: the Durham People's Alliance (liberal, largely white), the Durham Voters Alliance (moderate liberal, largely white), the Durham Committee on the Affairs of Black People, and the Friends of Durham (moderate conservative, largely white.)

The first three generally controlled city government through their endorsements during the 1980s. Interestingly, in the late 1990s this alliance broke up; the (fairly well-off) white liberal groups started supporting more and more zoning and development restrictions, whereas the Committee (supported by blacks with, on average, lower incomes) favored looser zoning in order to attract jobs and keep housing affordable. So the Committee and the Friends of Durham elected several jointly endorsed candidates starting in the late 90s.

The Committee gets to play kingmaker, and arranges for Durham to have high taxes and social spending, but also loose zoning.

Good for you, Giving up emotions even negative ones is a very hard prospect. Reading you post made me think about if there are any negative emotions that I need to shut out of my life.

A high concentration of liberals is certainly closely correlated with high housing prices. Glaeser is the first person I've seen suggest that the link is causative, a provocative idea, although one I'd want to see more evidence for.

I live in one of those expensive concentrations of liberals (Ann Arbor), and here there is an ongoing battle between the 'preservation liberals' and the 'density liberals' with the density advocates recently managing to make some headway (approval of some new downtown high-rise projects). But there are so many strings attached to these projects, that they are never very affordable (except for the few designated "affordable" units -- the subsidies for which, of course, raise the prices of the rest). And naturally we have the other accoutrements of expensive liberal university enclaves (a green belt and extensive and historic district commissions imposing strict limits on changes to buildings). And then everyone complains about sprawl and only rich people being able to afford to live in town. Now as someone who can afford it, I have to say it's really a very nice place to live, but to me the relationship between liberal politics, development restrictions, and high prices is quite clear.

"...the relationship between liberal politics, development restrictions, and high prices is quite clear."

And Republican suburbs have lots of affordable housing? Wrong. You might want to align your wishful beliefs with real estate facts.

What will it take for people to grasp that _everyone_ who lives in a place where there is development pressure likes land use restrictions -- especially when applied to their neighbors. People _prefer_ places where there is some predictability about what can be built nearby.

The point they made about businees following tracks for what I know from three rather large ($10+Billion) sized companies. They are all moving opperations out of the 'bubble' housing area. They can pay their engineers a lot less for the same standard of living in Texas and Georgia. In SoCal the idea is to leave by attrition. My company (and the others) can't keep our young engineers there. When they are single they love the 500 sq ft apartment living. They get married and look around for somewhere to raise a family. And leave. So the decision is just not to hire into the bubble areas (we try to hire from the bubble areas - especially good people from other companies willing to move and double there takehome (after taxes and mortgage) without a gross change in pay.

I did it and I'm in the process of cherry picking the best of my old company to join me. The numbers don't lie.

I'll even give a simple example. I have a young (26 yrs) engiineer, newly married and wants to start a family. They just bought a crummy $400K townhouse with a 75 minute commute. I'm offering him a %5 raise, corporate relo, and on that same $400K he can get a 3000 sq ft house on 2/3 acre, in a excellent school district, with a 15 minute commute.

I get an outstanding programmer and analyst into my team. It's like shooting fish in a barrel.

And Republican suburbs have lots of affordable housing? Wrong. You might want to align your wishful beliefs with real estate facts.

Again, Charlotte, Raleigh, and Houston have much more affordable housing, and all are pretty conservative for cities. Sure, all of them do have ritzy suburbs or neighborhoods, but housing is still much more affordable there than in more liberal areas because they allow more development.

I'm certainly willing to listen to geography-based explanations, for example, but you seem to be the one arguing without any fact.

Buffpilot-

Did you finally make the move to Texas?

A major driving force is that Republicans have few ideological buttresses for their innate desires to restrict development. Every person has a desire for a stable home environment and wants to preserve everything as it was from 5 minutes after they moved in, Democrat, Republican, or whatever.

For the left, these impulses are supported by a desire for the government to do something, by a tendency towards believing in environmental protection through regulation, preserving communities, protecting the less fortunate from high rents, halting gentrification from pushing out minorities, desire to reduce profits of capitalists and capture them for redistributive programs, etc. All of these various ideological programs have large communities of support, organizations (PIRG & Public Citizen, NRDC & Sierra Club, ACORN, ACORN BAMN and NAACP, DNC et al. respectively), and can call on the sympathy of a very large % of the overall movement even if they are not full throated supporters.

Restrictionist Republicans have to fall back on nostalgia and little else. Very few of the ideological elements of the alliance advance goals that have restrictionist means or that can be used to support restrictions. A very, very large majority of the Right are anti-restrictionist: developers, businesses with facilities in the area (as long as they're not getting expropriated), libertarians and anti-government conservatives, and resource, manufacturing, and retail concerns (whose revenues are highly dependent on housing activity). The conservative ideological groups supporting restriction are some hunting/conservationist groups, traditionalist farming groups (though this tends to be swamped by the desire of most farmers to sell land to developers for $$$$$), and the hardcore obscurantist Christians exemplified by the CrunchyCon blog at National Review. Overall this is a weak coalition that gets little sympathy and less support from the mainstream Right.

This is not to say that Republicans are ethically better than Democrats. Rather it is that they have more ideological and movement influences that counteract their innate greed and resistance to change, while Democrats' ideology and beliefs reinforce their innate impulses. I do believe Republicans (especially classical liberal imperialists, like myself) are more moral, as well as wittier, taller, posessed of better skin and teeth, more talented in bed, stronger, faster, smarter, more handsome and devastatingly charming, but thos beliefs are irrelevant to the question. Besides that bias, I do think that ideological conformation can be expected to predominate, with Right and Left areas becoming more monocultural.

You will tend to see a divergence in economic success with non-restrictionist areas surging, upper-class restrictionist areas that are luxury goods succeeding (at least for the limousine liberal population), and lower class restrictionist areas failing (Detroit, Buffalo...).

But definitely read the article. I just hope that Prof Glaeser doesn't end up running the Treasury Department and then getting appointed President of Harvard, since it would be a shame for another of Harvard's young genius profs to be destroyed by the envious and spiteful dullards of the Arts & Science faculty!

This theory only holds for countries like the US, Canada, and Australia with a multi-polar economy. The effect is swamped in unipolar primate city economies like UK and France by the incomparable advantage to locating in the capital. It is further exaggerated by the tendency of Primate City economies to have centralist governments where National Governments are in charge of most/all decisions, with these National governments tending to be captured by the decisionmakers of the Primate City.

Portland, Oregon may prove an interesting test case for whether liberal politics and affordable housing can intersect through higher-density efforts. Having previously instituted urban growth boundaries statewide, and having constructed an excellent light rail system throughought the Portland metro area, the city and suburbs are presently on a huge blitz to increase density.

The formula seems to be: old house on small lot demolished, replaced by four townhomes; old house on large lot demolished, replaced by either eight townhomes or twenty apartment units; very large lot razed, replaced by either eighty apartment units or a miniature retail center. And in spite of this there are still a decent number of older homes for sale within a reasonable price range. It will be interesting to see the end result.

Joe,

Yes, I have moved to Texas (from Northern Virginia) and love it! News is local, cost of living is way lower, traffic is less, and I still get all the ammenities (world class arts & museums) of the big cities! And no snow!

Best of all is the abscence of the political atmosphere that overwelms everything. And little BDS.

hey - you must be talking about me too! :)

My daughter's high school has two PhDs in physics who teach nothing but physics classes. Similar education goes on in other areas in the school. Yet, you can buy 2500 square feet or so of house with 3cm granite and wood/tile floors for under $200k in those school districts.

We are opening an office in Oregon. No one from our office is interested in moving (I had to apologize to my brother). buffpilot's comments made a lot of sense.

Stephen,

When I send my opening letter/email to people I always put a link into Realtor.com with nice house, for sale now, within a 15 minute commute. The work gets the guy and the house gets the spouse (yea being a little sexist but the principle holds regardless). I even find out if the spouse is working and look for a job for him/her also. Good people are hard to find, but if you can pull them out of the East Coast/SoCal cacoon you've got it made. People who owned homes prior to 1999 (and thus are sitting on a huge equity pot in their homes), can sell out from the bubble areas and by huge, dream homes for cash - no mortgage at all. And leave the poor buyer with a $850K house with a 3-year balloon ARM. I get a highly motivated, happy employee who thanks me daily for convincing him to take the job!

At my old office, for the two years I was there, I could not entice people to move to No Virginia. Cost of living was way too high, pay to low for it (and determined by the government as we were government contractor). We paid above market rates for the jobs ($75-100K range), but I could not hire one person to come. All took one look at the housing costs/commute and laughed their heads off. I'd offer a 10% gross pay increase, but they were looking at a 30-50% net (after tax and mortgage) pay decrease!! Plus a doubling or more of their commute. Now that dynamic is in my favor.

This business hiring stuff is easy once you get the hang of it!

And Republican suburbs have lots of affordable housing? Wrong. You might want to align your wishful beliefs with real estate facts.

In point of fact, yes -- the suburban areas surrounding Ann Arbor are much more affordable. There are many fewer restrictions on development and hurdles for developers to clear.

What will it take for people to grasp that _everyone_ who lives in a place where there is development pressure likes land use restrictions -- especially when applied to their neighbors.

Yes and no. Many lefty types in Ann Arbor do recognize that low and moderate income people are being priced out of the market, but their instincts tend to prevent (or even work against) effective measures (and these instincts are *not* widely shared in less liberal environments). For example, in Ann Arbor, historical districts cover a high percentage of downtown neighborhoods, the commissions are powerful and the restrictions quite strict. Just recently, one such district commission recently killed a 10-story mixed use development on the edge of a historic district which project had already cleared all the other (considerable) bureacratic hurdles (planning commission, city council).

Development, in general, is viewed with suspicion (and developers, likewise, as capitalists only out to make a profit). Also, affordable housing, is viewed as something city government does (by building it or by twisting developer's arms to create designated 'affordable units') -- not something that market and legal conditions create (or fail to create).

And Republican suburbs have lots of affordable housing? Wrong. You might want to align your wishful beliefs with real estate facts.

Well, it's true everywhere *I* have first hand knowledge. And Professor Glaeser discusses it and has studied the issue academically as well. Would you equally accuse him of lacking facts?

Raleigh and its Republican suburbs have much more affordable housing than liberal Chapel Hill and its Democratic suburb Carrboro.

Ithaca, NY has tremendously more expensive housing than its Republican suburbs. (Of course, Cornell U. distorts housing prices, but I can get a larger, nicer place a ten minute drive from Cornell's campus in a suburb than I can a minute drive from the campus in the city.)

I once lived in Framingham MA and knew so many people at the local unitarian church who supported, and even went to protests to support affordable housing.

That is, until there was a proposal to build some in their neighborhood and then there were all kinds of reasons to not put it there.

Hypocrites

"A high concentration of liberals is certainly closely correlated with high housing prices. Glaeser is the first person I've seen suggest that the link is causative, a provocative idea, although one I'd want to see more evidence for."

This is because you haven't been reading my blog! I noted this link quite a while ago, and if you follow the link from my blog post to a Steve Sailer article, you will see overwhelming proof of such a causative link.

Link to my blog post

Ithaca, NY has tremendously more expensive housing than its Republican suburbs.

Can you explain the correlation/causation, and, well, what the point of this exercise is? This is not a large geographic area we're talking about here, nor is untrammeled growth really a great concern of upstate New York. (And there are shacks in northern Ontario that are "tremendously more expensive" than suburban real estate in the southern tier.)

From what I understand, the town of Ithaca is a very desirable community among some subset of Americans. Presumably it has a walkable downtown and good amenities so the price for housing gets bid up.

Ithaca's suburbs would lack those amenities and any walkability, plus they have the benefits of Ithaca's weather and upstate New York's economic vitality.

Does it seem logical that the party preferences of the people living in those towns leads to the price differential THROUGH growth policies as opposed to other factors which, even if connected to politics, have nothing to do with Democrats pursuing policies designed to limit growth?

I see a lot of reasons why party politics correlates with housing costs, and many ways that the relationship can be causal in different directions. I don't think there's any one equation because there are too many factors involved. Trying to reduce it to one equation is as effective as looking at employment rates in N.J. solely as a function of the minimum wage.

Interestingly, Northern Virginia is the Republican half of the D.C. metropolitan area, and as recently as 2001/2002 was voting heavily Republican in state legislative and congressional races.

The Republican party has recently started experiencing some setbacks in Northern Virginia. This is coming years AFTER the housing price boom starting and in the middle of unchecked sprawl. Why are people starting to vote Democratic? Based on what I've read on tooconservative.com, a blog run by a conservative Republican activist, it's because the people want relief from traffic and are willing to pay higher taxes to get it. Meanwhile, the Republicans in the legislature that supported higher taxes have been primaried out by conservatives who oppose new taxes AND tend to campaign heavily on conservative social issues (abortion and gay marriage) that most suburbanites don't want to hear about whether they agree or disagree with the conservatives. Republicans are losing in districts of Fairfax and Loudoun Counties that voted 60+% for Bush and (if they were suburban then) just as much or more for Bush Sr.

It appears that once towns marked by open vistas, light traffic, and good schools begin to suffer from excessive development and fiscal decline associated with "new construction" moving 5 miles further down the road, homeowners get worried and start looking to the government to help them against the free market in development. They shift from Republican to Democratic.

Not surprisingly, these criteria of high density, high development, increasing population, and otherwise pleasant amenities (safety, good school) are features of high demand against supply which leads to higher prices.

There is an interesting dynamic here. I think there's more to be gained from looking at how individual suburbanites vote and what factors have come into play in affluent areas that shift from Republican to Democratic, like the suburbs in the Northeast and the Pacific Coast. It may be more enlightening, if not as much fun, as coming up with theories about Democratic evils and hypocrisy. Most voters just aren't that into the politics when they vote.

Why is this such big news? I thought that everyone understands that restricting building leads to higher prices. Maybe I'm out of it...

I mean, you walk around Manhattan and see block after block of four-story buildings that can't be torn down b/c of zoning or rent-regs. How could it not be that these zoning rules keep housing expensive?

Boston and the surrounding cities of Cambridge, Somerville, Chelsea, and Medford have many liberals, very dense housing, no rent control, and a lot of new brownfield development of even denser condo and townhouse developments. Yet prices keep going up beyond the reach of most people.

When we are talking about augmenting existing housing stock by a fraction of a percent, and density is among the highest in the nation (as it is New York and Jersey City as well), zoning rules on new construction are statistical noise.

Boston and the surrounding cities of Cambridge, Somerville, Chelsea, and Medford have many liberals, very dense housing, no rent control, and a lot of new brownfield development of even denser condo and townhouse developments.

And the two-acre-per-lot-minimum suburbs everyone agrees are the problem in the northeast, while favoring Kerry and Gore for President, voted by large margins and in large numbers for Mitt Romney for Governor in 2002.

Brittain33,

"zoning rules on new construction are statistical noise"

How can that be true? Walk around NYC and you'll see how many low, low rises there are. And then factor out how much housing is locked down b/c of gvt programs (Mitchel Lama, projects, rent control, etc).

I'm only familiar w/NYC, but it's just comon sense that the costs here are the regs.

JoshK, I'm thinking about the number of apartments under rent control/rent stabilization vs. the number of apartments that could be built in five years if most of the regulations were suddenly revoked. I would guess the former is much greater than the latter; also, I think I'm reading you correctly that rent stabilization/control is one of the factors preventing demolition and new construction.

A friend of mine who is an architect in New York said that infill process on brownfields is just about done because they have built everywhere they can. I would hazard a guess that only a limited amount of housing could be added by destroying low-rises and putting in high-rises because of the capacity of the city's infrastructure to deal with additional people living in certain areas. This is all a roundabout way of saying that I see rent control as a much, MUCH bigger contributor to reduced supply than the actual supply of housing.

Brittain33 ,

I agree with you that RC/RS is a huge factor in the cost of housing here. But, IMHO, it's just another reg, like zoning. Here we have plenty of rules in place limiting heights of buildings and we have tenants with such restrictive powers over the LL's that they could never build anyways, even if they could get the zoning allowance.

(T)he suburban areas surrounding Ann Arbor are much more affordable. There are many fewer restrictions on development and hurdles for developers to clear.

I lived in A2 in the 90s, in tiny apartments (starving college student, dontcha know). Buying a house there looked imposible. I moved to the Hudson Valley (just north of NYC) in 1995 and bought a house in a quaint little village for $130K in 2000. Then, some freaks slammed airplanes into a few buildings, and -- whoops! -- the race was on. I wouldn't take a dime less than $350K for my house now...in theory, at least, since I know damn well the bubble will pop the second I put my house up for sale. ;)

Just for fun, I looked at houses back in A2. Surprise! I can buy a house in Ann Arbor that's larger/nicer than the one I have now (not in the funky campus/downtown area, but in the city) for $200K or less! Who knew? (And in Saline or Dexter or Ypsilanti, I could buy a freakin' palace...in cash.)

Still, I like my little town and have no plans to move...but if in a year or two someone throws a half-mil at me to walk away, I'll guess I'll have to, eh?

The work of Prof. Glaeser suggests that most of the population growth of the country will occur in areas with less restrictive zoning policies. That will be partly due to the fact that people with children will tend to live in areas where housing is less expensive. This bodes well for the future of the Republican Party. Married people with children overwhelmingly vote Republican.

Heck, why worry about about where future Republicans are going to live? By this analysis, the future of the Republican Party is assured, since they're the ones who are reproducing. Tomorrow belongs to them.

I find it not a little bit depressing that so much of this thread consists of efforts to deploy the facts in the NYT article on the side of one party or the other, or to identify hypocrisy (imagine!).

Housing prices are highest in major metropolitan areas on the coasts. These are also areas that vote Democratic. But causation is not correlation.

As I'm not the first one to suggest, municipal laws limiting development rationally serve the interests of the municipality's homeowners. That being the case, I'd be curious to understand why there some areas (perhaps the suburbs of Raleigh, or Ithaca?) decline to adopt such laws.

Boston and the surrounding cities of Cambridge, Somerville, Chelsea, and Medford have many liberals, very dense housing, no rent control, and a lot of new brownfield development of even denser condo and townhouse developments.

But the housing is still fantastically expensive there, and they still have lots of regulations restricting it.

It appears that once towns marked by open vistas, light traffic, and good schools begin to suffer from excessive development and fiscal decline associated with "new construction" moving 5 miles further down the road, homeowners get worried and start looking to the government to help them against the free market in development. They shift from Republican to Democratic.

I agree that the shift is important and has happened, but certainly at the same don't you agree that the "help against the free market in development" that they start looking for causes housing prices to rise even further? It doesn't matter exactly whether they start looking to restrict development before or after home prices start rising; it matters that the policies artifically raise the home prices beyond what they would be.

I don't care if you believe that those people are "really conservative" or whatever, or that they don't count as "real liberals," or who they used to vote for. The fact remains that anti-development issues raise housing prices and decrease affordable housing, and that Democrats generally enact these policies. (And voters turn to Democrats to enact them.) The increasing dependence of the Democratic Party on such voters is not good for poor people.

Your point on rent control in NYC is well taken.

That being the case, I'd be curious to understand why there some areas (perhaps the suburbs of Raleigh, or Ithaca?) decline to adopt such laws.

In the case of the suburbs of Raleigh, it works like so:

1) There's a decent amount of greenfield area still. North Carolina, unlike many states, is dotted with lots of small towns but not dominated by one megalopolis.
2) Strong belief in the community that development is overall good and necessary to draw business to the state and the area. (The state in general is pretty pro-development; also Right-to-Work like much of the South, for instance.)

That said, it wouldn't be totally surprising for the area to be gentrified into favoring development restrictions.

But the housing is still fantastically expensive there, and they still have lots of regulations restricting it.

I really don't see how regulations are keeping a lid on the amount of housing in the cities I named. As I said, there has been a lot of construction on brownfields near railroad tracks, over highways, and on old parking lots. I could point you to any number of high-rise apartment-and-condo developments in neighborhoods with nothing like them before.

No, there is no completely unregulated growth like you might see in the prairies ringing Houston and Dallas, but there is so much building being done as opposed to the "no-growth" stereotype that I fail to see how any of these regulations contribute meaningfully to the high cost of housing Boston.

Yes, unlimited supply would reduce costs, but the fact of high-density, coastal, historic cities like Boston, New York City, and San Francisco is that the most significant constraints on additional building have nothing to do with what liberals say or do, even when they reach critical mass.

Oh, Cary, one suburb of Raleigh, has unusual ordinances restricting things like neon signs and stuff, but doesn't actually prevent development. It doesn't seem to raise prices much, but it does cause a certain degree of uniformity.

In the case of the suburbs of Raleigh, it works like so:

1) There's a decent amount of greenfield area still. North Carolina, unlike many states, is dotted with lots of small towns but not dominated by one megalopolis.
2) Strong belief in the community that development is overall good and necessary to draw business to the state and the area. (The state in general is pretty pro-development; also Right-to-Work like much of the South, for instance.)

That said, it wouldn't be totally surprising for the area to be gentrified into favoring development restrictions.

In my post at my blog on the NYT article (linked to in my post above), I suggested that homeowners had good reason to be pro-development while there were still ample greenfields sites open for building. DeLong (linked to on my blog) suggests that cities where we now see high prices started to run out of such sites within a certain commute in 1970, which seems right to me. So I don't think the comparison to Raleigh adds a whole lot. And Ithaca is probably even less developed. (So I don't place a whole lot of stock in your #2 -- I think voters' self-interest will usually trump.)

Well, yes, Brittain33, the geographical argument (coastal versus open plain) is a powerful one not to be dismissed easily, as I noted in one of comments before you added yours. Glaeser claims to have studied this as well; really we should all look at the supporting data rather than jumping to conclusions.

Some cities and towns want to grow in general so as to obtain the amenities that come with being in a large city. (Including things like sports, theater, etc.) Once you're already a large city, there does become less need for that.

Someone still has to explain Houston, though.

John, regarding who limits development in the suburbs, I refer you to this article in the Washington Post about Republican opposition to new density in Northern Virginia.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/11/AR2005051100757_pf.html

Among other concers, Republicans have to weigh the financial support of developers vs. the electoral support of homeowners. It seems that Republicans try to hold off density as long as possible but support sprawl, while Democrats encourage density while limiting sprawl. See Tom Suozzi's proposals to build a dense center around the Nassau Coliseum, a mature suburb long ruled by Republicans who disavowed increased density for fifty years.

We have to be careful not to elide these two paths to growth or to disregard one of them. How many Republicans favor smart growth that includes walkable city centers, dense housing, and the public transportation needed to sustain high-density populations, after all?

Let's not forget that while an area may have intrinsic reasons why housing is expensive or cheap, policies can still affect it and make it more expensive than it would be otherwise. High prices alone do not mean that policies are making it more expensive than it would be others.

There was an incredible negative correlation between "growth in housing prices between 1980 and 2004" and percentage of vote for Bush in 2004: Correlation coefficient -0.82. Massachusetts home prices rose 516% on a population which didn't grow that fast, Vermont's rose 238.7% despite having a slow-growing population and low density and lots of rural land. Arizona rose only 152.9% and Utah 162%, despite both having rapidly growing population. And so on.

Note that Vermont is important, since it's pretty low-growth and low-density. There's lots of greenfields and areas to grow and build housing.

Of course, some areas have Republicans who have adapted to slow and no growth agendas to please their constituents, so electing local Republicans may or may not be a good signal of attitude towards development. It depends on how closely they follow the national trends. That's why the national vote share is more important.

I don't care if you believe that those people are "really conservative" or whatever, or that they don't count as "real liberals," or who they used to vote for. The fact remains that anti-development issues raise housing prices and decrease affordable housing, and that Democrats generally enact these policies. (And voters turn to Democrats to enact them.)

But that it's not how it worked in Massachusetts, nor much of how it works elsewhere. These two-acre-lot towns that are anti-development vote Republican, that was my point. Places transition to Democratic voting AFTER they're built out, find themselves surrounded by other suburbs sending commuters through their towns, and get the negative consequences of growth. Then they turn to the Democrats to cope with it, but realistically speaking most of the housing for the region that will be built, has been built, it's just a question of making the best of it.

It seems that Republicans try to hold off density as long as possible but support sprawl, while Democrats encourage density while limiting sprawl.
How many Republicans favor smart growth that includes walkable city centers, dense housing, and the public transportation needed to sustain high-density populations, after all?

Depends on the area, of course. I certainly don't deny that. (The Republican politicans, and the local conservative PAC, the Friends of Durham, in Durham, NC support such policies, whereas the Democrats in Chapel Hill resolutely block apartment complexes that don't feature "enough" parking spaces because they want to cater to bike riders and people who walk to the city center.)

But "smart growth," in the vast majority of cases I've seen, doesn't actually lead to affordable housing, because somewhere along the way the environmentalists and other campaigners in the coalition (rent control supporters, others) end up restricting development so much that it overwhelms the effect of higher density.

As anony-mouse pointed out, Portland may well end up being a test case to see if real smart growth can work.

John, what I want to see is some explanation linking national voting habits to price increases. I can think of several, no question; but none of them involve liberal environmentalists restricting housing growth and prizing two-acre lots. As I said, urban Massachusetts is full of Kerry-voting liberals who live nowhere near any environmentally-restricted development zones.

Here's my theory: Natural constraints on growth (mostly geographical) correlate well with:
* rising prices
* unpleasantries associated with sprawl that make people want the government to do something
* desirable urban areas where gays, single women, and other Democratic voters live

And that's way more significant than correlating voting for Kerry = wanting two-acre-minimum lots = unnaturally prices.

In my experience, smart growth doesn't lead to affordable housing because it produces neighborhoods that are highly desirable for professionals and people without children.

It's not designed to make housing affordable, it's designed to make a given area sustain a larger population with a smaller footprint and less traffic.

Natural constraints on growth (mostly geographical) correlate well with:
* rising prices
* unpleasantries associated with sprawl that make people want the government to do something
* desirable urban areas where gays, single women, and other Democratic voters live

But all the college towns I know of, which could count as something like "desirable urban areas where gays, single women, and other Democratic voters live," don't have "natural constraints on growth (mostly geographical)," but they do have rising prices. They don't have sprawl yet, either. They've preemptively acted to try to prevent it, perhaps.

So Chapel Hill and Ithaca make me really skeptical of the idea that it's "natural constraints," such as geographical.

Secondly, you're incorrect to characterize the argument as "voting for Kerry = wanting two-acre-minimum lots = unnaturally prices." Plenty of these college towns don't have two-acre-minimum lots or anything. They have other sorts of development restrictions. Some of them have high amounts of park area; some of them prevent development on greenfields. This can result in high density in some areas but a large amount of totally undeveloped land. They also simply have a lot of hoops to jump through in order to get development approved.

In my experience, smart growth doesn't lead to affordable housing because it produces neighborhoods that are highly desirable for professionals and people without children.

It's not designed to make housing affordable, it's designed to make a given area sustain a larger population with a smaller footprint and less traffic.

So are you agreeing then that there's pretty much no policy prescription that Democrats can rally around as an entire party that actually leads to affordable housing?

Unchecked sprawl, for all its faults, does make housing more affordable than development restrictions.

John, I'm not well qualified to discuss rural college towns, so I'll not contest any point there. I know I've seen a lot of development in Princeton, N.J., including teardowns and new McMansions on old forest land, but that's one town.

I'm on solid ground when I assert that the real estate market of Ithaca, State College, etc. is an insignificant component of the real estate bubble in metro areas in the northeast corridor, the Pacific Coast, and South Florida.

I can think of several, no question; but none of them involve liberal environmentalists restricting housing growth and prizing two-acre lots.

Take out the "two-acre lots" and I don't see what's so implausible. I realize that I'm generalizing from my own experience, but in NC Chapel Hill's liberalism preceded any housing pressure or population increase in the state as a whole. Chapel Hill's liberalism led them to adopt various development restrictions. Raleigh and Wake County in general did not. Raleigh had lots of growth and suburbs; housing prices did not increase much. Chapel Hill had lots of restrictions; housing prices increased a lot. Neither has any sort of geographical restrictions.

Durham is different because, while liberal, the PAC aimed at black voters, as I mentioned, is resolutely pro-development and broke their coalition with liberal whites over that issue.

So are you agreeing then that there's pretty much no policy prescription that Democrats can rally around as an entire party that actually leads to affordable housing?

No--I think that abolishing the mortgage interest deduction would do the job.

I'm on solid ground when I assert that the real estate market of Ithaca, State College, etc. is an insignificant component of the real estate bubble in metro areas in the northeast corridor, the Pacific Coast, and South Florida.

Yes, absolutely. But we also must explain why other areas which also have rapid population increase (Raleigh, Charlotte, Houston, Utah, Arizona) have not seen the kind of real estate price increases, over 24 years, that rural Vermont has, or that the bubble areas have. Certainly geography is a plausible explanation for some of it. But there are places, like Vermont, where the geographical argument breaks down and breaks down badly.

No--I think that abolishing the mortgage interest deduction would do the job.

It could help, and I agree with the policy (although its effects would be complicated.) There's absolutely no chance of the Democratic Party rallying around it, though. Just take a look at how the Democratic Party absolutely hates the AMT, for an example of how they'd react.

But seriously--on that specific reply, presumably the addition of new, desirable housing would shift the supply curve such that older housing would be less expensive than it would have been if nothing had been built or less dense housing had been added. You can do the basic economics on that one.

I don't believe there's a macro solution to affordable housing in the current market, or to put it more clearly, I don't agree with you that liberals have created a problem that can be removed to make But seriously--on that specific reply, presumably the addition of new, desirable housing would shift the supply curve such that older housing would be less expensive than it would have been if nothing had been built or less dense housing had been added. You can do the basic economics on that one.

I don't believe there's a macro solution to affordable housing in the current market, or to put it more clearly, I don't agree with you that liberals have created a problem that can be removed to make

In the meantime, Boston and suburbs will continue to build up what they can, people will trade down in space and accept longer commutes, life will get a little more crowded, and the world will continue to turn unhindered by the ministrations of liberal gnomes.

Please, Vermont is sui generis. You picked it out because it's one of the few rural areas that votes heavily Democratic, but it's really unlike anywhere else in the country, and is heavily influenced by the vagaries of wealthy bored people from New York City and Boston.

I could ask you to defend the situation in Katharine Harris's Sarasota and Manatee County, Florida, where prices have risen at Bostonians rates while people voted heavily Republican. But like Vermont, it's an outlier and atypical of the trend.

I'm sorry about the repetitive reply... it should be "to make cheap housing widely available in downtown Boston."

Brittain33,

FL is still a lot cheaper than out here in Blueland...

Now that the 10yr is tumbling, let's see what happens to these prices.

I have lived and built in Massachusetts for almost fifty years. Making generalizations from present housing situation is like a doctor prescribing for a patient who has not told him he is a heroin using, life long alcoholic with long fetish for self-mutilation. Land/housing market distortions and manipulations have been underway for over a hundred years. In my lifetime I have seen mandatory lot sizes go from large, to tiny, to sprawl, to high density to large yuppie lots. Whatever numbers you pull from this legacy of land use button pushing and housing string pulling is junk.

I feel confident I can build safe, attractive, safe housing for half the present costs with present wage and material cost. But it would be illegal. I can only surmise what effect it would produce on the market.

You picked it out because it's one of the few rural areas that votes heavily Democratic, but it's really unlike anywhere else in the country, and is heavily influenced by the vagaries of wealthy bored people from New York City and Boston.

And also one of the few rural areas that has had such a price increase in housing. Yes, Sarasota and Manatee prices have gone up, but not as bad as Palm Beach County, which has a bunch of wealthy bored liberal retirees from New York City and Boston who vote Democratic.

So, just to be fair, it seems as though you're conceding that liberal college towns and wealthy liberal New York City and Boston retirees may push up housing prices in some places, but that's not as important as the Northeast megalopolis housing prices (and Pacific Coast), which were destined for huge increase anyway. And you basically argue that huge population increase/lack of green land is what causes both housing costs to increase and people to turn to the Democratic Party to manage the growth/increase density/prevent development and sprawl.

I argue that those Democratic Party positions that they turn to in general exacerbate the problem of housing prices, no matter what their other effects. While there may be a natural turn to the Democratic party as traffic/density/prices rise, areas with an unusually high natural rate of Democrats (college towns, retirees) have unusually high housing prices, mutatis mutandis, and vice versa for Republican areas.

There is one problem with using Portland, OR as a test case: It's a border city. None of the rules passed in Portland or Oregon affect Vancouver, WA which is just across the Columbia River. In effect, Portland has tried to limit sprawl by completely ignoring it's northern border. Not surprisingly, Vancouver is growing like a weed, with lots of suburban sprawl.

Eric -

Portland being a border town makes it an excellent test case, because one can more safely presume that there is one big labor market in the Portland/Vancouver area, and that most people would be willing to live in either state, if their other criteria for residence choice were satisfied.

What is the rate of change in property prices in Portland, the Oregon suburbs, Vancouver, and the Washington suburbs? How are the policies in each different?

Ten years ago, I was astounded to hear that a family member sold a tiny 2-bedroom house in San Diego for over $350,00 - when I was able to get a brand-new 2300 sq. ft. 2-story in a good school district in Birmingham for half the price! A house like hers would have gone for about $30k in certain areas of the city! When I lived in the Virginia-Highlands area of Atlanta in the late 70's, a typical Craftsman went for about $25k--nevermind the cathouse a street over. Now, those places are untouchable to me--but then I have absolutely no interest in living smack dab in the middle of the city like I did back then. I like living in a "sprawl" area--with my 3 acres of land full of wildlife and a school system (which could always use improvement) which draws the professionals with families away from the big city. The "college town" next door has a school system with a 50% graduation rate (and the cheaper housing to go with it in most areas), but the "nice" part of town has ridiculously inflated prices.
What irritates me the most is the seeming idea that we should all want to live piled on top of each other, and that it is a sin to want for something else. I also howl when I hear that "no one needs a such-and-such sized house." Do not presume to tell me what I do not need. Thank you, I put in my time in the center of the city - where yes, life was vibrant and I could walk everywhere. It was all so fun and intense, and not where I wanted to raise my family. Maybe you want to raise your family there, in an apartment, or in a commune - bully for you!...But I like the deer drinking at the creek, and I generally do not have to worry about the kids being knifed at school. Land here is at a premium, but there is a reason for that...That being said - If we didn't have to think about resale value all of the time, our choices would be much wider!

Fascinating debate & discussion.

American Mother brings up the subject of school districts and crime rates, which I'm sure plays some role in the change in housing costs.

One hypothesis I'll trot out is that rapidly increasing housing costs escalate perceptions of class divisions, which increases sympathies for Democratic-style policies.

American Mother brings up the subject of school districts and crime rates, which I'm sure plays some role in the change in housing costs.

School districts absolutely do. Several studies (here and in Australia) have shown that school district quality is a significant component of home price. One can speculate about the effects of vouchers that would weaken the link between housing and school district. Republicans have often supported vouchers, and have been punished by wealthy suburbanites (who otherwise lean Republican) for doing so and possibly threatening home values in places with very high home prices. (In non-bubble areas, the backlash has been smaller.) (See New Jersey for a good example.)

Amazing... I had to read all the way to the end before I got to the comment - by American Mother - that made the most sense to me.

I don't think its possible to extrapolate a cause and effect for general housing prices by using cities such as NYC or Boston or San Fransisco. These places are unique and each has its own flavor and reasons for being what they are. The same can be said for most big cities. I think it is also true for smaller cities that are dependant on one specific type of industry - a college town for example.

I think most housing prices are a function of supply and demand. The more demand outstrips supply, the higher the prices tend to be. I believe that places like NYC and Boston - though I wouldn't want to live there - are very desireable places for a lot of people. That many people chasing a limited amount of housing is going to make prices go up regardless of whether they are Democrat or Republican.

I also believe that the liberal vs conservative divide tends to be more of an urban vs rural mindset than anything else (with some notable exceptions of course.)

I live in Kentucky which is both midwestern and upper south. There are a lot of small to medium sized cities in this region so housing prices tend to be stable and affordable.

However, all of that aside, I agree with American Mother, and get very irritated when I perceive that coastal liberals are trying to dictate to us folks out here in "Jesusland" what our needs are. I see this not only in attempted anti-sprawl legislation, but also in the anti-automobile attitude prevalent among a lot of liberals.

This has more effect on my voting habits than housing prices do.

Let me begin by being a little immodest here and note that my post of from January made the argument that differential levels of regulation explained why housing is getting relatively cheaper in 75 percent of the country, but more expensive in the other 25 percent. And let me urge you to look at the remarkable map at the NYT article I link to. It shows that changes in affordability generally follow state or city lines, just as one would expect if regulation is driving the changes.

That said, let me switch back to modesty and note that I have been reading about the effect of regulations on housing costs for literally decades. There was nothing new in my post.

And I should add a note of warning for Steve Sailer and others who try to derive individual relationships from aggregate data. This risks running into the "ecological fallacy". I think it likely that leftists support politicians who favor regulation and run housing costs up, but I would be very careful before I concluded that using only state level data.

Fascinating.

Now go over to Baconsrebellion.blogspot.com and read some of the stuff there. There are some people there who will invent any kind of nonsense as an excuse to tell other people how they should live.

What is the rate of change in property prices in Portland, the Oregon suburbs, Vancouver, and the Washington suburbs? How are the policies in each different?

Well, *I* don't have much additional data, save this: Oregon derives all of its income from such means as excise and property taxes; there is no sales tax. Washington, meanwhile, has a 6.5% state sales tax (and, I presume, local sales taxes where applicable). Even if employed in the Portland area, this would provide a significant (possibly distortionary) incentive to live in Vancouver, but commute to Portland for work and grab your groceries on the way home.

It's always fascinating how many "progressive" policies happen in fact to impede social mobility. Guess all those trust-funders aren't so crazy after all...

Comments are Closed.