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Your Neighbor Is Making Your House More Expensive
20 February 2008I’ve seen this first hand, the cost of housing is being driven up by all those various commissions and agencies your town and state just love to have. All those people who just love to tell you what you can and can’t do with your property have the end effect of raising the cost of housing.
Have you ever been to a permit meeting? It is not uncommon for the developer to have on hand for the night meeting, a civil engineer or two, a biologist (might be endangered fauna on that Connecticut land) and a hydrogist. Plus an architect for good measure. Assume these professionals are being paid, $150/hr, which might be low and the cost of the night meeting is at least $2,400 and maybe more. Somebody has to pay for that, and it’s not the developer, he/she adds that “cost of doing business” on to the selling price of the home.
Now add in the cost of land use regulations, urban-growth boundaries and adequate public facilities ordinances. Which have the effect of removing land from development. Which raises the cost of land and therefore housing.
The Cato Insitute calls it the Planning Tax.
On average, homebuyers in 2006 had to pay $130,000 more for every home sold in states with mandatory growth-management planning than they would have had to pay if home price-to-income ratios were less than 3. This is, in effect, a planning tax that increases the costs of retail, commercial, and industrial developments as well as housing.
Case in point, town of Avon declared about a year ago that Avon had about 500 housing units of land left and after that Avon was closed for further development. Supply limited, demand high, price will skyrocket. Good deal if you live in Avon, bad deal if you don’t.
It that real value added or just a market distortion created by government? Housing valuation bubble in Avon? I have to wonder how much of Avon’s housing pricing is driven by the schools? Avon’s kids don’t seem to be living up to the hype and dollars spent per pupil, neither do Hartford’s kids. Come on kids, protect mom and dad’s investment, get those CMTs up! Have you seen that size of that addition on to that high school?
Worried about affordable housing in CT? Let the builders loose and they will build products for every budget. Add artificial constraints and prices go up.
The Cato Institute puts Connecticut planning tax at $59,000 per house.
Growth-management planning can profoundly change the character of the cities in which it is practiced. By making housing unaffordable, cities such as San Francisco, Portland, and Seattle have driven families with children to suburbs where they can afford a single-family
home with a yard. In 2000, 26 percent of the nation’s population was under the age of 18. But only 14.5 percent of San Franciscans, 15.6 percent of Seattleites, and 21.1 percent of Portlanders were under 18. Although Portland’s 2000 population was twice what it was in the 1920s, Portland schools educated fewer students in 2000 than in 1925. The result is that the central cities are inhabited largely by young singles and childless couples. These people may be more willing to live in higher densities and to walk or bicycle than older people or families with children, so planners believe that their plans are working to reduce driving and sprawl.
But in fact all they are doing is to separate the population into those who are willing to live in denser areas and to move to the central cities, from those who prefer low densities, who move to the sometimes-distant suburbs.
I can testify to that, I commute.
One Response to “Your Neighbor Is Making Your House More Expensive”
February 20th, 2008 at 11:58 am
Very sharp analysis