Housing affordability suffers under smart growth policies. Principal smart growth policies include urban containment (such as growth boundaries and restrictions on physically developable land), large-lot zoning in urban fringe and rural areas, state aid contingent on local growth zones, house building moratoria or limits, high development fees and exactions, and mandatory regional or county planning. Indeed, the largest house price drops after the housing bubble burst occurred in the markets that experienced the greatest cost escalation, both because prices were artificially higher but also because prices in smart growth markets are more volatile, says Wendell Cox, an adjunct scholar with the National Center for Policy Analysis.
If the losses in the ground zero markets had been limited to the rate in the less restrictively regulated markets (the estimated impact of cheap credit), lenders would have lost $1.6 trillion less, says Cox.
Source: Wendell Cox, The Fall: Smart Growth Losses, New Geography, July 8, 2011.
For text: http://www.newgeography.com/content/002324-the-costs-smart-growth-revisited-a-40-year-perspective
For more on Economic Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=17
First published by the National Center for Policy Analysis, United States
FMF Policy Bulletin/ 19 July 2011
