Faith-Based City Planning: Exorcising the Suburban Dream

Sticks and stones...

I must have really hit a nerve, wow! Sorry! Here is the facts - I've been contracted (paid) to design (in the past 16 years) over 700 Neighborhoods in 46 States, and 13 Countries with a 100% approval record on all designs I've designed and presented. These range from small sites to the 47 square mile Ranch at White Hills (250,000 units) south of the Hoover Dam, and the town of Madrid Expansion (30,000 units) in Colombia. I have never done a sketch plan - all my work is to survey plat accuracy. On the average my designs reduce public infrastructure 25% without losing density. I hold several patents in design technologies and have more patents pending. I've been keynote at many major conventions in the planning, sustainability and architectural industry.

If you think I'm an airhead and want to call me names, I'm sorry I've hit a nerve with you, that's fine - I'm curious, what are your accomplishments?

Hoff, you personify the type of planning advocate referred to in the following paper. You've got all these fabulous little details to support your argument, but you don't see the big picture. The big picture is, what growth restraints do to land prices and what land prices do to all the outcomes you CLAIM will occur.

Paul CHESHIRE, London School of Economics:

"Urban Containment, Housing Affordability and Price Stability: Irreconcilable Goals" (2009)

"The planning goals of urban containment and now densification conceive of houses in terms of physical units and of land ‘supply’ as the area allocated for housing by the planning system; estimates of ‘demand’ are driven by household projections. Prices and price volatility are, however, determined by economic forces and there is a fatal mismatch between the operational concepts of demand and supply in markets and the parallel concepts with which the planning system works. Planning allocates a scarce resource – land – so is fundamentally an economic activity; but its decisions are made independently of price or market information. Moreover the concepts used by the planning systems vary with institutional arrangements and culture. Underlying these fatal clashes is the fact that
housing is a complex good with many attributes, each of which is subject to particular supply and demand conditions and that one of the most important attributes of houses is space – both inside and around them. So the more planning systems attempt to densify development or to confine new housing to ‘brownfield’ land, the more inelastic supply of a vital housing attribute is, the more ‘unaffordable’ housing becomes and the more volatile housing markets will be. There are solutions - but none of them comfortable for policy makers......"

".........Policy analysis and implementation is focused on physical units of housing, areas of land and densities of buildings and takes no notice of market signals or the real drivers of demand or supply........"

"........Price volatility is damaging for a number of reasons. It transfers asset values between groups. It creates financial instability, especially since house purchases are largely financed on credit – the origin of the current crisis in the financial system. It also makes monetary policy more difficult even for independent central bankers since it becomes increasingly difficult to ignore housing-market pressures rather than just for inflation targeting in setting monetary policy. Also booms and busts in house prices create oscillating wealth effects feeding through to consumption spending......."

"........In a recent paper (Glaeser et al, 2008) analysed price
volatility and its relationship to the elasticity of supply across 79 US metropolitan areas. During the cycle of the 1980s and early 1990s the most volatile of the 79 markets was Los Angeles, where real prices rose 67 percent from 1984 to the peak of 1989 and declined by 33 percent in the following five years. This was substantially less than the average for England of a 79.2 increase followed by a 37.6 percent fall. The boom in Britain from the 1995 trough to the peak in 2007 was getting on for twice that of the previous cycle – an increase of 146.7 in real terms. We do not yet know how large in proportionate terms the subsequent fall will turn out to be......"

Cheshire then discusses the Glaeser, Gyourko and Saiz 2008 paper, and adds:

".......This evidence (the Glaeser et al paper) does not prove that there was or was not a bubble in some US housing market areas but does show that price volatility is closely related to the elasticity of supply of new housing and is not inconsistent with a model in which expectations about future house prices influence current demand and in which the supply side of the housing market is endogenised. When we compare this to the English housing market we find not only is the average price volatility in England greater than in the most extreme urban area market in the US but it has increased very substantially over time while the supply of new housing – as the
last columns of Table 1 show - has become even more inelastic. A price increase in real terms between 1993 and 2007 1.85 times as large in percentage terms as in the previous boom produced an increase in building of only 38 percent of the previous increase. The peak of market construction in 2007 was only 86 percent of the level of construction of market housing averaged in each year of the 1960s. One of the main findings of Barker (2003) was how inelastic the supply response of house construction was in England and Wales. The evidence of Table 1 is simply further support for that view. The supply elasticity of construction is very low and has been falling. What are the reasons for this and what does a low elasticity of supply of new construction imply?......."

Cheshire then discusses the justification for land use regulation, due to the market failures that will occur in its absence. He continues, however:

".......As argued elsewhere (Cheshire and Sheppard, 2002; 2004) not only does the fixed location of land lead to particular types of market failure but it also generates important distributional effects, normally ignored. Consumption of a wide range of important goods and amenities, often thought to be provided free, actually is conditioned on individual incomes and wealth because the value of these attributes is capitalised into house prices. Thus, the ability to benefit from better schools or the amenities generated by land use planning is determined by household income. For example, the amenity values generated by Greenbelts differentially benefit richer house owners because the value of Greenbelt access is fully reflected in house prices. As a result only richer households can afford to purchase the flow of benefits that are associated with preserving the Greenbelt. The outcome - perhaps paradoxical to planners who are culturally egalitarian - is that the net effect seems to be that Greenbelts produce an even more unequal distribution of welfare (measured as equivalent income) than the incomes of home owners themselves (Cheshire and Sheppard, 2002)......."

Cheshire then discusses the differences in land use regulations, between Britain, the Netherlands, Germany, and the USA. Britain has practised urban growth restraint for much longer than any other nations, and therefore is a useful working example to learn from.

"......If we are to provide stable prices for a given quality of housing and are to do so via a ‘planning’ system rather than just by a regulated market with some government provision for low income housing, then what we need to predict is the effective demand for housing and garden space given that it is the quantity of land that the system allocates. Then we have to allocate not just that quantity of land predicted as being compatible with price stability but
more. Not all the land allocated as available for development will actually be developed. One rule of thumb suggested (Evans and Hartwich, 2006) is that this implies allocating 40 percent more land than the estimated demand indicates is needed......"

Cheshire then discusses some model simulations done by himself and his colleagues, with the following fascinating conclusion:

"........in a world in which the supply of land is restricted, the real driver of real house price inflation seems to be income growth not growth in household numbers. This stems from the strong income elasticity of demand for space....."

"......So long as we constrict the supply of land and the demand for space is as income elastic as it appears to be, projections of household numbers – even were they accurate – would be little help in guiding our system to improve housing affordability, maintain the quality of housing or dampen price volatility. Houses are not simple goods and demand is not just for quality-constant houses (something quite imperfectly measured in current house price indicators) but for improving house quality. A central component in ‘improving quality’ is more space. Such improvements in turn imply more land for housing and, in the absence of such an increase in land supply but rising incomes, average real house prices will continue to trend upwards.
It is unpopular and difficult to confront the dilemma posed in this paper but the irreconcilable conflict between current planning policies and underlying economic forces – the fundamentals – means we are faced with three unpalatable policy choices. We could try to live with housing markets becoming ever more volatile and housing of a given quality becoming ever more unaffordable with the very undesirable distributional consequences this would have quite apart from the implications for future financial and economic stability. The second choice would be rigorously to follow the logic of 1947 state planning. If we are intent on allocating land for each use without regard to price then logically we need to introduce space rationing. If price does not determine the supply of land then price must not determine its consumption. Each adult could, for example, have a ration of say 40 sq metres with dependent children having, say, another 20 sq metres each. We could, if we wanted, even introduce a trading system so young adults or those willing to live in more cramped conditions could sell some of their space ration perhaps buying back space in later life. This would be in some sense inequitable but very much less inequitable than the outcome of the present system.
The third possible policy choice would be to modify our system of land use regulation so that it takes explicit account of price signals in determining land supply. As argued in Cheshire and Sheppard (2005) an elegant way of doing this would be to use the differential in the price of land with and without planning permission as a trigger to release land unless the social or amenity value of the land in its existing use exceeded the price differential. While it might be difficult to agree precisely what the amenity value of undeveloped land was in all circumstances, the evidence is clear that for very large areas of intensive farmland – see, for example, Barker (2004) Table 2.1 - the amenity value cannot possibly exceed its value in gardens so that land for development would be readily available in more than adequate quantities. This would obviously mean reassessing current policies of densification and the boundaries of existing protected land and it would mean looking systematically at the public values generated by maintaining present designations. What it would emphatically not mean is ‘concreting over Britain’. Even if the total area of towns and cities increased by half (sufficient effectively to eliminate land scarcity according to the estimates of Cheshire and Sheppard, 2002) still their total area would be only about that of Greenbelts now. While perceptions of the majority of people are that half or more of England is developed the actual figure is about 10 percent. Even in the ‘overcrowded’ South East it is only 12.2 percent......"

"........(Barker, 2006b). The area covered by existing English Greenbelts alone is about one and a half times the total area of England’s urban areas.
The purpose of these reforms should not imply a free for all for development on current nonurban land. As discussed above there are good reasons for regulating land markets and for policy to control where building occurs. An additional possible reason for being concerned with urban densities might be if clear evidence appeared demonstrating lower densities contributed to a higher carbon footprint. The way to resolve that problem – if it exists – would be to impose an appropriate carbon tax, a strong case for which exists anyway. Trying to reduce carbon release indirectly by using an opaque set of regulations which only determine patterns of new development (a very small fraction of total development), is not likely to resolve any contribution the density of the built environment may make to overall carbon use; as well as continuing to have the serious impact on housing markets identified in this paper. Indeed, it is very probable the "Greenbelt and town centre first" policies in fact tend to increase carbon emissions. They intentionally extend commuting trips since workers have to cross the Greenbelt and they separate people who are increasingly dispersed, from shops, thus increasing shopping trips.......

".........More obviously some non-urban land has high amenity or environmental value and the public interest would be served by safeguarding it from development. One of the ironies is that this in fact applies to some ‘brownfield’ land such as the extensive grounds of 19th Century hospitals. Much intensively farmed agricultural land with little public access, however, has negligible value beyond its value for producing food fully reflected in its market price. Policies with respect to such low amenity non-urban land, especially adjoining existing urban areas, need to be urgently reviewed........."

So, go ahead, Hoff; - turn the USA into a "once was a great nation", just as urban growth restraint planning has done to Britain.

I would be all in favor of suburban development if the negative externalizes were internalized to the homeowner ... the problem is only a very few would be able to financially support the public burden that disconnected street networks put onto society.