American Dream Coalition news service
Why We Defend the American Dream
(296 kb pdf)
On-line membership form
The Journalists' Guide to the American Dream
The Journalists' Guide to the American Dream
(pdf, 2.2 mb)
Fact Sheet on Rail Transit
(80-KB pdf file)
Rail Disasters 2005
(2.5 MB pdf file)
Report by Randal O'Toole finds rail transit strongly associated with reduced transit ridership:
The Planning Penalty
How Smart Growth Makes Housing Unaffordable
Smart growth and other land-use
restrictions cost U.S. homebuyers at least $275 billion in 2005. This
conclusion is based on several measures of housing affordability in
more than 300 metropolitan areas. The 48-page report
finds that high housing prices are almost always due to government
planning rules that prevent homebuilders from meeting the demand for
new homes. Such rules cause prices to increase much faster than
incomes, which quickly makes housing unaffordable.
of the report are available for several states, including Arizona,
California, Colorado, Georgia, Florida, Iowa, Minnesota, Montana, North
Carolina, Oregon, South Carolina, Tennessee, Utah, Washington, and
Wisconsin. These editions and briefing papers for each state reveal
just what planning has done to housing affordability in dozens of
How do we measure housing affordability?
Several measures are described on this affordability measurements page.
The report estimates that planning-induced
housing shortages have added at least $100,000 to the cost of a
median-value home in more than fifty metropolitan areas. This is the
penalty people must pay for buying a home in a region with smart-growth
planning. The penalty ranges as high as $850,000 in the San Francisco
metropolitan area. In fifty more areas, planners have imposed penalties
of $25,000 to $100,000 per home. The report notes that these costs are
conservatively calculated and probably average at least 25 percent more.
Is housing overpriced in your city or region? Find out using our pricing guide.
Most planning penalties are far more than the so-called costs of sprawl. According to page 13 of The Costs of Sprawl 2000,
low-density development costs about $11,000 more for urban services
than compact development. Why is it better to make all homebuyers pay
$25,000 to $850,000 more for homes than to make some pay $11,000?
Californians suffer from almost
half of the total increase in housing costs due to planning, largely
because California pioneered the use of growth-management planning in
Just twelve states (CA, NY, FL, NJ, MA, IL, WA, CT, AZ, CO, OR, MD) account for more than 90 percent of all planning penalties.
Fourteen states have penalties in all or nearly all metro areas in the states.
Thirteen states have penalties in only a few metro areas.
Twenty states have no planning penalties at all.
- Alaska, Hawaii, and Nevada also have
overpriced housing but in those states it is at least partly due to
causes other than growth-management planning.
The raw data (adjusted for inflation to 2005 dollars) and calculations used in the report are all in a downloadable spreadsheet. These data include:
- Median-family incomes by metro area for 1959, '69, '79, '89, '99, and 2005;
- Median-home values by metro area for the same years;
- A home price index measuring changes in the value of individual homes by metro area from 1975 through 2005;
- Calculations of the number of year it would
take for a median-income family to pay for a median-value home if they
devote 25, 33, or 40 percent of their incomes to the mortgage;
- Estimates of the penalties people must pay to buy a median-value home in areas with smart-growth planning.
Spreadsheet users can quickly and easily make
charts showing changes in affordability in any metro area over time. In
almost every case, affordability starts to decline soon after cities or
metro areas adopt smart-growth or other growth-management plans.
The Planning Penalty shows that
housing prices start rapidly growing soon after cities or regions enact
smart-growth plans and estimates the costs that such plans impose on
homebuyers. But previous researchers have already shown a connection
between high housing prices and land-use regulation.
- The Impact of Zoning on Housing Affordability,
by Harvard economist Edward Glaeser and Wharton economist Joseph
Gyourko, concludes that "Government regulation is responsible for high
housing costs where they exist." Professor Glaeser's research was
recently featured in the New York Times Magazine. You can download more of his papers, many of which are on the topic of housing affordability, from his web page.
- Does Sprawl Reduce the Black/White Housing Consumption Gap?,
by Tufts University economist Matthew Kahn, shows that low-density or
"sprawling" areas tend to be more affordable and, as a result, there is
less disparity between black and white homeownership rates.
- The Dynamics of Metropolitan Housing Prices
by University of North Carolina researchers Donald Jud and Daniel
Winkler shows that housing prices grow faster in places "with
restrictive growth management policies and limitations on land
- The New Segregation: Smart Growth and Its Effects on Housing Markets,
by Portland economist Randall Pozdena, estimates that if Oregon's
land-use planning system had been applied nationwide in the 1990s, more
than a milion young and low-income families would have been prevented
from buying homes.
- Wendell Cox
looked at more than 100 metropolitan areas in the U.S., Canada, U.K,
Australia, New Zealand, and Ireland and found that smart growth was
responsible for overpriced housing in twenty-three of the twenty-six
least affordable areas.
Although many planning advocates still deny
that smart growth makes housing unaffordable, the above research has
persuaded most economists that restrictive land-use regulation is the
cause of unaffordable housing. Liberal economist Paul Krugman,
for example, divides the country into the "Zoned Zone," where land-use
restrictions make "it hard to build new houses," and what he calls
"Flatland," meaning the parts of the country that may have zoning but
do not have aggressive growth-management planning. Krugman's 2005
article observed that housing prices are rapidly increasing in the
Zoned Zone but remain very affordable in Flatland.
Is Smart Growth Need to Protect Open Space?
Nearly 80 percent of Americans live in urban
areas that cover just 2.6 percent of the land. Nearly 95 percent of the
United States remains as rural open space. Government actions that
drive up housing prices in order to preserve such an abundant resources
are a tragic misplacement of priorities.
Find out much of your state has been urbanized and how much rural open space is left.
Download an open space spreadsheet
showing what percentage of each state that has been urbanized or
developed in any way and what percentage remains as rural open space.
This is based on two different sources of data, the 1997 Natural
Resources Inventory and the 2000 census. More information about these
data is available in the discussion of open space data in the Journalists' Guide to the American Dream
Smart Growth Is Inequitable
Actions that drive up housing prices penalize
low-income families while they provide windfall profits for relatively
wealthy homeowners. Nationally, nearly three out of four white families
own their own homes, but more than half of black and Hispanic families
live in rental housing. Homeownership is an important tool minorities
and other low-income families can use to get out of poverty: they can
use the equity in their homes to start small businesses. Children of
low-income families that own their own homes also do better in school
than those who live in rental housing.
What are the homeownership rates by race in your state or metropolitan area?
Download this homeownership rate
spreadsheet to find out. The spreadsheet, which is from the 2000
census, also shows black, Hispanic, and Asian family incomes as a
percentage of non-Hispanic white family incomes. The data show that
significant disparities remain between races.
Publishers of The Planning Penalty
The Planning Penalty was jointly released by the American Dream Coalition and state groups in a number of states including:
The state reports have different covers and one
page focusing on each state, but are otherwise alike. If you would like
to read all the state reviews, download the report for the state that
interests you most and the briefing papers for the other states.
The reports linked above are all in color and
some of the charts will be difficult to read if printed on a
black-and-white or greyscale printer. Here is a version you can use if you want to print copies of the report and don't have a color printer.
Questions about the report should be directed to its author, Randal O'Toole, an economist with the American Dream Coalition. Mr. O'Toole is also the author of The Vanishing Automobile and Other Urban Myths.