Saturday, November 24

A demand for walkable density?

I keep coming across this puzzling discrepancy when it comes to evaluating denser urban housing economically. It seems that different people, all with free-market tendencies, are slicing the same economic data in entirely different ways. I'm not sure what to make of it.

Chris Leinberger, of University of Michigan, advocates for denser walkable communities. He points out that the market is there for it, but outdated government regulations are preventing developers from fully capitalizing on it. From a Smart City interview,

"The market is assessing between a 40 and 200 premium, on a price per square foot basis, for walkable urban product over drivable suburban."

And he considers this a good thing. He points to the high property values of urban housing developments and reasons that demand is there, so we ought to build more to meet demand. In the meantime, he suggests using the extra tax revenue for inclusionary zoning to help those who were priced out the demand-driven upswing. Seems sensible.

On the other hand, Cato Institute fellow Randall O'Toole takes similar data from Portland and goes the other way with it. He claims that, as a result of smart growth policies which encourage denser communities,

"Housing affordability declined by more in Portland than in any other urban area in the United States."

So far they are looking at the same numbers, but he considers this fact to be a major strike against Portland. He reasons that Portland's urban growth boundary has choked off supply, and that's why the prices went up. It has nothing to do with demand. In fact, the average person would rather live in a place like Houston with miles of suburban options.

So which is it? Why are the prices higher? And does this mean that the market urges to build more or stick with the Post WWII suburban status quo?

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