Bacon's Rebellion

Democracy Thrives in Sunlight

Housing Shortage in Virginia Beach

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by

James A. Bacon
in

The vacancy rate for houses in Virginia Beach is running about one percent, while the vacancy rate for apartments is 2.5 percent, compared to a five percent rate deemed necessary to provide a range of consumer choice. Virginia Beach is experiencing an intense housing shortage that threatens to price out the teachers, policemen, shopworkers, carpenters and others earning less than $50K a year who are so indispensable to a functioning society. So notes an editorial in today’s Virginian-Pilot.

It’s nice to know that there’s something that the Pilot‘s editorial writers and I agree on. Accessibility to affordable housing is a real problem — not just in Virginia Beach, but throughout much of Virginia. We just disagree about the prescriptions.

“Developers blame regulation for the shortage,” says the Pilot. “They say that they are so burdened with expensive governmental oversight — about what they can build, where, and when — that affordable housing is impossible to do profitably. Their answer is to allow the market to govern such things, and affordable housing will come.” Relaxing regulations to encourage more economical solutions — more housing units in less space, for example, mixed in with stores and offices — might not be a bad idea, the Pilot concedes, but “unfettered development” — especially opening up agricultural zones — is what caused Virginia Beach’s problems in the first place.

What really gets the Pilot’s juices flowing is the prospect of more regulation, favorably citing a proposal by Empower Hampton Roads: If the city has to give zoning approval for a project of more than 50 units, require developers to throw in some “affordable” housing.

I like the Pilot‘s first notion better: Peel away the rules and regulations that make it impossible for developers to build affordable housing units. In particular, strip away regs that make it difficult for developers to re-develop old subdivisions at higher densities. Then stand back, overrule the NIMBYs who invariable object to the development of any housing less valuable than their own, and see what happens. If the market fails to respond to the demand for affordable housing, then try something different. But don’t start out with the presumption that the market doesn’t work.

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  1. SDH Avatar
    SDH

    I can’t let that fat fast ball hang out there, Jim. You don’t like the free market when it allows strip malls, sprawl and spreading subdivisions as evidenced along Route 288. People drive 30 miles to work because (1) it is a house they can afford or (2) they want to live there. Either way the market forces are at work, and one adjective I would never apply to E.M. Risse and Stuart Schwartz is “free market.”

    Sure there are regulatory and tax policy changes that can make infill and redevelopment more attractive, and there are things we can do to make sure the people out in the boonies pay the true cost of their life choice. But what do we do with those folks who still want the house in the country on 3 acres far from the urban travail? The developers have a strong point about government driving up the cost, but there are few more popular ideas with the public than proffers and impact fees, and nobody is in favor of lax building codes.

  2. Anonymous Avatar
    Anonymous

    Its the market as its regulated by our zoning laws and land use principles that allow such development, not an unregulated free market.

  3. Anonymous Avatar
    Anonymous

    Let’s keep in mind that the relaxation of some development rules led to the encroachment on NAS Oceana and the can of worms now open over the inclusion of the base on the BRAC list. Wait until September and if Oceana makes the list affodable housing here in the “largest resort city in the world” will be de riguer.

  4. Jim Bacon Avatar
    Jim Bacon

    Steve, I may have lobbed a “fat fast ball” — but you swung and missed! You say that I “don’t like the free market when it allows strip malls, sprawl and subdivisions.” Sprawl is not the result of a free market. Scattered, disconnected low-density development comes from market forces working within regulatory constraints imposed by local government and subsidized by state/federal government. Local zoning codes and comprehensive plans virtually mandate sprawl. Developers build that way not because that’s what “everyone” wants — they develop that way because it’s what the government allows, and it’s passable enough (when new) that people will buy it.

    Yes, there will always be some people who want to live on their 10-acre farmette in the middle of nowhere. Nothing in what Risse and I have written would prohibit people from doing so. All we have said is this: If the farmette people want to live in the country and want an urban-level of municipal services and an urban level of access to amenities, they must be willing to pay what it costs to provide those services and that access. That’s free market thinking.

    In all likelihood, a free market would support higher-density development, or re-development, in areas closer to the urban core. Zoning regulations thwart that re-development process. The only alternative to building up is building out — thus sprawl.

  5. SDH Avatar
    SDH

    Ah, our old argument. I’m all for making the people on the fringe pay the true cost of their choice, and that step alone would have a major impact on the pattern of development ($5 a gallon gas would be another change agent). And I don’t disagree that there are too many barriers to denser development, most of them put up because the neighbors complain. But the best you can argue is “in all likelihood” and that doesn’t rise to a high level of confidence. I don’t think you have to look far to find examples of urban areas with no planning, no zoning, limited regulation and see the results.

    If you think society would contract back on the central cities once those barriers are down, and swarm around public transit, then you are blind to the deep social and economic divisions that sparked this pattern in the first place. My neighborhood is deeply hostile to public transit and will remain so, and it will only come if forced. Crime and poor schools need to be dealt with right along with the traffic patterns if you want this utopia to flower. A heavy hit of pixie dust might help, too. I liked the comment in the paper today about more families moving downtown. Dream on, Macbeth.

  6. E M Risse Avatar
    E M Risse

    Jim:

    I could not have said it better myself!

    Steve:

    You need to stop trying to avoid the issues we raise by suggesting I oppose the free market as an important tool (perhaps the most important tool after citizen education) in creating functional human settlement patterns.

    Yes, many of my neighbors who live on 1/4 acre lots here just inside the Clear Edge around the core of Greater Warrenton feel the same way as your neighbors. But what if they too paid the true cost and understood the imperitive of functional human settlement patterns?

    As we note in column after column when you compare apples with apples and even with the massive subsides many (87.5 percent by the Natural Law of that name) choose to live in patterns and densities at the unit, dooryard and cluster scale that would aggregate into functional Alpha Communities.

    Even with massive subsides, the value of same unit, same builder in desireable locations is far higher (and on a smaller lot) than in scattered location.

    Protecting Oceana NAS and Ft A.P. Hill USA from urban intrusion takes comprehesive regional planning, enlightened citizens, a fair allocation of location variable costs and a free market.

    EMR

  7. TheModerate Avatar
    TheModerate

    Buyers control demand, which in turn controls prices.

    In housing, the “free market” exists on the buyer’s side of the equation more so than the builder’s side and that is a good thing.

    If we had a total free market on the building side of the equation, I would hate to think what human settlement patterns would look like. No redevelopment would likely occur as long as there was still land available. Thankfully, we have zoning laws to protect what is left.

    Do these laws increase the cost of a house? Yes, up to a point.

    In free markets prices are likely to drop once you run out of buyers. In this case, houses may become so expensive that you run out of buyers.

    I guess we will see.

  8. Ray Hyde Avatar
    Ray Hyde

    Those 10 and 20 acre farmettes would not be quite so available except for zoning laws that restrict sales of smaller lots which would be more affordable for many buyers and more profitable for many sellers. If you are going to advocate a free market, then it has to cut both ways.

    It is OK to advocate that dwellers pay the full cost of their amenities, but that will probably mean that city dwellers pay far more in taxes than suburban and rural residents. It is not OK to demand full cost payment for some and massive subsidies for others. I wonder how many city dwellers there would be if they had to pay the full cost for transit systems and all the other city amenities, not to mention the higher costs of public safety, complex physical infrastructure and restoring the school districts.

    This weeks Wall Street journal recounts the situation in Greenwich Connecticut (R35) which has become a major new center for hedge funds. Turns out the owners/managers want to have their offices near home. This has caused major dislocations in office rents since Greenwich has almost no office space. At the same time it is so expensive that workers other than the owners can’t live there and many are reverse commuting from the city, with the result that the trains between the city and Greenwich are full in both directions.

    Looks like a burgeoning balanced community.

    At the same time a number of redevelopment and infill projects in various cities have been abandoned on account of the backlash against eminent domain actions as a result of the extreme unpopularity of the Supreme’s recent decision.

    I don’t think we know anywhwere near enough to postulate the outcome of any particular action.

  9. Ray Hyde Avatar
    Ray Hyde

    “there are few more popular ideas with the public than proffers and impact fees”

    What is not to like about taxing someone else so that you can enjoy a capital gain on your property? someday people will wake up to the idea that proffers and impact fees, aside from being unfair, increase the tax burden of existing owners more than they do the taxes of those for whom the proffers apply.

  10. Ray Hyde Avatar
    Ray Hyde

    “Even with massive subsides, the value of same unit, same builder in desireable locations is far higher (and on a smaller lot) than in scattered location.”

    Right and wrong, both at once. —–Wrong. The price of the unit may be higher, but it does not mean the value is higher.

    If the market works, the price will be the price of the land, plus the cost of construction, plus the cost of amenities and infrastructure provided, plus the cost of fees and approvals, plus profit for the builder. If there is heavy demand, then buyers may bid the prices above the markets costs, but that portion of the price is speculation and adds no value to the property.

    For the end user, the value is the same no matter the location or price: a place to lie down at night, and fix breakfast in the morning before you go to work. Depending on the nature of your work, personal preferences and other factors, all those amenities may be of little interest to you: maybe you prefer to cook homegrown corn at home than to pay an exhorbitant price for two day old corn at some upscale health food emporium. Maybe you are willing to drive farther for a lot big enough to plant a couple rows of corn, assuming it is not against the rules of your neighborhoood association.

    A free market means that people have to be able to compare, choose, and pay for value based on their own notions, not the preconceived value judgements of others.

    —-Right – even with massive subsidies the price will be higher in locations you claim are desirable, but why would there be massive subsidies in a free market?

    There can be only one reason. Someone has decided that such places ought to be desirable even when they are, in fact, not. Some people WILL voluntarily pay more for the amenities and a shorter commute, and others will not.

    Some businesses will pay more to locate in a large labor pool, and some will not. Some businesses and people will migrate outward, to avoid those costs.

    When they migrate outward they will cause changes, including changes near existing uses like farms and military bases. In a free market, those uses have the opportunity to protect their operations by buying up surrounding properties.

    If they are unwilling to do that, then what they are saying is that the value of their operations is not as high as the value of the competing uses.

    That is a free market.

    A plan that depends on massive subsidies (whether housing, transit, school, or public safety) to reduce the costs and change the true values to something they are not is not a free market.

    A plan that artificially raises the costs to some unsubstantiated higher value in an otherwise competitive market is not a free market.

    A plan that promotes one vision exlusively over another is not a free market.

    A plan that does not recognize a multiplicity of markets, is not a free market.

    Even worse, promoting new urbanism with an elaborate and unsubstantiated bunch of rules and natural laws, when the whole operation, in my opinion, is an elaborate means to promote land conservation, is a fraud and a disservice to real conservation efforts.

  11. Jim Bacon Avatar
    Jim Bacon

    Ray, You said: “A plan that promotes one vision exclusively over another is not a free market.”

    I totally agree. But that’s what we’ve had over the past 30 to 40 years across most of the state — zoning codes, comprehensive plans, subdivision ordinances and road funding policies — that have mandated the scattered, disconnected, low-density pattern of development we have today, to the virtual exclusion of any other pattern of development. Sprawl has been the the plan, the vision, the execution and the result.

    You accuse people like me of trying to impose New Urbanism on the population. Perhaps there are some people in the world who would do that, but I would appreciate it if you directed your arguments against me by reference to what I say, not what someone else says. I will repeat for the umpteenth time that people should be given a choice, and that developers should be allowed to provide people with the types of development they think people want. As a practical matter, expanding the range of choices means changing regulations to support New Urbanism-style development, and changing regulations to support re-development and in-fill development. I would not — repeat NOT — seek to outlow sprawl-like development.

    You see, I think that zoning codes and comprehensive plans should be flexible enough to accommodate both patterns of development. I think that in a free market and economically level playing field, given a choice, most (not all, but most) people would choose to live in a New Urbanism environment, and most would choose to live closer to the urban core in proximity to jobs and amenities.

    From your relentless criticism of New Urbanism, I see you as the one who would deprive people of a full range of choices. You are the one seeking to impose your vision upon others by adamantly defending the status quo and prohibiting alternative development forms.

  12. Ray Hyde Avatar
    Ray Hyde

    Jim: you and I agree on most things. We have had a pattern of development driven by zoning plans we now see as stupid but which were state of the art planning at the time.

    Where I start having heartburn is over things like mandating a clear edge, proposing that 95% of the population live on 5% of the land, and other planning stupidity that we currently think is state of the art.

    I have a problem with supposing that new urban dwelling will save money and reduce traffic when we don’t have any evidence this is true and plenty that it isn’t.

    I have said, if new urbanism is what people want and there is a market for it, fine. Just don’t artificially create that market by, for example, restricting me to selling only fifty-acre lots which are artificially inexpensive for people wealthy enough to buy them, and which prohibit me from using the land for affordable (yes I know, not accessible) housing, or in fact, any use other than agriculture.

    I’m not against new urbanism at all, but if Portland regulations are an example of what it takes to make it happen, then yes, you can expect my criticism to be as relentless as the nonsense spouted and promoted by some groups. For an example consider the statement “We have to save all these farms because they pay $3 in taxes for every $1 in services.

    We can eliminate the sort of mandate you complain about without comment from me. However, that mandate was put in place by officials who believed they were acting on the wishes of their constituents. We still see many instances of people (NIMBY’s) opposing more density.

    We can eliminate the sort of mandate you complain about without comment from me. Just don’t replace it with some other mandate.

    I’m not opposed to conservationism either, but those who require expensive services should pay for them and conservation is an expensive service. If we decide to save 95% of the land, then lets figure out what that is worth, and figure out how to pay that much for it.

  13. SDH Avatar
    SDH

    Ray, I agree that proffers and impact fees are poor policy, I was just making the point that they are excellent politics and that is why they remain in place. The local government folks know full well that 90 percent of the new tax revenue they generate will come from rising values on existing homes. Jim, et. al., I offer the same challenge I’ve offered before. Give me a list of bills, legislative proposals, just three or four concrete ideas that can be put before the General Assembly. I even know a good lobbyist who is still tying to fill is dance card for the session. (Shameless plug).

  14. Ray Hyde Avatar
    Ray Hyde

    I agree, proffers and impact fees and imposed aforadable housing are good politics. Just bad economics.

    Like EMR says, if we could just educate the people.

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