Too-Tight Growth Boundaries Limit Home Ownership
If you read no farther in this article, it is important that you understand two things about the Spokane Home Builders Association. First, we believe in balance in all things, including management of the growth process. And second, we sincerely consider ourselves the champions of home ownership.
“Housing affordability” is our battle cry and it’s the factor that determines the positions we take on regulatory and legislative issues.
Most citizens know intuitively that housing is becoming less affordable. This can be measured in several ways. From 1970 to 1990, home ownership in Spokane County has dropped from 69.2 percent to 63.7 percent. City home ownership has dropped even lower, to less than 60 percent. Between 1970 and 1996, single-family residences dropped from 77.6 percent to 67.2 percent of the county’s housing stock, while the percentage of mobile homes increased from 2.5 percent to 9.5.
These figures clearly show that housing affordability is decreasing significantly.
Abraham Lincoln said, “The strength of a nation lies in the homes of its people.” These simple words convey a timeless truth: Home ownership and housing are essential to the strength and vitality of a nation and their value is virtually immeasurable.
This truth is recognized by all political parties and was codified by President Bill Clinton when he announced on May 2, 1995, a national home ownership strategy to increase home ownership from 64.2 percent to 67.5 percent nationwide by the year 2000.
“Owning a home,” Clinton said, “has come to symbolize the realization of the American Dream. … Sadly … it has become much harder for many young families to buy their first home and our national home ownership rate has declined. … Our Administration is determined to reverse this trend.”
Statistics from the National Home Builders Association show that regulatory costs increased twice as fast as total home costs from 1974 to 1994. This has been gradual and the annual changes are so slight they are hardly noticed.
Even so, the difference in regulatory costs between Spokane and Kootenai counties has already pushed an increasing amount of new housing into Post Falls and Kootenai County. In both 1995 and 1996, Kootenai County had more single-family building permits than Spokane County, although Kootenai County has not quite 25 percent as much population (90,000 compared to 400,000). Maybe that’s why Kootenai County home ownership is 71.3 percent.
While the existing regulatory burden is significant, the potential impact of very tight urban growth boundaries will be much greater - massive and almost instantaneous. (In accord with the state Growth Management Act, urban growth boundaries are drawn by counties to determine where development is and is not welcome.)
The impact will be significant because no one, not even government, can repeal the law of supply and demand. Lot prices doubled in six months’ time in the Seattle area when that locality’s tight boundaries were established. The number of building permits issued in King County the following year plummeted. For 1996, Seattle, with a population of 1.63 million, had only 4,100 single-family housing starts. Slightly bigger Denver, population 2.2 million, had 19,000 single-family housing starts.
More recently, in Hillsboro, Ore., lot prices tripled in a shorter period because of a new, tighter boundary.
If Spokane’s UGA boundary is set too tightly, lot prices could easily double and start a snowball effect on housing affordability.
First to be affected would be new-home prices. With typical lot prices ranging from $20,000 to $30,000 in Spokane County, a doubling would add $20,000 to $30,000 to the price of a new home. This would put the existing $100,000 new home out of the reach of over two-thirds of Spokane buyers. The Spokane Association of Realtors summary of 1996 home sales shows that only 29.3 percent of the sales were of homes in excess of $124,000.
However, an even more disastrous effect results from upward pressure on existing homes’ valuations. Just as rising water in a lake raises both new and old boats, raising new-home prices increases the cost of homes in all price ranges. In 1996, 23 percent of Spokane County sales were of homes that cost less than $70,000. Price increases here are extremely adverse to the first-time home buyer.
As valuations go up, so do tax assessment values and taxes. Elderly and fixed-income retirees will be adversely affected and some may lose their homes.
High-density housing advocates believe people should be forced to live in higher-density housing as a means of curbing urban sprawl. They use the term “urban sprawl” in a pejorative way, to conjure up connotations of unaesthetic and undisciplined development. What they’re really attacking is suburbanization, which is the expressed lifestyle preference of a majority of Americans.
Many surveys, including FmHA surveys of 1992, 1993 and 1994, have consistently shown strong preferences for suburban living. Anti-suburban bias is in reality an attack on the sanctity of consumer sovereignty.
High density advocates use the ploy that America is running out of open spaces or agricultural land. A 1995 study showed that if the entire United States population lived at “suburban sprawl” densities of one acre per household, just 3 percent of the total land area of the 48 contiguous states would be utilized. With megalopolises like New York and Los Angeles, that percentage would be even lower.
The Legislature passed the Growth Management Act as a top-down system. Governor-appointed regional hearings boards can overturn decisions of local elected governments and completely ignore the work of citizens advisory committees that work two to three years to craft compromises acceptable to local people holding various points of view.
There is still time for citizens to become more informed before the Feb. 11 meeting at which Spokane County commissioners may decide on the location of the urban growth boundary. I hope I have raised your level of interest and concern.
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