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Californication
Posted by Stephen Green  ·   4 June 2002

Thomas Sowell explains that if you declare a lot of empty land off limits, then all the other land becomes more valuable.

There is a lot of talk these days about "connecting the dots" but nobody is connecting the dots between making land artificially scarce and making housing unaffordable -- or impossible to build. Prices automatically connect the dots, when transactions take place in a free market. That is because everyone has to bid against everyone else and those who want to use land for the benefit of swamp animals have to bid against those who want to use it for housing people.

If you think that’s an obvious point, then stop reading. If you’re not sure what that all means, then click to Sowell. If you deny it, then go back to your Sierra Club newsletter.

Comments

You know, I think Sowell writes this column, or a minor variation on it, every year. That's not a slam at him necessarily-- it's sad that the point has to be made repeatedly. Many people honestly don't grasp it.

Posted by: John Thacker at June 4, 2002 01:03 AM

I'm not impressed with the article. Sowell limits himself to vague generalities rather than producing any sort of numbers, and is very one-sided. He looks only at costs of zoning (and exagerrates them tremendously, IMO) and ignores the costs of "free" development. He also doesn't appear to be aware of the concept of quality of life, which is the point of most zoning laws. Or if he is aware of it, he's intentionally deceitful by totally ignoring it in his discussions.

So where is this land in California that the Senators want to put off limits? Is it really affecting development? If it's up in the mountains and desert, his attempt to link that with increased housing costs is a bunch of BS. Regardless, 16,500 acres is a miniscule amount of land, quite frankly. A 50 mi by 50 mi area (my guess at the size of the Los Angeles metro area is about 100 times that size.

I guess Sowell think New York government is horrificly ignorant and unamerican for maintaining 843 acres of parkland in the middle of valuable Manhattan land. I eagerly await his next column calling for the bulldozing of the park and the erection of numerous condo developments there. If he wouldn't support such a move, then he's a hypocrite.

I'm also extremely skeptical of his claim that land costs dominate the price of apartments. I know that my small 3 bedroom house located fairly close in in DC (an area with high housing costs) is worth 2-3 times as much as the quarter acre plot of land it's built on. So I think he's full of it on this point as well. I guess he could claim that he's only talking about the San Fran area, but the San Fran/Silicon Valley area is pretty fully developed--it's not like huge swaths of it are given over to nature preserves, so the cost of housing there is unrelated to development restrictions.

And I'm very skeptical of his complaints about zoning laws and building heights. How much effect does this really have on sprawl? Most people prefer to live (in my experience) in shorter buildings, so how much demand is there really for hi-rise apartments?

His traffic arguments are junk, too. What drives sprawl (which drives the traffic problem) are single family home developments, not the denied desire of people to live in giant apartment complexes in close-in suburbs. And high population density actually can overstrain highway systems as much or more than long commute distances. Put up lots of high density housing and you'll have big traffic jams from all the people trying to get in and out of it every day.

Basically, a profoundly unimpressive column full of flawed, one-sided reasoning and gross exagerrations of the impact of a valid underlying point (that decreasing supply increases demand.)

Posted by: Doug Turnbull at June 4, 2002 07:54 AM

I'm not sure where you live, but it's not that fencing off a bunch of desert is what drives up SF real estate prices.

What drives the prices up is that every potential development goes through costly environmental reviews, then the city/county boards inevitably delay it some more to "study" all the "impacts" of the development. Then the neighborhood associations get in on the act, suing the developers or otherwise protesting at every opportunity. Berkeley is a prime example of this. Everytime the UC wants to build a new dorm, the city has a hissy fit. Of course, taking 5000 students out of the apartment hunt would relieve some housing pressure, but god forbid the city council sees that instead of non-existent parking problems.

I don't have any studies to back me up (except the vague memory of a NYTimes Business section rehash of an economics study), but I think the delays and frustration associated with trying to build ANYTHING in the Bay Area drive up the costs.

Finally, there ARE additional set-asides in the hills and proposals to expand the "no-growth" zones every year. That does reduce land available for housing.

Posted by: David at June 4, 2002 11:15 AM



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