Envy is making houses unaffordable

Sprawl is good. Sprawl is choice. The opponents of sprawl are not just against sprawl, they're against choice -- the proof of this is that if people wanted to live in the way the enemies of choice wanted, they wouldn't need to be forced into it, they'd be doing it anyway.

The enemies of sprawl are the enemies of choice -- they simply use the power of government and the powers that the Resource Management Act gives local government to force people to live in the way that they prefer, rather than the way the people themselves wish to live. They're just another brand of interfering busybody who want to force their own predilections upon others.

The result in New Zealand is severe restrictions on building and development, and the result of that is some of the most unaffordable housing in the world.

The enmity of the anti-sprawlers is expressed in restrictions on building and development -- on where and how and how many houses, shops, offices, studios and workshops people can build on their own land -- and is is expressed in severe restrictions on the growth and expansion of New Zealand's cities -- including ring-fencing cities and prohibiting urban development beyond an artificially imposed 'urban fence.'

The result of all the planners' restrictions has been a severe dampening of housing supply at the very time that demand for those houses is going through the roof, so much so that New Zealand's cities now rank amongst the most unaffordable cities in the world in which to buy a home: as you might have heard, in a recent report released by Wendell Cox's Demographia and Hugh Pavletich [blogged here many times], Auckland was shown as the twenty-first most unaffordable city in the world in which to buy a home (as measured by the income of people in those cities) with NZ's other cities not far behind.

There are dickheads about who either don't think that it's restrictions on sprawl that raises costs, or they simply ignore the evidence; dickheads like Colin James for example who, writing in Tuesday's Herald, suggests the reason for the unaffordability of housing is due solely to lending policies.

But this just ignores the reality. The evidence is clear enough that where lending policies are equal -- across the continental US for example -- that the most unaffordable cities are those that have applied the so-called 'sustainable' solutions to growth; and it is the cities that have applied most restrictions on people's choices that are the most unaffordable in which to live. (The chart at left shows the western world's most unaffordable cities; the chart at right shows the cities following the anti-sprawlers' nostrums; this post discusses the correlation) It's no surprise that cities ranking highly in one chart generally rank rather highly in the other chart as well.

The difference between affordable cities and unaffordable cities is not in lending policies, which are the same across whole countries, it is in the level of restrictions placed on building new houses, which differ from city to city. This should not be rocket science. Restrict supply, and you increase prices. Thinking you can do otherwise is trying to refute a basic law of economics -- and even dictators can't do that, however much they like to try.

Notes a recent article in the Washington Post: sprawl, suburban living, and the cars that make the sprawling suburbs possible have been demonised in all sorts of ways.

They don't rate up there with cancer and al-Qaeda -- at least not yet -- but suburban sprawl and automobiles are rapidly acquiring a reputation as scourges of modern American society. Sprawl, goes the typical indictment, devours open space, exacerbates global warming and causes pollution, social alienation and even obesity. And cars are the evil co-conspirator -- the driving force, so to speak, behind sprawl.

In objecting to sprawl and to the evidence adduced by Pavletich and Cox for the unaffordablility of cities with more restrictions on development, blogger and 'Smart Growth' advocate Tom Beard demonstrates the sneering mixture of envy and myth on which restrictions on turning bare land into new housing are based:

In reality, what actually concerns [Hugh Pavletich] and right-wing American lobby group Demographia is the ability of suburban property developers to make a quick profit from subdivisions while externalising the cost of infrastructure...

The price of a house is only part of the story: how "affordable" will it be to live in his sprawling, car-dependent suburbs when oil prices soar even higher? Meanwhile, the entire city shares the costs of roading, sewerage and water, as well as having to put up with increased pollution, road deaths and having motorways driven through our neighbourhoods.

Pavletich... can't wait to convert the country into a debased landscape of McMansions, megamalls and motorways, pocketing the profit while the rest of us pay for the physical and civic infrastructure required to turn it into some semblance of a city

Beard is representative of many anti-sprawlers; people who want to force others to live by the anti-sprawlers' own envy-ridden sensibilities. But ignoring the envy-ridden barbs, let's boil down his real objections to sprawl, the claim that suburbs are "unsustainable."

• Anti-sprawlers argue that roads, sewage, water and "the physical and civic infrastructure required to turn it into some semblance of a city" are paid for by "the rest of us," so therefore the extension of infrastructure must be restricted. But what is their reaction when someone suggests that roads, sewage, water and "the physical and civic infrastructure required to turn it into some semblance of a city" are provided privately, and the real costs sheeted home to buyers? Apoplexy. Let infrastructure be provided privately, however, with costs sheeted home to users, and this objection dissolves.
  
• And "how affordable will it be to live in his sprawling, car-dependent suburbs when oil prices soar even higher?" Well, isn't the future affordability or unaffordability up to those who choose to live in these sprawling, car-dependent suburbs, and to invest in their own future?
  After all, neither Tom Beard nor Dick Hubbard nor Al Bore nor any planner anywhere in the world has a direct line to the future. Freedom means we're each allowed to plan our own futures, with the full knowledge of our own context, our own lives, and our own hopes and dreams, and -- provided we don't initiate force against anyone else -- we should all be free to do so. In fact, when people have been left free to plan their own lives, and to react freely to price signals that indicate resources and lifestyles are or should be changing, the results have been vastly superior to those achieved in the planned societies and planned economies so beloved of Beard and Hubbard and Bore.

As Joel Schwartz at the American Institute summarises, in a related context:

I suspect these people and others like them must at bottom believe that businesses don't deliver what's best for consumers unless the government forces them to. They hold this belief, or at least fail to examine it, even as businesses continue to supply them with what they actually want, as revealed by their purchase choices, rather than with what they say they want.

Perhaps we need to define a new type of 'market failure.' Market failure occurs when businesses supply what people actually choose to buy, rather than what people claim they want to buy.

As I've suggested, the idea that that sprawl is bad is essentially one of envy; what gets anti-sprawlers apoplectic is the idea that someone, somewhere, is being allowed to live their life in the way that they want too, rather than the way the anti-sprawler wants them to. Economic ignorance allows them to think they can get away with it.

Ted Balaker and Sam Staley discuss five other envy-ridden myths of the anti-sprawlers in that Washington Post article mentioned above, myths they explode in the American context, and which are equally mythical here in NZ.

• Myth #1. Americans are addicted to driving.
  Fact is, Americans are no more addicted to driving than Europeans. Europeans -- who live in the European cities that are so often cited by planners as being our ideal (that's a suburb near Paris on the right, by the way) -- they drive almost as much as we do. As Balaker and Staley point out: "The key factor that affects driving habits isn't population density, public transit availability, gasoline taxes or even different attitudes. It's wealth. Europe and the United States are relatively wealthy, but American incomes are 15 to 40 percent higher than those in Western Europe. And as nations such as China and India become wealthier, the portion of their populations that drive cars will grow."
  
  
• Myth #2. Public transit can reduce traffic congestion.
  Public transportation still has an important role, concede the authors, but they say, "We have to be realistic about what transit can accomplish."

  Suppose we could not only reverse transit's long slide but also triple the size of the nation's transit system and fill it with riders. Transportation guru Anthony Downs of the Brookings Institution notes that this enormous feat would be "extremely costly" and, even if it could be done, would not "notably reduce" rush-hour congestion, primarily because transit would continue to account for only a small percentage of commuting trips.

  In any case, public transportation use itself is generally declining, but like auto use, suburbanisation itself is driven not by use or non-use of public transportation, but by wealth. "Workers once left the fields to find better lives in the cities. Today more and more have decided that they can do so in the suburbs."
  
  
• Myth #3. We can cut air pollution only if we stop driving.
  "Although driving is increasing by 1 to 3 percent each year, average vehicle emissions are dropping about 10 percent annually. Pollution will wane even more as motorists continue to replace older, dirtier cars with newer, cleaner models." Cleaner cars and better roads -- so those cars aren't sitting around in traffic jams all day -- between them, that's going to do more for pollution and greenhouse gas emissions than raising the price of houses by restricting growth.
  
  
• Myth #4. We're paving over America.
  "How much of the United States is developed? Twenty-five percent? Fifty? Seventy-five? How about 5.4 percent? That's the Census Bureau's figure... In truth, housing in this country takes up less space than most people realize. If the nation were divided into four-person households and each household had an acre, everyone would fit in an area half the size of Texas."
  The same sort of figures apply here in New Zealand, except even less so. According to the Landcover Database of Terralink, urban areas and urban open space in New Zealand account for less than 1 percent of total area, one quarter of that in the Auckland region. If all of NZ's 1,471,476 existing households were to be rebuilt on an acre of land (which was the sort of thing proposed by Frank Lloyd Wright in his Broadacre project, right), we'd all fit in an area less than one-quarter the size of the Waikato -- and think how easy it'd be to thumb a lift out to Raglan!
  
  
• Myth #5. We can't deal with global warming unless we stop driving.
  Really? Does the myth-making of the anti-sprawlists depend solely on the myth-making of the warmists? Seems so.
  But as Dr Vincent Gray notes, even the alarmists on the IPCC only suggest it is "very likely" that between 0.3ºC and 0.5ºC of the last century's warming is due to us humans, and only one-tenth of New Zealand's greenhouse gas emissions are due to "household transport." In fact, and if you believe the threats are real, then you will know that livestock are a greater 'threat' to the planet than our cars. Are we going to 'save the planet' by ploughing under our livestock and paving all the farms? Or by bulldozing all our existing housing just so we can pack ourselves all in within walking distance of each other?
  And even if you take seriously the alarmism of the warmists, that's not going to stop everyone driving, particularly not the drivers in China and India who are just going to go right on getting rich and driving more -- the only thing to do is ensure that price signals here reflect the true realities, and leave people free to choose.
  

Such is the quality of the reasoning by which our houses are becoming unaffordable.

What the anti-sprawlists are doing with their restrictions on development is making housing unaffordable for every first-home buyer, and pushing up rent and mortage payments for everyone else.

And what they're also doing, ironically enough, by artificially ring-fencing our cities with restrictive zoning, is offering a great boon to the bigger developers they claim to despise -- the mega-developers who are the only ones to have the capacity and the political connections to buy up the ready-to-be-rezoned land that sits outside the ring-fence, encourage its rezoning, and then release it on to the market once the ring-fence is relaxed.

But that's another story ... one we'll talk about here very, very soon.

UPDATE: Tom Beard has responded here, to which I've responded briefly here.

LINK: Five myths about suburbia and our car-happy culture - Washington Post
Sustainable cities are unaffordable cities - (Peter Cresswell) Not PC

RELATED: Urban Design, Politics-NZ, Housing