Economy

Smart Growth to Blame For the Housing Crash? Not By a Long Shot.

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Cross posted from Streetsblog.

The Wall Street Journal yesterday posed the question of whether smart growth policies

and land use restrictions were to blame for the housing boom and bust. The hypothesis comes from Wendell Cox, a long-time critic of smart growth, who, in a recent paper, recycled a specious argument that land use regulations caused housing prices to increase unsustainably, creating the real estate bubble and, eventually, the collapse of the housing market. Cox claims to show that differences in how metro areas regulated development explain the recent housing crisis.

Cox’s argument is full of holes. He examines a few cherry-picked cities while ignoring what happened nationally.

The irrationally exuberant housing market affected real estate prices in most of the country in the decade before 2006, with a pronounced increase after 2003. The only national variable that correlates clearly with this overwhelmingly national trend was the loosening of mortgage lending rules and Wall Street’s invention of new ways to profit from bad loans — not land use restrictions.

In contrast to Cox’s hypothesis, rates of foreclosure correlate most strongly with the year a home was built. All other things being equal, newer neighborhoods – built during the boom and financed with non-traditional loans – have more bank-owned homes now. In other words, areas that pulled out all the stops on new development suffered more than those that took a more measured approach. Rather than impacting neighborhoods that built according to smart growth strategies, the foreclosure crisis is now a much bigger problem for peripheral suburbs that sacrificed quality and access to jobs in exchange for more taxable properties.

As Chris Leinberger, fellow at Brookings and president of Smart Growth America’s LOCUS project, told the WSJ, the price decline on the “drivable fringe” was generally twice as bad during the crash, “and it was that part of the market that is the least regulated.” Walkable, compact neighborhoods essentially “held their value, thank you very much,” he said.

Communities that developed more along the lines of sprawl than smart growth are struggling to recover from the housing crisis. Recent census data show suburban growth is slowing for the first time in decades, and it’s not just the housing crisis that’s to blame. Neighborhoods without transportation choices and located far from employment centers are less attractive to home buyers and are suffering more in the downturn. Desperate developers in the far-flung exurbs are including free cars with home purchases in empty neighborhoods, but it’s getting harder to persuade potential homeowners to commute 60 miles each way to work. Consumers increasingly understand that buying a home with a long, car-dependent commute — especially when gas prices are hitting record highs — can lock a household into an ongoing expense that can blow up their budget.

Smart growth neighborhoods, by contrast, offer insurance against foreclosure and can reduce the combined cost of housing and transportation. Due to consistent demand for walkable neighborhoods with a mix of uses and good access to jobs and public transportation, homes in these neighborhoods are much easier to sell and tend to hold their value. Places that invest in smart growth principles not only survived the housing crisis better, they protect their residents against spiking fuel prices as well. That is good for the homeowners in these communities as well as their local economies, and that’s news we think the Wall Street Journal should be pretty excited about.

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Round Two: Your Stories About the High Cost of Gas and Your Jobs

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Rising gas prices and high levels of unemployment continue to weigh on the American economy. Smart Growth America asked for stories about how high gas prices are affecting your life, and we heard many stories about how expensive gas is making your professional life more challenging. With gas costing $4 gallon or more, workers are feeling the pain when it comes to commuting, meeting with clients around town, going to conferences, or even looking for a job.

  • A gallon of gas costs $4.11 for Carisa in Illinois, so in addition to carpooling more, she has to be very selective about which meetings and marketing events she absolutely must attend for work, and she said she’s still not getting to all of them. She’s reconsidering her attendance at some out of town conferences. She cannot reach her clients downtown without a car, so driving is a must for her.
  • An anonymous contributor from Northern California, where gas is $4.17 per gallon, is looking for a job and said the high gas prices are limiting the search.
  • Faced with $4.50 for a gallon of gas, Umi in Hawaii recently started carpooling the three-hour round-trip commute with a coworker. Even though the coworker’s shift ends an hour later, she “sacrifice[s] a little sleep and the personal convenience of leaving on my time table” to save money. Public buses are unreliable and intermittent in her hometown, and filling up just 3/4 of her tank costs more than $60.

A consistent theme throughout these stories is that transportation choices can help people and communities cope with rising gas prices. We’ve heard from people who are using public transportation or biking to work – or to look for work, for those who are unemployed – as driving becomes more expensive.

Part of Smart Growth America’s work is helping great communities have more low cost options for getting around when gas prices get too high, but we need to hear from you to do it. How much does gas cost in your area? What are you doing to cope with the high prices of gas? If you don’t drive often, or at all, how do you get around? Smart Growth America is helping more people have the option of shorter drives and more ways to get around when they want it. Click here to tell us your story.

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Metropolitan Business Plans: A New Approach to Economic Growth

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Too frequently, towns and cities seek economic growth by chasing the latest fad, without considering how those short-term decisions will impact their long-term economic health. On Monday, the Brookings Institution Metropolitan Policy Program held a forum presenting three pilot projects that helped communities create long-term evidence-based business plans.

Yesterday’s speakers included Bob Weissbourd of RW Ventures, LLC; Brad Whitehead of the Fund for Our Economic Future, Northeast Ohio Pilot Program; Eric Schinfeld of the Puget Sound Regional Council; Mayor R.T. Rybak of Minneapolis; Mayor Chris Coleman of St. Paul; Mayor Ray Stephanson of the City of Everett and Puget Sound Regional Council; Derek Douglas of the White House Domestic Policy Council; Daniel Malarkey of the Washington State Department of Commerce; Kim Nelson of Microsoft; and U.S. Senator Amy Klobuchar of Minnesota.

In cooperation with Brookings, leaders in Northeast Ohio, Minneapolis/St. Paul, and the Puget Sound region have created strategic business plans to promote resilient economic development for each region. The metropolitan business plans will help these regions capitalize on local strengths and increase capacity, allowing each local economy to better weather short-term cyclical economic fluctuations.

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Good Jobs, Green Jobs on the benefits sustainable communities bring to jobs and economies

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The annual Good Jobs, Green Jobs National Conference is wrapping up today in Washington, DC. Coordinated by the BlueGreen Alliance Foundation, the multi-day conference shares ideas and strategies for building a green economy that creates good jobs and preserves America’s economic and environmental security. It brought together a diverse group of agencies and organizations to tackle questions about revitalizing our economy, replacing jobs lost in the “great recession” and building the infrastructure needed to keep America competitive in the 21st century.

Smart growth strategies are a key part of all these goals, and yesterday’s morning plenary at the conference was dedicated to just that. U.S. Congressman Keith Ellison (DFL-MN), Amalgamated Transit Union International President Lawrence Hanley, Kaiser Permanente Vice President of Workplace Safety and Environmental Stewardship Kathy Gerwig and American Institute of Architects President Clark Manus spoke on a panel about Sustainable Communities, moderated by Kojo Nnamdi, host of WAMU’s “The Kojo Nnamdi Show.”

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Photo by Keith Mellnick/Good Jobs, Green Jobs National Conference

Congressman Keith Ellison discussed how sustainable communities have the ability to increase independence, maximize efficiency and encourage innovation. Clark Manus, President of the American Institute of Architects (AIA), detailed how AIA is “working with communities on more than just buildings,” and emphasized the possible depth of what “more sustainable, more responsible communities” can offer their residents – from increased access to transportation options to a stronger economy.

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Tim Geithner on middle-class jobs and long-term growth

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Secretary of the Treasury Tim Geithner with CNBC anchor Erin Burnett at the Port of Tacoma, WA. Photo: Flickr/Port of Tacoma

In a post on the U.S. Department of the Treasury’s website today Secretary of the Treasury Tim Geithner voices his support for infrastructure investments as a tool for economic growth. Geithner explains that “targeted infrastructure investments are a necessary component of creating the middle-class jobs we need now and strengthening our foundation for future economic growth.”

Today’s post comes on the heels of October 2010’s Economic Analysis of Infrastructure Investment, a report by the Treasury which reiterated the fact that well designed infrastructure investments have long term economic benefits that disproportionately benefit the middle class. The report also noted that there is currently a high level of underutilized resources that can be used to improve and expand our infrastructure, as well as strong demand by the public and businesses for additional transportation infrastructure investments. From Treasury.gov:

Well-targeted infrastructure investments create both immediate and long-term economic benefits. Those benefits accrue not only where the infrastructure is located but also to communities all across the country.

When the Port of Seattle improves its connection with local freight railroads, it creates construction jobs for local workers – but the project’s benefits extend far across the heartland. By making it cheaper to transport cargo, this improvement will allow cattle ranchers in rural Montana to ship their beef to new markets across the world. Consumers who purchase imported goods and American businesses that are expanding their exports enjoy lower prices and improved access to new markets and goods…

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New report reveals smart transportation spending creates jobs, grows the economy

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In his State of the Union address, President Obama called on Americans to “out-innovate, out-educate, and out-build the rest of the world” to win the future. To rebuild America, he said, we will aim to put “more Americans to work repairing crumbling roads and bridges.”

A new report from Smart Growth America analyzes states’ investments in infrastructure to determine whether they made the best use of their spending based on job creation numbers. Recent Lessons from the Stimulus: Transportation Funding and Job Creation evaluates how successful states have been in creating jobs with their flexible $26.6 billion of transportation funds from the American Reinvestment and Recovery Act (ARRA). Those results should guide governors and other leaders in revitalizing America’s transportation system, maximizing job creation from transportation dollars and rebuilding the economy.

According to data sent by the states to Congress, the states that created the most jobs were the ones that invested in public transportation projects and projects that maintained and repaired existing roads and bridges. The states that spent their funds predominantly building new roads and bridges created fewer jobs.

As Newsweek’s David A. Graham explains, investments in transportation create jobs in the short term and longer term economic prosperity too:

Injecting money into transportation projects, the thinking goes, is an especially potent jobs-creation tool because it not only puts construction workers and contractors to work quickly, it also lays the groundwork for future economic growth and development. Obama predicted the transportation money alone would put hundreds of thousands of workers on the job.

As “Recent Lessons from the Stimulus” explains, not all transportation projects reap these benefits equally:

[S]tates spent more than a third of the money on building new roads—rather than working on public transportation and fixing up existing roads and bridges. The result of the indiscriminate spending? States missed out on potentially thousands of new jobs—and bridges, roads, and overpasses around the country are still crumbling. Meanwhile, the states that did put dollars toward public transportation were richly rewarded: Each dollar used on transit was 75 percent more effective at putting people to work than a dollar used for highway work.

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New report highlights smart growth's return on investment and cost savings

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A new report out today from the Center for Clean Air Policy (CCAP) discusses the myriad economic benefits that smart growth brings to households, communities and municipal governments. The study, titled Growing Wealthier: Smart Growth, Climate Change and Prosperity shows that smart growth development strategies enhance community prosperity and generate economic benefits for local businesses, households and governments.

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HUD, DOT, EPA and White House announce "unprecedented collaboration" supporting sustainable communities to "create good jobs today"

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Melody Barnes, Director of the White House Domestic Policy Council, at a press conference on the Partnership for Sustainable Communities today.

Leaders of the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Transportation (DOT), the Environmental Protection Agency (EPA) and the White House joined together today to discuss the Partnership for Sustainable Communities, a joint effort between the three agencies to use taxpayer money more efficiently by coordinating federal investments to meet multiple economic, environmental, and community objectives with each dollar spent. This week, the Partnership has awarded a combined $400 million to communities across the country to help plan and build sustainable communities. Ray LaHood, U.S. Secretary of Transportation, called this an “unprecedented collaboration.”

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Reclaiming Vacant Properties Conference Champions Economic and Environmental Revitalization

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Vacant Properties Conference 2010

Investing in and reusing vacant properties can catalyze long-term, sustainable revitalization in a community. Focusing on the multiple benefits these projects bring to neighborhoods and local economies, the Center for Community Progress’ Reclaiming Vacant Properties conference kicked off this week in Cleveland, Ohio. The annual conference brings together a diversity of leaders working on community development issues to make our neighborhoods stronger and healthier.

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