Argument: land restrictions lead to the American cities with the “most and least affordable housing”

A new survey names the “most and least affordable housing” markets in the United States. Not too many surprises here. The top ten most affordable markets: Detroit, Atlanta, Phoenix, Cincinnati, Cleveland, Las Vegas, Rochester, Columbus, Kansas City, and Minneapolis-St. Paul. The top ten least affordable markets: San Jose, San Francisco-Oakland, New York, San Diego, Los Angeles, Boston, Seattle, Richmond, Providence, and Portland.

What is particularly interesting is the reason given to explain the differences in affordability:

The authors specifically call out new construction that is significantly controlled by comprehensive plans or through more restrictive land use regulations “referred to as ‘compact development,’ ‘urban consolidation,’ ‘growth management’ and ‘smart growth.’” The thesis is that these places create housing that is unaffordable. And conversely, the places ranked as affordable – Phoenix, Atlanta, Las Vegas – tend to be areas associated with sprawl development.

These two authors are known for their market-based preferences for land use and housing development, so their argument is no surprise. And though there is certainly a case to be made that restrictive land use policies can limit supply and drive up costs, these aren’t the only factors in play. That New York City is less affordable than its upstate neighbor Rochester has more to do with the fact that it is a much more vibrant and attractive city, and that people are willing to pay more to live that lifestyle than people who prefer Rochester living. Taking this and other factors into account would expand the understanding of why some places are less affordable than others. And while the picture painted by Cox and Pavletich is not wrong, per se, its limited scope offers a less-than-comprehensive analysis that could benefit from more context.

This sounds like an argument from the urban ecology school that argued sprawl could be explained by a search for cheaper land. If governments or other agencies restrict the amount of land available for development, then prices will have to go up.

This explanation also seems to suggest that the affordability sprawl allows should be a primary goal. Of course, sprawl comes with other problems including increased costs, longer commutes, more environmental concerns, and a loss of space that could have been used for other purposes or left open. If the affordability of a home was the only thing that mattered for public policy, policies would be quite different. But when doing urban and regional planning, there are a number of other concerns that must be taken into consideration.

Also: I’ve always wondered why lists of affordable or unaffordable places don’t try to overlay other data on the prices. At a quick glance, it looks like the more affordable places tend to be in the Rust Belt, the South, and foreclosure centers while the more expensive places are on the coasts. Some other factors that may matter: perhaps “creative class” cities more expensive on the whole, even controlling for other factors; demographics; the particular industries and companies located in each place; where cultural centers are located; the historical context.

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