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

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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National association releases smart growth course for real estate professionals

The National Association of Realtors (NAR) officially launched a new course offering at their mid-year meeting last week. “Smart Growth for the 21st Century” is designed to bring real estate professionals up to speed on the basics of smart growth – what it is, why home buyers want it, and how it can build their business. The four-hour course is now available to Realtors® associations nationwide.

“Our Smart Growth Program Advisory Group asked us to create this tool to help our membership lead conversations about their communities’ futures,” explained Joe Molinaro, the Managing Director for Smart Growth and Housing Opportunity at NAR. “Realtors® are deeply rooted in and knowledgeable about the places where they live and work. They are in a position to make a strong case for smart growth.”

The course uses the ten smart growth principles to explain how different elements of community design and public policy work together to create the communities demanded by a growing market sector. The course also lays out economic arguments for smart growth and engages participants with opportunities to practice explaining and promoting smart growth approaches based on their community’s needs.

A recent NAR poll found that the majority of Americans define their ideal community as including a mix of houses, places to walk, and amenities within walking distance or a brief drive. These ideal communities included cities (preferred by 19 percent of respondents), mixed-use suburbs (28 percent), and small towns (18 percent). According to Mr. Molinaro, developing a national course that could address each of these contexts was a priority for the Advisory Group. Course instructors are trained to tailor the materials and exercises to the specific needs of different communities, using case studies and examples that are especially relevant to the hosts’ geography, community size and market conditions.

Robert Johnston, Vice President of the Anne Arundel County Association of Realtors in Maryland, attended the first training and said, “I really appreciated the balanced perspective. So many times those discussions are one sided, and not realistic. This course is really grounded in the realities of the market.” NAR also provides interested Realtor® associations with a list of instructors and an application to apply for an NAR Smart Growth Action Grant to help defray the course implementation costs.

For more information visit www.realtor.org.

LOCUS

DOT and HUD Grants Connect Housing, Employment, Transportation and Economic Development

The U.S. Departments of Transportation (DOT) and Housing and Urban Development (HUD) jointly announced today the award of $68 million to 62 communities across the country for projects that integrate affordable housing, create more good jobs and support better public transportation options.

HUD’s Sustainable Communities Challenge Grants and DOT’s TIGER II Planning Grants are the latest examples of interagency federal programs that aim to create economically robust and sustainable communities through better transportation, housing and development coordination – helping communities make themselves even stronger through a more thoughtful use of every available dollar for their local economy.

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Metro Boston wins $4 million for Sustainable Regional Planning

Metro Area Planning Council.

The following is a guest post from the Metropolitan Area Planning Council, a member of the Smart Growth America coalition. Congratulations to the Council for Metro Boston’s recent award of a HUD Sustainable Communities Regional Planning Grant!

Smart Growth in greater Boston, Mass. scored a major victory recently with the region’s receipt of a $4 million Sustainable Communities Regional Planning Grant from the U.S. Department of Housing and Urban Development (HUD). This grant will support the implementation of MetroFuture, the region’s blueprint plan for sustainable and equitable long-term growth. MetroFuture was developed with the participation of over 5,000 “plan-builders,” including individuals, academic institutions, business organizations, community based organizations, and others.

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National Associations Congratulate HUD Sustainable Communities Regional Planning Grant Awardees

FOR IMMEDIATE RELEASE: October 14, 2010

National Associations Congratulate HUD Sustainable Communities Regional Planning Grant Awardees
Organizations Urge Continued Federal Investments to Ensure Nationwide Community Economic Competitiveness

WASHINGTON, DC – The National League of Cities (NLC), National Association of Regional Councils (NARC), Smart Growth America (SGA), the National Association of Area Agencies on Aging (n4a) and ICLEI-Local Governments for Sustainability USA (ICLEI) congratulate the cities, towns, communities and regions which today were awarded Sustainable Communities Regional Planning Grants from the U.S. Department of Housing and Urban Development (HUD). These communities will now undertake critical regional planning and implementation activities that support building sustainable, livable communities through regional cooperation, broad stakeholder and community involvement and coordinated processes. The organizations also offer gratitude to HUD and the other federal agencies involved for undertaking an inaugural and historic process that will yield results for years to come.

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President Obama’s FY 2011 Budget Will Help Create Jobs, Cut Transportation Costs for Families, and Improve Access to Affordable Housing

President Obama’s budget for the 2011 fiscal year, released this morning, contains more than $1 billion in programs and grants that will help create and support livable, sustainable communities and neighborhoods across the country. “This is good news for anyone looking to cut their transportation costs, find an affordable home in a walkable neighborhood, or live in a community with a multitude of transportation options,” said SGA President Geoff Anderson.

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EPA joins inter-agency effort to support livable communities and smarter growth

There’s some exciting news out of Washington, DC to report this morning, where US EPA Administrator Lisa Jackson announced in Senate testimony this morning that EPA is joining with the Department of Housing and Urban Development (HUD) and the Department of Transportation (USDOT) in a special partnership to work together to promote smart growth and more livable, sustainable communities across America.

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Inward momentum: Residential growth in American center cities

You’ve probably seen some of the anecdotal evidence in newspaper stories or other outlets recently about how many center cities have experienced a resurgence of residential growth within their borders over the last 10 to 20 years. Many of us had wondered if there had been any systematic examination of building permit trends to document … Continued

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New HUD chief on the connectedness of housing policy and sustainability

There’s an old problem in government — probably at all levels, but most notably at the federal level — of agencies working at cross purposes with each other. For example, new transportation investments in unneeded highways in exurban areas works against the EPA’s effort to reduce emissions and satisfy the Clean Air Act. Sometimes this … Continued

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