The Cost of Radical ‘Densification’ in California Housing

The Cost of Radical ‘Densification’ in California Housing
May 15, 2012

Wendell Cox

Wendell Cox is a senior fellow of The Heartland Institute; a consultant to public and private... (read full bio)

My April 9 commentary in The Wall Street Journal (“California Declares War on Suburbia”) outlined California's determination to virtually outlaw new detached housing. The goal is clear: Force most new residents into multifamily buildings at 20, 30, or more to the acre.

California's harsh land use regulations had already driven housing affordability from fairly typical levels to twice and even three times higher than those of much of the nation. California's more recent further tightening of land use restrictions (under Assembly Bill 32 and Senate Bill 375) has been justified as necessary to reduce greenhouse gas (GHG) emissions.

The reality, however, is that all of this is unnecessary and GHG emission reductions can be achieved without interfering with how people live their lives. As a report by the McKinsey & Company consulting firm and the Conference Board (a global, independent business research association) put it, there would need to be "no downsizing of vehicles, homes or commercial space," while "traveling the same mileage." Nor, as McKinsey and The Conference Board found, would there be a need for a "shift to denser urban housing."

Bars to Meeting Demand

A letter to the editor in The Wall Street Journal suggested there are more than enough single-family homes to accommodate future detached housing demand in California for the next 25 years. That's irrelevant because California has no intention of allowing any such demand to be met.

In California's major metropolitan areas, detached houses accounted for 80 percent of the additions to the occupied housing stock between 2000 and 2010, which slightly exceeded the national trend favoring detached housing.

It does no good to point to surveys indicating people preferring higher-density living. People's preferences are not determined by what they say they will do, but rather by what they do.

"Off-point" criticism to my Wall Street Journal article may be more abundant than criticisms that are "on-point." Perhaps the most curious was by Brookings Institution Metropolitan Policy Program Senior Researcher Jonathan Rothwell (writing in The New Republic) in a piece titled "Low-Density Suburbs Are Not Free-Market Capitalism." I was taken aback by this because the words "free," "market," and "capitalism" did not appear in “California Declares War on Suburbia.”

I was even more surprised at the claim that I defend "anti-density zoning and other forms of large lot protectionism." Not so.

Zoning Problems

Indeed, I agree with Rothwell on the problems with large lot zoning. However, it is a stretch to suggest, as he does, that the prevalence of detached housing results from large lot zoning. This is particularly true in places like southern California where lots have historically been small and overall density is far higher than in greater New York, Boston, or Seattle and double that of Portland, Oregon.

Rothwell’s own Brookings Institution has compiled perhaps the best inventory of metropolitan land use restrictions, which indicates the major metropolitan areas of the West have little in large lot zoning. Yet detached housing is about as prevalent in the West as in the rest of the nation (60.4 percent in the West compared to 61.9 percent nationally, according to the 2010 American Community Survey).

However, to his credit, Rothwell points out the connection between urban growth boundaries and higher house prices. This is a view not shared by most in the urban planning community, who remain in denial of the economic principle that constraining supply leads to higher prices.

Urban Growth

From 1900 to 2010, the urban population increased from 40 percent to 80 percent of the U.S. population. Approximately 95 percent of the population growth over 100 years was in urban areas. People did not move to urban areas for "togetherness" or to become better citizens, nor out of a desire for better urban design or planning. The driving force was the desire for higher incomes and better lives.

A former World Bank principal urban planner, Alain Bertaud, stated the economic justification directly: "Large labor markets are the only raison d’être of large cities."

And for most Americans in metropolitan areas, including those in California, better lives means living in suburbs and detached houses.

Problematic Policies

The performance of urban areas is appropriately evaluated by results, such as economic outcomes, without regard to inputs, such as the extent to which an area conforms to the latest conventional wisdom in urban planning.

Land use policies should not lead to higher housing costs relative to incomes. Transportation policies should not be allowed to intensify traffic congestion by disproportionately funding alternatives (such as transit and bicycles) that have little or no potential to improve mobility.

This gets to the heart of the debate. The "smart growth on steroids" policies now being implemented in California are likely to lead to urban areas with less efficient personal and job mobility, where economic and employment growth is likely to be less than would otherwise be expected.

The issue is not urban sprawl. The issue is sustaining the quality of life, which is now endangered by public policy in California, and for no good reason.

Wendell Cox (demographia@gmail.com) is a Heartland Institute senior fellow and author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life (2006). Used with permission from NewGeography.com, where a longer version appears.

Internet Info

“Reducing Greenhouse Gas Emissions: How Much at What Cost?” McKinsey-Conference Board report: http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=1384

Wendell Cox

Wendell Cox is a senior fellow of The Heartland Institute; a consultant to public and private... (read full bio)