One of the starkest impacts of smart growth policies is the huge differentials in property prices that occur on virtually adjacent properties on either side of an urban growth boundary.
The extent to which regulatory restrictions can drive up prices is illustrated by the differences between the values of undeveloped lands just a few steps from each other, but across the urban growth boundary. Research from more than a decade ago in Portland indicated that land on which development is permitted inside the urban growth boundary tended to be 10 times as valuable per acre as land immediately outside the urban growth boundary, on which development was not permitted. In Auckland, New Zealand, recent research found virtually adjoining undeveloped land value differences at 10 times or more as well. Research in the London area by Dr. Timothy Leunig of the London School of Economics indicates that this difference can be as much as 500 times.
Recently (February), I examined tax assessment records for all parcels in Portland's Washington County that abut the urban growth boundary to see if value differences exist. The properties had to be 5 or more acres and be undeveloped. Research was conducted based upon Internet information in February 2010. Property along 25 miles of the urban growth boundary from Cedar Hills to Hillsboro to southwest Beaverton was included in the analysis.
- The land adjacent to, but outside the urban growth boundary (on which development is prohibited) was assessed at approximately $16,000 per acre.
- The land adjacent to, but inside the urban growth boundary (on which development is permitted) was assessed at approximately $180,000 per acre, approximately 11 times the price of land that is virtually across the street (across the urban growth boundary)
A sample was also taken of more remote developable parcels of more than 5 acres, on which development would not be permitted. These parcels, which were from one to five miles outside the urban growth boundary, had a value of approximately $8,500. Thus, the developable land inside the urban growth boundary was 21 times as expensive as the more remote land.
These data indicate the impact of urban growth boundaries on the price of raw land, which is inevitably passed on to buyers of new housing. Without an urban growth boundary, it would be expected that land on both sides of an urban growth boundary would have similar values. Further, land would be expected to drop in value beyond the urban fringe, but not by the drastic amounts indicated in Portland, Auckland and London.
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One of the starkest impacts
One of the starkest impacts of smart growth policies is the huge differentials in property prices that occur on virtually adjacent properties on either anime hd online side of an urban growth boundary.
The extent to which regulatory restrictions can drive up prices is illustrated by the differences between the values of undeveloped lands just a few steps from each other, but across the urban manga read growth boundary. Research from more than a decade ago in Portland indicated that land on which development is permitted i
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One of the starkest impacts
One of the starkest impacts of smart growth policies is the huge differentials in property prices manga online that occur on virtually adjacent properties on either side of an urban growth boundary.
The extent to which regulatory restrictions can drive up prices is illustrated by the differences between the values of undeveloped lands just a few steps from anime online each other, but across the urban growth boundary. Research from more than a decade ago in Portland indicated that land on which development is permitted i
The land adjacent to, but
The land adjacent to, but inside the urban growth boundary (on which development is permitted) was assessed at approximately $180,000 per acre, approximately 11 times the price of land that is virtually across the street (across the urban growth boundary) http://www.arcadia-azsearchforhomes.com/
Portland is already the model for FAILURE on EVERY LEVEL
Something that even Wendell has not yet focused on, is Alain Bertaud's findings on urban density profiles of different metros. These are time consuming and expensive to do, but Bertaud points out that urban planners really should be doing them as part of their analysis, if they want intelligent outcomes to their planning.
What Bertaud finds with Portland and Curitiba (Brazil), which are the two model urban-growth-boundaried cities in his study, is that "densification" has ceased to occur at its historically natural locations nearer the urban core, and that "densification" has instead shifted to further AWAY from the urban core in LESS efficient locations. The reason for this, is that the price of land has been forced up so much by the UGB, that households are unable to afford the "premium" price commanded by EFFICIENT locations, and are forced to locate instead at "less unaffordable" but LESS EFFICIENT locations.
I believe that if Bertaud's study was broadened, this effect would be found to be at work in every metro where land supply has been constrained and land prices forced up. Some time spent on Google Earth will provide anyone with visually apparent evidence. Use the Demographia surveys to identify metros where median multiple prices have gone higher than about 4.5 (even if they have crashed since), and compare them, on Google Earth, with metros where no bubble occurred.
In the bubble metros, you will find increased density occurring at illogical, inefficient locations; but in non-bubble metros with relatively free land markets, you will find the clusters of densification all occurring at logical, efficient "nodes" nearer to employment and social amenities.
The urban planning profession desperately need to "get it" - their plans are not only not working, and they are not only causing disastrous unaffordability and property bubbles; they are having exactly the OPPOSITE effect as that intended, on "household location choices" and obviously, VMT.
There is actually no lack of academic study showing that jobs dispersion and mixed land use and multiple nodes, are the best thing out for reducing VMT, but I fear that academic analysis is missing the massive differences that are evolving between "free land market" metros and "restricted land supply" metros. Analysis of the latter will reveal tendencies to REDUCED location efficiency and INCREASED VMT, that may get blamed on the wrong things. Especially by analysts who do not have a clue about Urban Economics - which criticism sadly, applies to most "planning" specialists including some tragically influential ones.
portland urban growth boundary
There are no services to the land outside the UGB. If you add this the ratio is different.
The $180,000 per acre is a bargin. That is at most $30,000/lot.
The cost of Housing inside the Portland UGB is not outof line with other urban areas without them. Look at Seattle or any city in California.
There are of course many reasons for a UGB besides land costs. Saving farm land, efficiency of services etc; but I sence something idiological about your study.
that assumes
That assumes that the area inside the urban boundary has services when it may not. Land that hasn't been developed before likely has no services installed and still needs them.
Seattle and cities in California aren't comparable size wise so they aren't good examples to compare Portland prices with. Also those cities are also difficult places to develop land. So they are all overpriced due to their politics not due to their development demand.
Also a libertarian or conservative viewpoint is no more ideological then the liberal one. UGB were born from a liberal viewpoint. You have to be a liberal to think a UGB is a good idea, everybody else thinks they are quite insane.
Too bad the public fails to collect the value they create.
Thanks to Wendell Cox for compiling this information.
Certainly most of the difference in value must be due to the effect of the urban growth boundary (altho some may be due to differences in physical characteristics; planners will seek to put buildable land within the boundary, and land subject to flooding or other difficulties outside.)
Since the value is essentially created by the public, it's a shame that the public fails to collect it. If they did, Oregon might not need such heavy taxes on earned income. The same applies, of course, to Auckland and any other places with effective development boundaries.
urban planning and market demand
The problem with the "planning" is it doesn't take into account market demand. It locks up real estate that should be developed causing prices to rise at artificial rates that the city cannot support. For a city the size of Portland with the job levels and amenities it has, it's really overpriced.
Affordability is a big problem there, most cities its size don't have that problem. It won't change until either the economic growth slows because the city can't grow and people leave on mass, or they remove urban "boundaries" or add huge areas to the allowed to build area.
Frankly growth boundaries are a bigger problem then the problems that they are supposed to prevent. The "cure" is worse then the disease. Not that growth is a disease. Portland is likely far less competitive with other cities of it size due to its much higher cost of living. Being "cool" isn't very high on many people's lists when they are looking at numbers for a business.
Why are these property
Why are these property prices so high. For the average american family prices like these will really make repayments almost impossible.
free market vs. planned economy
It's because the amount of land that could be and should be developed is kept artificially low. Its simply the law of supply and demand at work. The supply is too low in Portland so prices rise. Land needs to be developed outside the urban growth boundary and they don't allow it.
The real estate market isn't the free market but is over-planned in that city. Urban planners think they know better then home builders and the families that buy homes from them. The problem with planners is that they aren't risking their own money, but they are shaping the value of other peoples property by denying the right to develop their property to whatever use they want.
There is a saying in my business (I am a realtor), "highest and best use". The value of a property is directly related to the use of that property. In the case of many farms near cities, that use isn't a farm anymore. It needs to be developed with industry, businesses or have homes built on them.
That's why homes are affordable in Texas (they allow development where people want it) and why Portland is overpriced. If they overturned the growth boundaries Portland would be much more affordable. In other expensive cities, if regulations are relaxed more homes would be built and prices would be much more affordable as well.
Side effects
These MULs normally follow some Spatial or Smart Growth planning exercise where the planners pre-determine where growth should take place and where it should not.
As soon as the growth areas are ring-fenced the price of the land behind the fence and escalates and naturally creates a strong incentive for developers to go somewhere else.
Of course the planners cannot accept this unintended consequence and so go to court to prevent the "ad hoc" development.
These cases drag on for years and eventually the planners normally win.
Consequently development grinds to a halt.
Expensive land kills development in the areas "approved" by the land use planners and the courts kill the development in the areas where the land is still cheap enough to be viable.
Result - the economy is stuck in recession. It's sustainable development.
Owen McShane, Kaiwaka, New Zealand.
Director, Centre for Resource Management Studies.
http://www.rmastudies.org.nz/