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How to keep smart growth affordable: build more of it

Kaid Benfield

Posted October 15, 2009 in Green Enterprise, Living Sustainably, Solving Global Warming

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One of the more frustrating challenges for people in our field to overcome is a certain past-is-destiny argument from sprawl defenders who contend that past trends in favor of large-lot, dispersed, automobile-dependent development constitute proof that Americans want more of it in the future. 

In fact, signals in the market have never been clearer that consumer preferences are changing and that demand for smart growth will outpace both demand for sprawl and current smart growth supply trends in the coming decades.  This is due to many factors, among them changing demographics, higher energy prices, the rebirth of central cities, the failure of the suburban model to meet many consumers' demands for convenient access to jobs and services, and a resurgence in appealing models for living in a more urban context.  central cities have rebounded from their decline (by: Todd Litman)Smart growth is currently constrained not so much by the market as by policy distortions and conservative lending and building practices.

This is essentially the ground that I have covered in this space for some time, perhaps summarizing it best in a post in April.  But Todd Litman of the Victoria Transport Policy Institute has just done a much better and more thorough job of it, in a very well-researched, -documented, and -written paper ("Where We Want To Be: Home Location Preferences And Their Implications For Smart Growth," September 18). 

Litman, who is making a career of this sort of excellent analysis, begins by examining the oft-argued myth that smart growth imposes significant costs by reducing the supply of large-lot, single-family homes that most families seek, driving up prices in the process.  There might have been some truth to that hypothesis if the debate were being held three to five decades ago.  sprawling subdivisions have suffered most (from: Bubble Meter)But today, the supply of large-lot housing may already be overbuilt in relation to future demand, and in any event we will need much less of it than we will need of compact, walkable neighborhoods, which are currently in significant undersupply: 

"Although the exact impacts are difficult to predict and depend on how sprawl and smart growth are defined, this roughly indicates that until two decades ago (1990) more than two-thirds of households preferred sprawl housing locations and less than a third preferred smart growth, it is now about fifty-fifty, and within two more decades (2030) less than one third will prefer sprawl and more than two thirds will prefer smart growth.

"This explains why smart growth locations, such as older urban neighborhoods and new transit-oriented communities, are often unaffordable. Inadequate supply drives up prices. The rational response is to significantly increase the supply of smart growth housing to bring smart growth benefits within the budget of more consumers, particularly economically and physically disadvantaged households."

Litman argues from the evidence that during the peak of suburban optimism and urban pessimism, housing on the fringe represented a bundle of desired goods, including affordable home ownership and investment equity (particularly before condominiums became available beginning in the 1970s), larger homes and yards, separation from poverty (and minorities), perceived increased safety, superior schools, and more status.  In return, consumers were willing to accept some disadvantages, including social isolation and high transportation costs (suburban traffic congestion was not yet a major factor, and the environmental and public costs of sprawl were not well known).  cycle of automobile dependence by Todd LitmanAs a result, both the housing industry and municipal planners created a self-perpetuating cycle of automobile dependence (see illustration) that has yet to be broken, even though conditions and perceptions have changed.

(I'll be the first to admit, by the way, that for many big cities the difference in public school quality between city and suburb remains very real.  As David Owen suggested, that's now an environmental problem.  But, even so, the percentage of households with school-age children is nowhere near what it was during the peak sprawl years and is likely to further decline as a portion of overall housing demand.)

Litman walks the reader through the evidence, from market surveys to trend data to quite a bit of academic research, all suggesting that, while demand for large-lot suburban homes will remain (an important point), it is not where the growth in demand will occur.  Note the graph from Chris Nelson's research projecting where the growth in future demand will occur:

  research by Arthur C. Nelson, graph via Todd Litman

In this dynamic, it is no wonder that one of the frequent criticisms raised in connection with close-in, convenient, walkable neighborhoods is that they can be so expensive.  Litman cites the 2001-2002 SMARTRAQ study for the proposition that, while at that time 20-40 percent of the Atlanta housing market "strongly preferred" walkable neighborhoods, only five percent of the area's housing stock was located in such areas.  Heck, even in Houston, when survey respondents were asked whether they would prefer to live "in a suburban setting with larger lots and houses and a longer drive to work and most other places" or "in a more central urban setting with smaller homes on smaller lots, and be able to take transit or walk to work and other places," fifty-five percent chose the more urban option.  Smart growth is only going to become less and less affordable unless we build more of it.

Litman closes the paper with a point-by-point analysis of smart growth criticisms and policy arguments.  Overall the analysis is a fabulous summary of the issues and evidence and includes a lengthy, detailed bibliography.  Highly recommended.

Kaid Benfield writes (almost) daily about community, development, and the environment.  For more posts, see his blog's home page. 

 

 

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Comments

Boris SuchkovOct 15 2009 12:16 PM

Neither this article nor the paper really define "urban", "sprawl", and "smart growth" - or, more precisely, they don't make it clear that these definitions consist of multiple characteristics that may or may not be present individually. But how many of the characteristics must be present to make a location "urban" or "smart growth"? For example, Bensonhurst, Brooklyn, consists largely of tightly packed houses on small lots, but the lack of high quality cross-town transit options makes it clear that overall, this area would probably not qualify as "smart growth." Yet, going by the examples in the paper, Bensonhurst is clearly an urban area.

What happens with these kinds of definitions is that people may look at Bensonhurst's "urban" label and decide that nothing more needs to be done, even though citywide suburbanization efforts significantly hamper the quality of life in this neighborhood. Streets designated as high-throughput arterials, a dilapidated subway system with only one destination- Manhattan, zoning that favors big box stores with parking lots, lack of parkland, etc., are very real problems that must be dealt with. An urbanized area with imposed suburban characteristics is really the worst of both worlds. But the paper writes off areas like this as successes.

Mark ArsenalOct 15 2009 05:12 PM

Exactly. I would argue also that developers are pre-disposed to building spread-out, cheap auto-dependent development because this housing type is much cheaper to build. In a cheap-oil environment, the consumer's preference for smart growth doesn't override a cheap price tag, and the margins are higher and speed of ROI shorter for developers in suburban growth.

Kaid @ NRDCOct 15 2009 05:44 PM

Mark, I agree with you. That's why as advocates we need to pursue as many tools as possible to support true smart development. I'm certainly not complacent about that and, although Todd can speak for himself, I don't think he is, either.

Boris, I read absolutely nothing in the paper that suggests that urban or partially urban neighborhoods should not be improved. Bensonhurst isn't mentioned in the paper, and I don't think that, by pointing to consumer preferences for denser, more centrally located, walkable neighborhoods, the paper is passing a judgment on that. The point the paper is making is that consumers are increasingly rejecting large-lot, suburban subdivisions. That point stands.

Todd LitmanOct 15 2009 06:46 PM

Thank you very much for reviewing my paper. Let me respond to some of the comments.

Although "Where We Want To Be" provides little discussion of "smart growth" and "sprawl," these are defined in detail in other publications such as the "Smart Growth" chapter of our Online TDM Encyclopedia (http://www.vtpi.org/tdm/tdm38.htm ), and in my report, "Evaluating Transportation Land Use Impacts," (www.vtpi.org/landuse.pdf).

Smart growth involves several features including land use density and mix, road and pathway connectivity, good walkability, transport system diversity, and appropriate parking management. Critics sometimes claim that smart growth only consists of land use density, but that is quite wrong. It is possible to have dumb density (such as Los Angeles county, where I grew up) and smart suburbs, with walkable urban villages connected by high quality public transit.

I disagree that sprawl is necessrily cheaper than smart growth. Smart growth can provide various savings and efficiencies including reduced land costs per housing unit, parking cost savings, public infrastructure and service cost savings, consumer transportation cost savings and improved transit system cost efficiency. These are discussed in the "Affordability" chapter of our Encyclopedia (http://www.vtpi.org/tdm/tdm106.htm) and in the reports "Understanding Smart Growth Savings: What We Know About Public Infrastructure and Service Cost Savings, And How They are Misrepresented By Critics," (www.vtpi.org/sg_save.pdf ) and "Parking Requirement Impacts on Housing Affordability," (www.vtpi.org/park-hou.pdf ).

Policy changes are needed for communities and developers to be able to take advantage of these savings and benefits, and for consumers to percieve them. For example, communities will need to eliminate restrictive zoning codes and development policies that favor single-family housing, and reduce or eliminate minimum parking requirements in order to reduce housing costs. In addition, development and utility fees should be discounted for smart growth development, reflecting the lower costs of providing services in such locations. Improving walking, cycling and public transit service quality, and encouragement of carshare services are needed so households can signficantly reduce their transportation costs in smart growth locations.

These do require significant investments, but the savings are much, much larger. For example, my research indicates that residents of cities with high quality public transportation must spend an additional $100 per capit in transit subsidies, but they save on average $500 annually per capita in reduced transportation costs.

For information see "Smart Growth Policy Reforms," (www.vtpi.org/smart_growth_reforms.pdf ).

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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