In this Issue: "Smart growth" cities are cutting their own throats
By Dr. Michael Sanera
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As we documented in our report, Planning
Penalties In North Carolina: Why Other N.C. Cities Should not Follow Asheville
and Wilmington, excessive land-use restrictions, including many that
are touted as "smart growth," drive up housing prices, increase the
cost of living, and drive out the poor and minorities. (See my analysis of the impact of Davidson's
smart growth policies on the poor and minorities here.)
The latest research by Mark Schill and Joel Kotkin, reported
here, shows that when cities are ranked according to average annual wage adjusted
for the cost of living, many hip, smart growth cities drop out of sight.
Lacking zoning and other restrictive land-use policies,
Houston rises to the top. Why? Houston's cost of living is low primarily due
to low home prices. Houston's ratio of median home price to median annual
household income is 2.9, very low compared to many high wage cities such as San
Francisco where home prices are 6.7 times the median household income. Why are
Houston's home prices low? The city
lacks zoning and allows home supply to keep up with demand. In other words, by letting the market in home
building work, Houston allows entrepreneurs to build homes at competitive
Does that mean Houston is an "unplanned," anything
goes city? On the contrary, planning in
Houston occurs through private contracts at the neighborhood level via
restrictive covenants. Instead of "one
size fits all" land-use regulations imposed by planners and politicians,
homebuyers select the level of regulation they want from numerous Houston
Where do N.C. cities rank?
The Schill/Kotkin research is based on the 51 largest metropolitan
statistical areas (MSA), so only the Charlotte and Raleigh MSAs are ranked. Charlotte ranks 6th and Raleigh 20th.
Back in 2006, when we wrote Planning Penalties, most N.C. cities had home prices 2 to 2.5 times
the median income for the area. Asheville and Wilmington, where there were more
restrictive land-use controls, were more expensive, with home prices about
three times the median household income.
These ratios were not as bad as Boulder, Colorado at 4.1, Boston at 5.5,
or Los Angeles and San Diego at over 8.
But the numbers are not as important as the direction. Since then, Raleigh, Charlotte, and other
N.C. cities have ignored Houston's example and rushed to follow Asheville and
Wilmington by increasing their land-use controls. Raleigh, for example, is implementing a new
comprehensive plan that contains lots of smart growth controls. (See our report, A
In other words, NC cities are going in the wrong
direction. N.C. cities that want to attract
businesses and jobs need to follow the example of Houston and decrease their
land-use controls, making housing more affordable and lowering the cost of
living. As the negative example of
Davidson shows, the added bonus is that fewer land-use controls makes a city
more economically and racially diverse.
Isn't that what the liberals on the Raleigh and Charlotte
city councils claim they want?
What do Schill and Kotkin recommend?
Maintaining affordability and
a wide range of high-paying jobs may not be as glamorous a metric for success
as the number of hip web startups or the concentration of educated people. But
over time it is likely to be about as good a guide to future prospects as we
Schill/Kotkin Ranking of Top 10 Metro Areas
(Ranked by average annual wage adjusted for cost of living)
Jose-Sunnyvale-Santa Clara, CA
- Detroit-Warren-Livonia, MI
- Memphis, TN-MS-AR
- Charlotte-Gastonia-Rock Hill, NC-SC
- Cincinnati-Middletown, OH-KY-IN
Rock-San Marcos, TX
- Columbus, OH
Click here for the Local
Government Update archive.
Monday, Jul. 16th, 2012 at 12:00 pm Noon
A meeting of the Shaftesbury Society
with our special guest Steve Milloy
Outlaw Experiments? Human Testing at the Environmental Protection Agency
Thursday, Jul. 19th, 2012 at 6:30pm
with panelists Jenna Ashley Robinson, Andrew Gillen, Bill Glod, and Ronald Henry
Bursting the College Bubble: The Status of Higher Education Today
Monday, Jul. 23rd, 2012 at 12:00pm Noon
A meeting of the Shaftesbury Society
with our special guest Miguel Estrada
2012 Supreme Court Review
Tuesday, Jul. 31st, 2012 at 12:00 pm
Friedman Legacy Freedom Lecture
with our special guest Joseph P. Calhoun
Keeping Milton Friedman's Ideas Alive in Colleges and Universities