“Smart Growth” is a fad that has caught on in many cities, counties, and states by promising better urban growth and planning. So far, it has delivered only the artificially inflated prices of the housing bubble, the collapse of which sparked the current recession. Unfortunately, despite the proven calamity, there is a continuing push to bring these destructive policies to Texas.
Smart Growth is the label that has been given to a wide array of restrictive government policies that define what land can be used and what it can be used for, levy fines and fees on homeowners and developers, and generally distort the real estate market. California, Florida, and the city of Portland are the leading examples of governments that have adopted Smart Growth policies. It is no coincidence that these are among the nation’s most decimated housing markets. By restricting the use of available developable land, these regulators decreased supply, even as demand was being fueled by more liberal lending policies. Consequently, prices started to climb rapidly, sparking speculation that drove prices even higher, feeding a vicious cycle that distorted home prices far more than in areas without such restrictions.
In a report recently prepared for Houstonians for Responsible Growth, Demographia broke down the factors contributing to real estate costs, and found that construction costs, demand, population growth, available land, lending practices (Texas had among the greatest number of sub-prime mortgages in the nation), and other factors were not able to explain why California’s and Florida’s bubble was so much bigger than Texas’. Instead it was restrictive land use policies disconnecting the housing market from the true indicators of cost that fueled such an incredibly large bubble.
Home ownership has become a symbol of the American Dream, but it remains out of reach for too many people. Many potential first-time home buyers are being driven out of the market by restrictive government policies. Texans must recognize the consequences of these policies and work to ensure that our cities are able to grow and develop appropriately to meet the demand of our growing population and business community.
And should it be a surprise that much of that population and business growth comes from people and businesses leaving California and Florida?
– Ryan Harvey