housing policy

Sydney to Abandon Radical Urban Containment Policy

Wendell Cox — Wed, 20 Mar 2013 09:56:12 -0400

The New South Wales government has proposed a new Metropolitan Strategy for the Sydney area which would significantly weaken the urban containment policy (also called urban consolidation, smart growth, livability, growth management, densification, etc.) that has driven if house prices to among the highest in the affluent New World (Australia, Canada, New Zealand and the United States) relative to household incomes.

According to the Australian Financial Review, the state's Liberal-National government plans to allow the building of more than 170,000 new homes, with the vast majority being on greenfield sites, largely beyond the current urban footprint. Premier Barry O'Farrell and his party had promised in their electoral campaign in 2011 to liberalize land-use regulation and to moderate the previous Labor government's quota that required 70% of new houses to be built within the current urban footprint and 30% on greenfield sites. In fact, however, under the Labor government's administration, new house building had been produced at a well below demand level.

Among the major New World metropolitan areas rated in annual Demographia International Housing Affordability Surveys, Sydney has been the most unaffordable, along with Vancouver, in recent years. Sydney and Vancouver have had among the most stringent urban containment policies in the New World, and the resulting unaffordable house prices under such circumstances are consistent with economic principle.

Premier O'Farrell told the Sydney Morning Herald that the government wanted to "make home ownership a reality again." He continued, "The more blocks of land (lots) we can release, the greater downward pressure we can put on housing because it's been so high for so long." In a press release issued by his office, the Premier recalled that “Before the election, I said I wanted to ensure owning a home wasn’t a fading dream for young families" and noted that the massive housing package "will go a long way to delivering on that commitment."

In the longer run (by 2031), the government intends to provide for a total of 545,000 new homes, while abandoning the practice of allocating locations based upon planning theory. Planning and Infrastructure Minister Bradley Hazzard told the Sydney Morning Herald that the government intended to “look further afield” than the presently planned greenfield suburban growth centers. He continued: "We're trying to [be] less constrictive and restrictive and what we're saying is the marketplace should have far more of a say in what the mix of housing is and where it should be,'' adding that ''it doesn't matter'' what percentage was delivered in greenfield and established suburbs. He concluded: ''No one should be preoccupied by particular prescriptive formulas.''

The government also indicated its intention to encourage one half of employment growth over the next 20 years to be in Western Sydney. Western Sydney is virtually across the urban area from the central business district. This dispersion of employment, along with roadway improvements in the area, is likely to improve the metropolitan balance between jobs and housing.

The plan for greater job dispersion would, if successful, bring Sydney more into line with urban best practices, which are exhibited by the location of most new jobs in edge cities, as well as throughout the entire urban area. Sydney has among the longest work trip travel times in the New World. The one-way work trip travel time is newly reported in the Metropolitan Strategy to have reached 35 minutes. Work trip travel times are worse only in Melbourne, at 36 minutes. By comparison, Dallas-Fort Worth, with a larger population, a much lower urban area density and a mere fraction of the Melbourne or Sydney transit work trip market share has a far shorter one-way work trip travel time (26 minutes).

The Sydney developments are the latest in a trend toward liberalizing urban land use in four nations.

In October, the New Zealand government announced plans to liberalize land-use amid growing concern about the extent to which that nation's urban containment policies have destroyed housing affordability. In the introduction to the 9th Annual Demographia International Housing Affordability Survey, Deputy Premier Bill English said:

Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. When demand shocks occur, as they did in the mid-2000s in New Zealand and around the world, much of that shock translates to higher prices rather than more houses.

Recent polling has shown support, by an almost 2 to 1 margin for government action to improve housing affordability, with even higher stronger support in the 18 to 34 age group, where the margin was more than 3 to 1.

The United Kingdom Cameron government is also embarked on a program to liberalize that nation's restrictive land use policies, which former Bank of England Monetary Policy Committee member Kate Barker found to be the cause of severe housing unaffordability in a report commissioned by the Blair Labour government. Planning Minister Nick Boles has characterized the unaffordability of housing as "the biggest social justice problem we have."

In 2011, Florida repealed its statewide smart growth mandate and closed the administrative bureaucracy that had overseen the program. Before that, the government of the Australian state of Victoria substantially expanded the urban growth boundary of the Melbourne urban area.

Home Ownership and the American Dream

Jacob Langenfeld — Thu, 24 Mar 2011 10:26:38 -0400

What defines the American Dream? A new poll by Big Builder reveals that one answer to this enduring question may be home ownership. A major portion of the American population (59%) believes that they are living the American Dream. Respondents distinguished owning a home as the second most important factor of the American Dream, just behind raising a family.

Another statistic in this poll seem to suggest that this trend may be more stifled as the younger generation of Americans (18-29 year olds) come to the crucial decision of buying a home. Still, 49% see home ownership as a “sound investment,” while 49% of this age group call it “too risky.” Perhaps the effect of the weak economy has been especially evident in this age group.

Some interesting contradictions also arise in these statistics. For instance, 58% of those who believe the housing crisis is a chronic problem also recommend buying a home. Furthermore, 75% of respondents claim to not have benefited from any federal program to assist in ownership (such as mortgage interest deduction), yet 71% confessed to taking the deduction. The pollsters have considered that perhaps the government’s assistance in home ownership may be unclear for many Americans.

A final statistic worth mentioning is that 58% of Americans believe that fulfilling the American Dream is influenced mostly by their own skills and hard work than by the current state of the economy. The ubiquitous American Dream still runs on hard work and the pressing notion of owning a home, it would seem.

Strategic Diminshment at the Heart of New Housing Policy

Ed Braddy — Tue, 24 Aug 2010 12:55:47 -0400

Robert Samuelson in the Washington Post takes on the role of homeownership in our society. I'm generally a fan of Samuelson's writing, a normally sober, cold-eyed analysis of issues without favor to one ideology over another, so imagine my disappointment when reading him say, "The relentless promotion of homeownership as the embodiment of the American dream has outlived its usefulness."

Of course, there's more to his column. He goes on to say:

Unfortunately, we let a sensible goal become a foolish fetish. Not everyone can become a homeowner. Some are too young and footloose; some are too old and dependent; some are too poor or irresponsible. Some don't want a home.

This is different that saying homeownership is not a worthy goal for our nation and is quite distinct from the ideas of Richard Florida, who has previously written that homeownership is overrated and who’s recent "Roadmap" to recovery focuses on de-emphasizing homeownership. Where Florida is right is in acknowledging that this would "blow up" the fundamentals of our economy.

He's also engaging in what I call strategic diminishment – that is, consciously pursuing a future that is less than our current state. Many elite progressives think we have it too good and that our lifestyle choices are harmful to ourselves and our planet. It's not enough that they want to be scolds; they want to use the power of government to change America into a place where our quality of life is diminished.

And progressives also glorify this reduction with a "less is more" attitude. The Washington Post recently presented the case against air conditioning, and USA Today reported on the banning of drive-throughs in the city that pioneered them sixty years ago. I've addressed strategic diminishment as it relates to the mobility and the Obama administration’s “Livable Communities Act,” but this is also true for homeowners and covers not just the percentage of homeowners but even the size of homes. Ron Utt of the Heritage Foundation warns how even the President has adopted a worrisome narrative on homeownership.

Before we go off the deep end, let's clear up two points. First, the crisis we've gotten ourselves into is not because people own homes. It's because of the flawed policies promoting homeownership. We know about the role of the Community Reinvestment Act and Fannie Mae and Freddie Mac, but also contributing were various land-use planning schemes collectively known as Smart Growth.

Second, homeownership has many benefits. Homeownership is more than a lifestyle choice; it's a source of wealth and stability. And when homeowners take out a second mortgage on their homes, it's often as a source for financing their own small businesses – another ideal we associate with the American Dream.

There are countries with equal or greater rates of homeownership that do not have government intervention policies that skew the market. But as we consider housing policy at the local, state, and federal levels, what should be the principles on which it is based?

Owning a home is a laudable goal held by millions of Americans.
Homeownership is positive good that should never be discouraged by government policy.
Everyone should have the right to pursue homeownership, but not everyone is ready to be a homeowner.
Government’s role is not to determine who should be a homeowner or when and where they should buy a home.
Markets are better than mandates at creating the environment in which people pursue renting or owning homes according to their ability.

Before we adopt A Nation of Renters as our new creed, let's fix the broken policies that got us here.

Ed Braddy is executive director of the American Dream Coalition, a non-profit grassroots and public policy organization that promotes freedom, mobility, and affordable homeownership. The ADC's annual conference takes place September 23-25 in Orlando, Florida. For more information, visit americandreamcoalition.org or email Ed at ed@americandreamcoalition.org.