Writing in March about my meeting with the Realtor's Association of Northeast Wisconsin, I couldn't quite figure out their angle. I think I finally did.
During my meeting with them, the theme was Affordable/Workforce Housing: what did I think about Affordable/Workforce Housing, what would I do as Alderman to ensure Affordable/Workforce Housing?
I had the feeling during that meeting that lots of cards were being held close to their vests. They talked a bit about the cost of city infrastructure and fees for city services. What they did not talk about was zoning.
In my recent reading I've been very impressed with the book "The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future". It sounds like a wild-haired, reactionary tome, doesn't it? Maybe with lots of paranoid, anti-government screeds peppered throughout. That is definitely not the case.
The author, Randal O'Toole, has done an enormous amount of research into government planning. His book focuses on three areas: forest planning, land use planning, and transportation planning. It was while reading the section on land use planning that I experienced a bit of an epiphany, a revelation.
Realtors certainly want to sell houses; that's where their commissions come from. But they'd also like to sell a house for as much as they can. This helps the seller, of course, get the most for his house, and it boosts the commission for the realtor. This much is easy to understand.
What is interesting about the real estate market is that it is heavily affected by zoning and land use laws.
In addition to "The Best-Laid Plans", Mr. O'Toole was the author of a section of the latest "Cato Handbook for Policymakers". Chapter 22 is his work and it covers Housing Policy. Here's an excerpt:
The key to keeping housing affordable is the presence of large amounts of relatively unregulated vacant land. Historically, city zoning stopped at the city limits. City officials knew that if they imposed too much landuse regulation in the city, developers would go outside the city limits. To prevent this loss of tax revenue, cities kept their regulations flexible. This often led to charges that developers controlled city planning, but because developers would only build what buyers wanted, the truth was that consumers controlled city planning.
Growth-management and other laws that give cities control over rural areas changed the balance of power between consumers and city officials. Officials preferred that all development (and the resulting tax revenues) took place within city boundaries, so they eagerly used growth boundaries and other controls to limit rural development. This resulted in artificial land shortages and dramatic increases in housing costs.
Growth management comes in several flavors, including slow growth, which limits the number of building permits issued each year, and smart growth, which does not attempt to control growth rates but mandates that growth take place at higher densities instead of in the form of low-density "sprawl." Both kinds of growth management make housing less affordable by creating artificial land shortages.
"Dramatic increases in housing costs" ... that is much more to the liking of the Realtor's Association than any talk of making housing more affordable. That's the revelation: that growth management, land use, and zoning laws contribute heavily to realtors' bottom lines.