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Jewish World Review May 15, 2001 / 22 Iyar, 5761

Betsy Hart

Betsy Hart
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Consumer Reports

The war against owning homes -- FOR many people springtime means time to look for a new house. In fact it's typically the hottest time of the year for home sales. America, of course, cherishes the ideal of home ownership, and we're proud of our high home ownership rates. We rightly see this as contributing to social stability and civil society, as well as providing an opportunity for wealth creation. On a simpler level, visions of starting out in married life, finding just the right quaint little home surrounded by a white picket fence, is the stuff the American dream is built on.

But that dream has turned into a nightmare in much of the country. Particularly for that "quaint" first-time-buyer category, costs have gotten simply out of control. The reason? An explosion in so-called "smart-growth" initiatives "are effectively pricing most new homes beyond the reach of entry-level buyers," say smart-growth experts Dr. Ron Utt and his colleague Wendell Cox of The Heritage Foundation in Washington, D.C.

In a just-published paper compiling reams of data on the effect of these ever-growing initiatives to limit new home building and suburbanization, Utt and Cox note that historically the biggest threat to the construction industry and to home ownership itself were the vagaries of the market. But no more. Today, they say, the biggest menace, particularly to the first-time home buyer market, is smart growth - meaning "now that I'm here in the suburbs, I want to keep the other folks out."

How do the people already in the homeownership club do it? Simple. Raise the entrance fee for everyone else.

It's done in a host of different ways. A community might impose impact fees, fees new residents are forced to pay as a "contribution" to the additional public infrastructure they require, like schools, water and roads. Even though all available evidence is that the new homeowner will more than "pay his way" through existing property tax structures, in some fast growing communities the punitive fee tacked on to a new home purchase price can reach $20,000.

Then there is "downzoning," the technique more and more communities are employing. This involves changing, and strictly limiting, the amount of housing that can be built on any given piece of land. So, for instance, where once zoning might have allowed for four homes to be built on an acre, that acre might now get downzoned to allow only one home. (Some areas on the edge of fast-growing Washington, D.C. and its "high-tech" corridor have been "downzoned" to one home on every 25-acres.) It's not hard to do the math on the staggering costs this can add to housing. Utt and Cox show how typical downzoning can easily raise the cost of a new home as much as 60 percent, for many families moving a once-affordable first-time $125,000 house into the out-of-reach $200,000 range.

Other popular growth-limiting initiatives include mandating lower population densities, construction prohibitions, land set-asides, and growth boundaries. Utt told me that the growing use of such maneuvers has been so effective in raising the price of new homes, affecting most the people who can least afford it, that some smart growth advocates have admitted the problem and even proposed a solution: more federal subsidies for "affordable housing" - a nice way of saying government should take these middle-class folks who can no longer afford that first home and include them, too, in all the glories of public housing and welfare.

Sure, the smart growth advocates say drastic limits on new home building are necessary because of concerns about overstressed infrastructure, traffic, crowding and the environment. But where such concerns are legitimate, the answer is not more coercive government policies. Utt and Cox show it's often precisely because of short-sighted government regulation - which stifles innovation, creativity, and market-oriented solutions which really meet people's needs - that many of these problems exist to begin with.

But, in any event, it's easy for smart growth advocates to suddenly get "concerned." Because such initiatives limit housing supply, or at least make it a lot more expensive, smart-growth is a financial boon to those who already own a home as they watch the value of their asset increase.

The people such initiatives hurt most are those with household incomes below the median, particularly racial minorities. But apparently that's of little concern to these Martha Stewart Democrats and Range-Rover Republicans, as professor Fred Siegel of Cooper Union in Manhattan so rightly describes many smart growth advocates.

I agree with Utt and Cox: to the extent that "smart-growth" limits opportunities for the American dream of home ownership, it just isn't wise.

JWR contributor Betsy Hart, a frequent commentator on CNN and the Fox News Channel, can be reached by clicking here.


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