Building Moratoria, Regulation Creating No. Virginia Affordable Housing Shortage

Heritage Foundation’s Ron Utt is urging Virginia Gov. Tom Kaine to rethink his campaign promise to give local governments more power over planning decisions. Why? Well, just look at the results of what they’ve been doing with the power they already have:

In an effort to deter growth and upgrade community demographics, in the late 1990s Virginia counties began to adopt a series of restrictive land use regulations to limit the availability and affordability of building lots (down zoning and limited rezonings) and/or impose a substantial implicit tax on all new houses (called a proffer). These higher fees and artificial land shortages caused home prices to soar, forcing families of moderate means into the rental market, or pushing them to the distant fringe of the metropolitan area–where lower land costs and less onerous land regulations provide affordable housing. Forced to move farther away from their jobs, the time they spend on the road lengthens, and traffic congestion worsens.

Take for example Prince William County (approx. 30 miles south of D.C., home of Manassas, southern neighbor of Fairfax & Loudoun Counties), which recently adopted a building moratorium:

Data published each year by the U.S. Census Bureau reveals the adverse impact that Prince William’s extant abusive land use practices have caused. In 2000, the median value of a home in the county was $149,600–25 percent greater than the national average. But by 2005, the census reports that the median home value in the county rose to $391,500, 133 percent greater than the national average. Reflecting the county’s use of high home prices to upgrade its demographic characteristics, over the 2000-2005 period, the median income for households in the county rose 24 percent–from $65,960 to $81,904–while incomes nationally rose by just 10 percent. Nonetheless, because home price escalation substantially outpaced income growth, Prince William County homes are unaffordable even by the distorted income standards of the region. And with its new moratorium on home building, affordability will only worsen.

Utt goes on to suggest that Gov. Kaine, who ran on promises of “doing something” to address land use and transportation issues, should reconsider the wisdom of jumping on the regulatory bandwagon:

So what to do? In the center of it all is Gov. Kaine, who has yet to advance beyond campaign promises to give counties more control over growth. In fact, Virginia counties have tremendous control over growth, as Prince William has demonstrated by invoking a moratorium on it. If such an extreme act of property rights abuse reflects limited control, then the logical enhancement of such existing powers must be to allow them a policy of “ungrowth” whereby existing subdivisions are bulldozed into rubble. . . . . Under the circumstances, the governor might want to reconsider his role in this debate, and a good place to start is to remember that he is a Democrat, and that his party has traditionally stood for the rights of the little guy over those of the privileged elites who have often abused their influence to enhance their lifestyles and bank accounts. Thanks to more than a decade of land rights abuses implemented by local officials, Virginia has managed to achieve the ignominious distinction of experiencing the sharpest decline in homeownership of any state between 2001 and 2005–a period in which the nation’s homeownership rate continued to increase.

So in essence, the same unintended consequences are playing out in Northern Virginia that play out time and time again in regulation-happy places like California and Oregon. Local governments adopt strong growth management regulations aimed at curbing “sprawl,” housing supply is choked off and prices naturally skyrocket, traffic problems are exacerbated as people commute longer distances in search of affordable housing, and then policymakers scratch their heads and misdiagnose the problem. Instead of cutting regulation and red tape to target the self-imposed problem, the tendency is to prescribe even more regulation and to adopt policies and programs that at best have no discernible effect (i.e., light rail transit) and at worst compound the problem even further (i.e., inclusionary zoning policies). Simply brilliant thinking, eh?