Slide 1 Slide Presentation APPENDIX A The Impact of Smart Growth on Housing Affordability ANALYSIS OF 8 METROPOLITAN MARKETS BY LAND USE PLANNING SYSTEM.

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Presentation transcript:

Slide 1 Slide Presentation APPENDIX A The Impact of Smart Growth on Housing Affordability ANALYSIS OF 8 METROPOLITAN MARKETS BY LAND USE PLANNING SYSTEM

Slide 2 Housing Affordability: A Tale of Two Nations Kansas CityPortland

Slide 3 There has been considerable debate about whether the newer, prescriptive urban planning policies (“smart growth”) materially raise house prices in relation to the more traditional, responsive planning systems. This inquiry reviews house price experience and trends in 8 markets, 4 with prescriptive planning and 4 with responsive planning. An attempt is made to estimate market prices in the absence of smart growth, by developing a “market upper limit” that is applied to all markets. Prices and trends in responsive and prescriptive markets are then evaluated based upon this standard. Summary of Research SMART GROWTH & HOUSING AFFORDABILITY

Slide 4 Housing Affordability Distribution: 2006 MAJOR METROPOLITAN MARKETS  MEDIAN MULTIPLE (Median House Price/ Median Household Income) MEDIAN MULTIPLE 3.0 AFFORDABILITY MAXIMUM

Slide 5 The Issue Does smart growth lead to materially higher housing costs than occur in non-smart growth markets?

Slide 6 Land Use Planning Systems and Metropolitan Markets PortlandKansas City

Slide 7 Planning Types & Markets RESPONSIVE PLANNING (Liberal) Atlanta Dallas-Fort Worth Indianapolis Kansas City PRESCRIPTIVE PLANNING (Smart Growth) Boston Portland (Oregon) San Diego Washington (DC)

Slide 8 Population Growth: METROPOLITAN MARKETS Calculated from US Census Bureau Data

Slide 9 Existing House Analysis: Median Prices PortlandKansas City

Slide 10 Existing House: Structure Replacement METROPOLITAN MARKETS: 2006

Slide 11 Existing House: Market Upper Limit METROPOLITAN MARKETS: 2006

Slide 12 Existing House: Median Price METROPOLITAN MARKETS: 2006

Slide 13 Existing House: Median Price Trend METROPOLITAN MARKETS: 1996 & 2006  2006$

Slide 14 Median Price & Market Upper Limit METROPOLITAN MARKETS: 2006

Slide 15 Median Price & Market Upper Limit METROPOLITAN MARKETS: 1996  2006$

Slide 16 Median Price & Market Upper Limit Trend RESPONSIVE MARKET AVERAGE: (2006$) Median House Price Market Upper Limit  2006$

Slide 17 Median Price & Market Upper Limit Trend PRESCRIPTIVE MARKETS AVERAGE: (2006$) Market Upper Limit Median House Price  2006$

Slide 18  2006$ Market Upper Limit & Regulatory Excess EXISTING HOUSE: METROPOLITAN MARKETS: 1996

Slide 19  2006$ Market Upper Limit & Regulatory Excess EXISTING HOUSE: METROPOLITAN MARKETS: 1996

Slide 20 Share of Difference in Price Increases BY PLANNING SYSTEM TYPE: Regulatory Excess 98%  Non-Smart Growth Market Factors: 2%

Slide 21 Predicted & Actual Smart Growth Impact “COSTS OF SPRAWL-2000” V. ACTUAL:  Change in Cost per House

Slide 22 Demand & Median Prices: METROPOLITAN MARKETS  Change

Slide 23 New House Analysis PortlandKansas City

Slide 24 New House: Structure Cost NATIONAL & BY PLANNING TYPE

Slide 25 New House: Structure Cost METROPOLITAN MARKETS

Slide 26 New House: Finished Lot Cost METROPOLITAN MARKETS

Slide 27 Market Upper Limit & Production Price METROPOLITAN MARKETS

Slide 28 Actual Price & Market Upper Limit NEW HOUSE: METROPOLITAN MARKETS

Slide 29 Market Upper Limit & Regulatory Excess NEW HOUSE: METROPOLITAN MARKETS

Slide 30 The Negative Externalities of Smart Growth PortlandKansas City

Slide 31 Price Difference Components PRESCRIPTIVE V. RESPONSIVE MARKET PRICES  2006$

Slide 32 Share of Price Difference PRESCRIPTIVE V. RESPONSIVE MARKET PRICES

Slide 33 Median Multiple: MAJOR METROPOLITAN MARKETS BY PLANNING TYPE Prescriptive Planning Responsive Planning Calculated from JFK School of Government, Harvard University Data

Slide 34  MEDIAN MULTIPLE (Median House Price/ Median Household Income) Housing Affordability Distribution: 1996 MAJOR METROPOLITAN MARKETS MEDIAN MULTIPLE 3.0 AFFORDABILITY MAXIMUM

Slide 35 House Value:Income Ratio: CALIFORNIA, TEXAS & UNITED STATES California United States Texas  Median House Value/ Median Household Income Calculated from US Census Bureau Data

Slide 36 Housing Affordability Distribution: 2006 MAJOR METROPOLITAN MARKETS  MEDIAN MULTIPLE (Median House Price/ Median Household Income) MEDIAN MULTIPLE 3.0 AFFORDABILITY MAXIMUM

Slide 37 Relocation Bonus: From Smart Growth MOVE TO RESPONSIVE MARKET (AVERAGE) Additional Years Gained: Purchase and Finance the Median Priced House (Median Income in New Market)  40-Year Career 11.4 Years Median Household Income Relocation Bonus $646,000

Slide 38 Relocation Bonus: Move from Boston MOVE TO RESPONSIVE MARKET (AVERAGE) Additional Years Gained: Purchase and Finance the Median Priced House (Median Income in New Market)  40-Year Career 10.6 Years Median Household Income Relocation Bonus $598,000

Slide 39 Additional Years Gained: Purchase and Finance the Median Priced House (Median Income in New Market)  40-Year Career 5.4 Years Median Household Income Relocation Bonus: Move from Portland MOVE TO RESPONSIVE MARKET (AVERAGE) Relocation Bonus $305,000

Slide 40 Additional Years Gained: Purchase and Finance the Median Priced House (Median Income in New Market)  40-Year Career 18.3 Years Median Household Income Relocation Bonus: Move from San Diego MOVE TO RESPONSIVE MARKET (AVERAGE) Relocation Bonus $1,035,000

Slide 41 Relocation Bonus: Move from Washington MOVE TO RESPONSIVE MARKET (AVERAGE) Additional Years Gained: Purchase and Finance the Median Priced House (Median Income in New Market)  40-Year Career 11.4 Years Median Household Income Relocation Bonus $645,000

Slide 42 House Prices & Income Required MAJOR METROPOLITAN MARKETS:  Change in Years Income: Required to Purchase Median Priced House

Slide 43 House Financing & Income Required MAJOR METROPOLITAN MARKETS:  Change in Years Income: Purchase & Finance Median Priced House

Slide 44 Domestic Migration: METROPOLITAN MARKETS BY PLANNING TYPE

Slide 45 Domestic Migration Rate: METROPOLITAN MARKETS

Slide 46 Domestic Migration: Portland: INSIDE & OUTSIDE URBAN GROWTH BOUNDARY

Slide 47 Migration: San Diego & Rust Belt NET DOMESTIC MIGRATION: 2000 TO 2006

Slide 48 Conclusion After accounting for non-regulatory (non-smart growth) differences, it is concluded that smart growth materially increases housing prices.