5 ms·

Reforming land use regulations

29 points by luu 10y ago

mabbo 10y ago
To the overall premise of the article, I do agree- land use regulations have played a huge role in the decrease in supply to real estate, increasing housing prices in the places where it's most needed. But (if there was no 'but' why even comment?) I think it's also important to not throw the baby out with the bathwater. There's a case[0] ongoing in Ontario wherein the premise is basically "conservation authorities don't have the right to tell me what to do with my land". But those same regulations are the ones that have helped prevent major flooding throughout the province for the last 60 years. Some regulations aren't just there for NIMBYism- some are there to prevent the tragedy of the commons. It's important to recognize the difference. [0] - http://canadianjusticereviewboard.ca/articles-caselaw/case-law/gilmor-et-al.-v.-nottawasaga-valley-and-the-township-of-amaranth-2015-onsc-5327 http://canadianjusticereviewboard.ca/articles-caselaw/case-l...
- tpudlik 10y ago
  It sounds like you agree not just with the overall premise, but with the article's specific recommendation, which is to "start with a serious cost benefit analysis and then require localities to refrain from any new regulations without first performing cost-benefit analyses of their own".
  - falcolas 10y ago
    Sounds like something that would require a lot of extra time and/or money to be spent by the government, just to review existing and implement new regulation. I have a hard time seeing tax payers supporting tax increases simply to implement more bureaucracy, in the name of giving land owners more opportunities to make money.
    - valuearb 10y ago
      Maybe it won't lead to more bureaucracy, but more freedom.
- wonder_er 10y ago
  Sometimes those regulations just create a _different_ "tragedy of the commons". For example, building affordable apartments often requires finding "loopholes" and squeezing something through the regulatory process before it gets shut down. If I may quote at length from the Seattle times[0]: > It was the brainchild of the late Bellevue developer Jim Potter, who found a loophole in Seattle’s building regulations. > At the time, the city allowed up to eight unrelated people to live in one “dwelling” with a shared kitchen. The code didn’t say the rooms had to be tied together as a single unit, so Potter built a cross between an apartment building and a boardinghouse, where someone could rent a sleeping room as small as 100 square feet with a private bath and share a kitchen with up to seven others renters. > A micro-housing building spree ensued that gave Seattle more such units than any city in the country. At last count, 782 micro-housing units were cleared for occupancy in Seattle, with another 1,598 units in the pipeline. No other American city comes close. > Once the pipeline is cleared, though, no future Potter-style hybrids will be allowed: The city changed the rules in October after neighbors railed against the projects. Congregate housing — group housing arrangements such as dorms and senior housing that use common areas — is still allowed. But in the future, micro-housing will mean efficiency apartments of at least 220 square feet, each with its own bath and kitchen. --------------------- I'd argue that on the whole, more people are harmed by heavy-handed regulations that limit the mark I know regulations contain more than just "affordable housing" issues, but often the impact of land use regulation is to drive up the cost of housing for everyone, which makes households more sensitive to job loss, and dependent upon a steady income. The 2007-2008 recession could have been partially mitigated if inexpensive housing stock was available for purchase. So, I'd argue that preventing major flooding is good, but the tools by which governments try to prevent that flooding (and other "negative externalities" cause problems more severe than they solve.) [0] http://www.seattletimes.com/pacific-nw-magazine/seattles-micro-housing-boom-offers-an-affordable-alternative/ http://www.seattletimes.com/pacific-nw-magazine/seattles-mic... [1] https://www.strongtowns.org/journal/2017/4/20/the-high-high-price-of-affordable-housing https://www.strongtowns.org/journal/2017/4/20/the-high-high-...
  - falcolas 10y ago
    Microhousing doesn't sound like much of a good thing, if I'm honest. It pushes a lot of functionality normally fulfilled by a house (such as entertainment, eating, work, storage, etc.) onto the city at large - you live in the city, and just sleep in the house. If the city isn't prepared to support such externalities, there's going to be a lot of chaos. 2,000+ families living around Bellevue (a suburb of Seattle, not even Seattle proper) doesn't sound great to me. Seattle isn't known for being a great place to spend your day in the park... Seems to me more like a scam to sell more homes at the cost of the city.
AndyMcConachie 10y ago
Why is it that American think tanks can only think of regulations as a scalar? It's not 'more regulation' or 'less regulation' we should be discussing. It's better regulation, where better requires a more nuanced discussion of what kind of regulations should be instituted. I generally agree with this article that many land use regulations have restricted building and it has generally hurt all of us. I'm all for density, and one of the ways in which we could increase density is with 'better' land use controls, not fewer or more or whatever. Regulation should not be thought of as a scalar.
- khuey 10y ago
  "If states do want to reform local land use controls, they might start with a serious cost benefit analysis and then require localities to refrain from any new regulations without first performing cost-benefit analyses of their own." Sounds a lot like "a more nuanced discussion" to me.
brudgers 10y ago
I'm not surprised when the Brookings Institute concludes that the answer is less regulation. The article ignores the market dynamics of real-estate development. Those dynamics are created by the the limited fungibility of real property. Real property may be exchanged for cash, but following such a transaction the cash can not (usually) be used to replace the original property because there is only one property at a particular location. In general, real-estate development seeks to maximize profits by pushing parcels toward their highest and best use. Removing regulations affecting real-estate entitlement won't change the economics affecting what developers build. Class A office space will be more profitable than a used car lot. A Porsche dealership will be more profitable than a Greyhound station. Luxury apartments will be more profitable than a tenement. Those are what developers will try to build. Suppose a luxury housing developer controls a parcel, removing entitlement regulations does not mean the developer builds a tenement. It means either the luxury housing developer builds luxury housing or waits until there is demand for luxury housing or someone makes an offer on the parcel that meets the luxury housing developer's expected internal rate of return from developing the property as luxury housing. An affordable housing developer who wants the parcel has to pay the price of a parcel suitable for luxury housing to obtain it. So will another luxury housing developer or an office building developer and for them the price will make more economic sense. One way of thinking about real-estate is that each and every parcel is a monopoly. Some monopolies are worth more than others. Removing entitlement regulations does not change the value of locations. It does not change the economic incentives of highest and best use. It does not remove market demand.
LennyThompson 10y ago
The only part of this article that is worth reading is the last paragraph, where the author is unmasked as a spokesman for the realty industry, who clearly have an interest in more high value low cost housing, for which regulation needs to change. It's a pity this sort of rubbish can't come with an appropriate disclaimer at the start.

29 points by luu 10y ago

mabbo 10y ago

To the overall premise of the article, I do agree- land use regulations have played a huge role in the decrease in supply to real estate, increasing housing prices in the places where it's most needed. But (if there was no 'but' why even comment?) I think it's also important to not throw the baby out with the bathwater. There's a case[0] ongoing in Ontario wherein the premise is basically "conservation authorities don't have the right to tell me what to do with my land". But those same regulations are the ones that have helped prevent major flooding throughout the province for the last 60 years. Some regulations aren't just there for NIMBYism- some are there to prevent the tragedy of the commons. It's important to recognize the difference. [0] - http://canadianjusticereviewboard.ca/articles-caselaw/case-law/gilmor-et-al.-v.-nottawasaga-valley-and-the-township-of-amaranth-2015-onsc-5327 http://canadianjusticereviewboard.ca/articles-caselaw/case-l...

tpudlik 10y ago
It sounds like you agree not just with the overall premise, but with the article's specific recommendation, which is to "start with a serious cost benefit analysis and then require localities to refrain from any new regulations without first performing cost-benefit analyses of their own".
- falcolas 10y ago
  Sounds like something that would require a lot of extra time and/or money to be spent by the government, just to review existing and implement new regulation. I have a hard time seeing tax payers supporting tax increases simply to implement more bureaucracy, in the name of giving land owners more opportunities to make money.
  - valuearb 10y ago
    Maybe it won't lead to more bureaucracy, but more freedom.
wonder_er 10y ago
Sometimes those regulations just create a _different_ "tragedy of the commons". For example, building affordable apartments often requires finding "loopholes" and squeezing something through the regulatory process before it gets shut down. If I may quote at length from the Seattle times[0]: > It was the brainchild of the late Bellevue developer Jim Potter, who found a loophole in Seattle’s building regulations. > At the time, the city allowed up to eight unrelated people to live in one “dwelling” with a shared kitchen. The code didn’t say the rooms had to be tied together as a single unit, so Potter built a cross between an apartment building and a boardinghouse, where someone could rent a sleeping room as small as 100 square feet with a private bath and share a kitchen with up to seven others renters. > A micro-housing building spree ensued that gave Seattle more such units than any city in the country. At last count, 782 micro-housing units were cleared for occupancy in Seattle, with another 1,598 units in the pipeline. No other American city comes close. > Once the pipeline is cleared, though, no future Potter-style hybrids will be allowed: The city changed the rules in October after neighbors railed against the projects. Congregate housing — group housing arrangements such as dorms and senior housing that use common areas — is still allowed. But in the future, micro-housing will mean efficiency apartments of at least 220 square feet, each with its own bath and kitchen. --------------------- I'd argue that on the whole, more people are harmed by heavy-handed regulations that limit the mark I know regulations contain more than just "affordable housing" issues, but often the impact of land use regulation is to drive up the cost of housing for everyone, which makes households more sensitive to job loss, and dependent upon a steady income. The 2007-2008 recession could have been partially mitigated if inexpensive housing stock was available for purchase. So, I'd argue that preventing major flooding is good, but the tools by which governments try to prevent that flooding (and other "negative externalities" cause problems more severe than they solve.) [0] http://www.seattletimes.com/pacific-nw-magazine/seattles-micro-housing-boom-offers-an-affordable-alternative/ http://www.seattletimes.com/pacific-nw-magazine/seattles-mic... [1] https://www.strongtowns.org/journal/2017/4/20/the-high-high-price-of-affordable-housing https://www.strongtowns.org/journal/2017/4/20/the-high-high-...
- falcolas 10y ago
  Microhousing doesn't sound like much of a good thing, if I'm honest. It pushes a lot of functionality normally fulfilled by a house (such as entertainment, eating, work, storage, etc.) onto the city at large - you live in the city, and just sleep in the house. If the city isn't prepared to support such externalities, there's going to be a lot of chaos. 2,000+ families living around Bellevue (a suburb of Seattle, not even Seattle proper) doesn't sound great to me. Seattle isn't known for being a great place to spend your day in the park... Seems to me more like a scam to sell more homes at the cost of the city.

AndyMcConachie 10y ago

Why is it that American think tanks can only think of regulations as a scalar? It's not 'more regulation' or 'less regulation' we should be discussing. It's better regulation, where better requires a more nuanced discussion of what kind of regulations should be instituted. I generally agree with this article that many land use regulations have restricted building and it has generally hurt all of us. I'm all for density, and one of the ways in which we could increase density is with 'better' land use controls, not fewer or more or whatever. Regulation should not be thought of as a scalar.

khuey 10y ago
"If states do want to reform local land use controls, they might start with a serious cost benefit analysis and then require localities to refrain from any new regulations without first performing cost-benefit analyses of their own." Sounds a lot like "a more nuanced discussion" to me.

brudgers 10y ago

I'm not surprised when the Brookings Institute concludes that the answer is less regulation. The article ignores the market dynamics of real-estate development. Those dynamics are created by the the limited fungibility of real property. Real property may be exchanged for cash, but following such a transaction the cash can not (usually) be used to replace the original property because there is only one property at a particular location. In general, real-estate development seeks to maximize profits by pushing parcels toward their highest and best use. Removing regulations affecting real-estate entitlement won't change the economics affecting what developers build. Class A office space will be more profitable than a used car lot. A Porsche dealership will be more profitable than a Greyhound station. Luxury apartments will be more profitable than a tenement. Those are what developers will try to build. Suppose a luxury housing developer controls a parcel, removing entitlement regulations does not mean the developer builds a tenement. It means either the luxury housing developer builds luxury housing or waits until there is demand for luxury housing or someone makes an offer on the parcel that meets the luxury housing developer's expected internal rate of return from developing the property as luxury housing. An affordable housing developer who wants the parcel has to pay the price of a parcel suitable for luxury housing to obtain it. So will another luxury housing developer or an office building developer and for them the price will make more economic sense. One way of thinking about real-estate is that each and every parcel is a monopoly. Some monopolies are worth more than others. Removing entitlement regulations does not change the value of locations. It does not change the economic incentives of highest and best use. It does not remove market demand.

LennyThompson 10y ago

The only part of this article that is worth reading is the last paragraph, where the author is unmasked as a spokesman for the realty industry, who clearly have an interest in more high value low cost housing, for which regulation needs to change. It's a pity this sort of rubbish can't come with an appropriate disclaimer at the start.