A National Look at the Effect of Growth Management Policies on Housing: Containment and Density Boost Costs

“Urban containment” policies like Washington’s Growth Management Act drive up housing costs, writes Wendell Cox in New Geography. 

Excessive land use regulation is a major cause of seriously unaffordable housing. Usually, these regulations include urban containment policy, which restricts or even prohibits building middle income detached housing on the urban fringe. As sure as OPEC cutbacks drive up the price of gasoline, urban planning land cutbacks drive up house prices. There is plenty of evidence that the law of supply and demand operates in urban land markets — that restricting the availability of land for development pushes land and house prices up.

Washington’s GMA is now in its 25th year and receiving serious legislative scrutiny. A report by the Washington Research Council in July provides good background on the act, including recommendations for adapting it to today’s housing and growth realities. From the report’s conclusion:

Those in the urban Puget Sound area seeking single-family homes are finding their op- tions increasingly limited. Cost is pushing them to the periphery of urban areas in various parts of the state, effectively negating the goal to reduce sprawl…

If we continue on the current path, the ability to purchase a single-family detached home may be greatly reduced for all but the wealthy. Additional- ly, the market evolution into a more beneficial pat- tern of agriculture may be thwarted. Enhancing the GMA will require protecting growth boundaries from continual assault while increasing their flexi- bility and utility for all of our citizens, particularly those hardest hit by rising prices.

Cox reports on the effect of land costs.

The key issue is the cost of residential land under the house. Average residential land values are at least 75 percent of the house and land value in San Jose and San Francisco , 70 percent in Los Angeles and 65 percent in San Diego. Our analysis of Lincoln Institute of Land Policy data indicates that the average house structure in the four California metropolitan areas had an average value is only 25 percent higher than that of the other major metropolitan areas. By contrast, the land value was more than 650 percent higher. It would be too expensive for middle income households to buy vacant residential lots, even if they intended living in tents.

With such expensive land, there is virtually no hope to restore housing affordability without tackling the issue of land head on.

And he takes on the argument that increasing densities can reduce costs.

It is popular to contend that housing affordability can be restored through   building higher densities. There are no examples of restoring metropolitan area housing affordability through intensification. A principal problem is higher prices. A City Sector Model analysis indicates that the urban core rents per room are well above that of the suburbs. The differences are even greater in cities with the more aggressive intensification programs, such as Portland, Seattle and Los Angeles.

Meanwhile, as The Lens reports, small cities in the metro Seattle area are challenging growth regulations.

A shot across the bow was fired last week last week as two regional growth planning bodies met in Seattle. They were trying to tamp down growing unrest among some suburban King County cities because their population growth targets have morphed from minimums or “floors,” to strict “ceilings,” or caps. It didn’t work.

The debate included central planners who oppose what they term “sprawl” or continued growth outside the region’s increasingly unaffordable urban centers such as Seattle and Bellevue. Bringing a different perspective to the conversation are representatives of some King County communities. Foremost are Covington, Snoqualmie, North Bend and Carnation.

Lens editor Matt Rosenberg writes,

They want freedom to respond to market-driven demand for local land from prospective developers of single-family and multi-family homes, offices and light industrial sites, medical centers, and retail clusters. 

The story goes into increased concerns about housing affordability and Among the issues are how regulations are being interpreted and the need for changes in the GMA.

The menu of suggested GMA reforms grew last month when city, county and school district officials told lawmakers that 25 years under the Act show the need for more state investment in transportation infrastructure to handle growth; more outward expansion of Urban Growth Areas (UGAs) to increase availability of truly buildable lands; easier access to water rights; and more flexibility on siting of new schools.

While the 2017 legislative agenda is filling up, it’s likely lawmakers will make room for consideration of changes in the GMA.