Edmund
Peterson, an African-American policy wonk from Washington,
D.C.,
hijacks a propaganda ploy of American
liberals and turns it against them.
In
the world view of liberalism, racial discrimination
is endemic in the United
States.
Particularly complicit are businesses such as
mortgage companies, hospitals and industrial users
of toxic chemicals. By showing that minorities
receive fewer mortgages, enjoy less access to health
care or live in greater numbers near manufacturing
plants – regardless of what other factors, like
income, may account for the differences -- study
after study portrays minorities as victims of society.
Mere statistical disparity is deemed proof of
institutional racism.
Peterson
observes that African Americans have lower rates of
home ownership than whites. He also maintains that
high housing prices in the suburbs block minorities
from escaping deteriorating inner cities.
Provocatively, he labels the
phenomenon “the new segregation.” But
he doesn’t blame the usual suspects. The greatest
problem for African Americans today isn’t overt
prejudice and discrimination, said Peterson recently
at a forum of the Virginia Institute for Public
Policy, it’s the steady erosion of property
rights. The villains aren’t capitalists –
they’re liberals!
Local
growth controls, like those espoused by the “smart
growth” movement, restrict the supply of
developable land or load up new houses with impact
fees, both of which force up the price of houses.
Existing suburban home owners, mostly white, capture
the benefit of rising real estate prices in the form
of increased equity. By contrast, tens of thousands
of minority families are shut out of the suburban
housing market.
Environmentalists
comprise a core constituency of the smart growth
movement, which opposes sprawl-like development on
the grounds that it disrupts wildlife habitat, ruins
rural vistas, causes air pollution by making people
drive more, and aggravates water pollution by
increasing run-off. Most environmentalists like to
think that their social conscience extends to
matters of race, but their growth-control
initiatives build an invisible wall around the inner
city. Peterson describes the phenomenon this way:
“Jim Crow turns green.”
Affiliated
with the Center for Environmental Justice, Peterson
revels in controversy. It’s
amusing to hear him turn the tables on the
holier-than-thou rhetoric that emanates from the
Left. I must confess, though, I do get weary of
hearing the endless refrain of racism, racism,
racism, even when employed in defense of free
markets and property rights. But Peterson's
incendiary turns of phrase do describe the
outcome of growth controls even if they don't accurately describe the
motives behind them.
Robertson
raises a vital point for understanding the political
economy of development in Virginia and the rest of
the United States: Growth controls invariably
protect the interests of suburban property
owners/voters/taxpayers at the expense of newcomers
– not just minorities, but all lower-income
families striving to live the suburban dream.
Peterson
bases his critique on an econometric study
commissioned by the Center for Environmental Justice
of the National
Center
for Public Policy Research. QuantEcon, Inc., an
econometrics firm based in Portland,
Ore.,
wrote the report. The key finding is this:
Poor
and minority families pay a disproportionate amount
of the social and economic costs of growth
restrictions. The weight of increased home prices
falls more heavily on minorities, the disadvantaged
and the young, fewer of whom already own homes. The
“haves” who already own homes ride the price
bubble created by restricted growth policies while
the dream of home ownership moves further away from
the “have-nots.”
If
growth restrictions like those imposed in Portland,
a bastion of the smart-growth movement, had been in
effect across the nation for the last 10 years, the
report concludes, 260,000 minority families who now
own their homes would not own them today.
The
Portland
example is particularly instructive because it is a
model that many smart growth advocates in Virginia
look to for inspiration. According to the QuantEcon
report, housing prices have climbed faster in Oregon
faster than anywhere else in the country. Despite
the existence of an Urban Growth Boundary in
Portland and the
funneling of development into mass-transportation
corridors, light rail struggles to find riders,
infrastructure spending has not slowed, and people
are driving their cars more than ever. The icing on
the cake: Minorities in Portland and other
"smart growth" cities, according to the
report, are less likely
to own their own homes than minorities in
"sprawl" cities.
Hypothesizing
a correlation between growth controls and housing
inflation, QuantEcon developed a “Site Scarcity
Index,” measured as a ratio of population growth
to developed-land growth. A state with a high Site
Scarcity Index, such as Oregon,
would have a population that is growing more rapidly
than the amount of land developed. The resulting
scarcity of land, in theory, should translate into
higher home prices.
The
numbers confirm that there is, in fact, a
correlation between a scarcity of
developable land and rising housing prices. But the
relationship is a tangled one. Land-use
policies are not the only factor inhibiting land
development, QuantEcon notes. Many metro areas are
hemmed in by water, mountains or other geographic
boundaries; some have limited supplies of water.
Population,
Development
and
Home Prices
|
|
Site |
Site |
Housing |
Housing |
|
Scarcity |
Scarcity |
Inflation |
Inflation |
|
Index |
Rank |
(%) |
Rank |
Alabama
|
0.4
|
36
|
61
|
23
|
Alaska
|
|
|
53
|
28
|
Arizona
|
2.31
|
2
|
53
|
29
|
Arkansas
|
0.71
|
15
|
60
|
25
|
California
|
0.58
|
26
|
11
|
47
|
Colorado
|
1.60
|
3
|
105
|
3
|
Connecticut
|
0.37
|
38
|
-5
|
51
|
D.C. |
|
|
33
|
40
|
Delaware
|
0.81
|
12
|
35
|
39
|
Florida
|
0.56
|
27
|
40
|
36
|
Georgia
|
0.52
|
30
|
62
|
22
|
Hawaii
|
0.54
|
29
|
19
|
43
|
Idaho
|
1.21
|
5
|
81
|
7
|
Illinois
|
0.70
|
16
|
63
|
21
|
Indiana
|
0.62
|
20
|
77
|
9
|
Iowa
|
0.91
|
10
|
77
|
10
|
Kansas
|
0.76
|
13
|
64
|
19
|
Kentucky
|
0.33
|
43
|
78
|
8
|
Louisiana
|
0.34
|
39
|
46
|
34
|
Maine
|
0.14
|
46
|
18
|
45
|
Maryland
|
0.44
|
34
|
27
|
41
|
Massachusetts
|
0.19
|
45
|
19
|
44
|
Michigan
|
0.33
|
42
|
95
|
4
|
Minnesota
|
0.67
|
17
|
68
|
15
|
Mississippi
|
0.45
|
32
|
66
|
16
|
Missouri
|
0.61
|
22
|
54
|
27
|
Montana
|
0.81
|
11
|
75
|
12
|
Nebraska
|
1.23
|
4
|
72
|
13
|
Nevada
|
3.47
|
1
|
48
|
33
|
New Hampshire
|
0.45
|
33
|
7
|
49
|
New Jersey
|
0.46
|
31
|
7
|
48
|
New Mexico
|
0.60
|
25
|
52
|
31
|
New York
|
0.33
|
41
|
16
|
46
|
North Carolina
|
0.61
|
23
|
66
|
17
|
North Dakota
|
0.11
|
47
|
49
|
32
|
Ohio
|
0.22
|
44
|
63
|
20
|
Oklahoma
|
0.65
|
18
|
55
|
26
|
Oregon
|
1.19
|
6
|
124
|
1
|
Pennsylvania
|
0.10
|
48
|
37
|
38
|
Rhode Island
|
0.34
|
40
|
4
|
50
|
South Carolina
|
0.39
|
37
|
71
|
14
|
South Dakota
|
0.62
|
21
|
83
|
5
|
Tennessee
|
0.44
|
35
|
65
|
18
|
Texas
|
0.98
|
9
|
42
|
35
|
Utah
|
1.05
|
8
|
110
|
2
|
Vermont
|
0.61
|
24
|
21
|
42
|
Virginia
|
0.55
|
28
|
40
|
37
|
Washington
|
0.75
|
14
|
82
|
6
|
West Virginia
|
0.02
|
49
|
52
|
30
|
Wisconsin
|
0.64
|
19
|
77
|
11
|
Wyoming
|
1.13
|
7
|
60
|
24
|
Note:
Housing inflation covers the period 1990 to 2000.
Ranking runs from high inflation to low.
Source:
“Smart Growth and Its Effects on Housing Markets:
The New Segregation,” a econometric report by
QuantEcon for the Center for Environmental Justice
of the National
Center
for Public
Policy Research, November 2002.
The
report concedes that other factors influence rising
housing prices, most notably growth in per capita
income. Wealthier populations can afford to buy
bigger houses with more expensive amenities.
Among
the states most closely identified with Smart Growth –
Oregon,
Washington,
Tennessee,
Kentucky,
Pennsylvania
and Colorado
– housing inflation was higher than expected,
QuantEcon says. But the report notes that California,
Hawaii
and Vermont
were notable exceptions. In the first two,
recessions had pricked housing bubbles early in the
1990s. Vermont
may be an anomaly.
According
to QuantEcon’s methodology, Virginia
was expected to experience home price inflation of
51.7 percent during the 1990s, but in actuality
turned in a 40.2 percent performance. Clearly,
restricting the development of land is only one
factor among several that affect the price and
affordability of real estate. By itself, that
conclusion doesn't take us very far.
While
I endorse Peterson’s commitment to affordable
housing, especially for minorities who have for too
long been excluded from America’s
mainstream, I am not clear -- either from his report
or his remarks last week -- how he proposes to
achieve this worthy goal. I certainly share his
antipathy to those who, under the “smart growth”
banner demand more government power to fix the hash that existing land-use
regulations have made over the past 30 to 40 years.
Peterson
implies that lifting restrictions on “the supply
of development sites” is the answer. I would
respond, yes, but…. If he means opening up more rural
land to development, as Virginia
and the rest of the nation have done for decades,
then I would disagree. Who does he suppose will pay
for all the transportation and infrastructure
improvements in the middle of nowhere? Subsidizing
developers and land owners on the urban fringe does
not equate to free markets.
If
Peterson advocates lifting the restrictions that
inhibit infill development and the redevelopment of
deteriorating neighborhoods, then I wholeheartedly
agree.
Not
everyone wants to live in a five-story apartment
complex a block from the METRO, like the 2900
Clarendon project I described last week. But a
lot of people do. There is large pent-up demand for
Clarendon-style projects, which the current array of
institutional forces – from zoning codes, the
empowerment of NIMBYs, to state
funding for sprawl-inducing transportation projects – makes exceedingly
difficult to develop.
By
all means, we should make every effort to increase
the supply of housing for young people, minorities
and other lower-income groups. Let's not make them,
as so many smart-growth advocates seem prepared to
do, live in multi-rise apartment buildings and ride
the transit to work. Likewise, let's not assume, as
the current system does, that they want to move into
a single-family dwelling in a cul-de-sac subdivision
on the edge of town. Let's create a system that is
responsive to consumers -- of whatever ethnicity -- and empowers developers to
supply the housing product they want.
--February
17, 2003
|