In 1985 architect Donald Brackenbush completed a plan for a new housing development in Ventura County that he thought struck a fair balance between development needs and environmental amenities. Brackenbush envisioned building about 3,000 new homes and associated commercial infrastructure on 2,800 acres while permanently preserving over 10,000 acres of natural open space. Many environmentalists endorsed the plan, which became known as the Ahmanson Ranch.
Seventeen years later, however, not a single house has been built and the Ahmanson Ranch project is still in limbo, the victim of repeated lawsuits, regulatory delay, and political opposition, typically led by celebrities such as Martin Sheen and Rob Reiner. Opponents of the development want no houses built at the Ahmanson Ranch site, and are demanding that the landowner, Washington Mutual Savings, give away the entire ranch to a non-profit land conservation group.
The regulatory morass of the Ahmanson Ranch is not untypical for California--more than 30,000 proposed units in Los Angeles County alone have been in similar regulatory limbo for more than a decade--even as state officials for years have been warning that California needs at least 50,000 more housing units built each year than are currently being built to keep up with population growth. Dowell Myers, an urban planning expert at USC, told the Los Angeles Times recently: "We have a disastrous housing situation in the state, and Ahmanson Ranch is a poster child for delay and non-production. This is the Nancy Reagan style of providing housing: 'Just say no.'"
Common sense and the basic economic law of supply and demand would lead to the conclusion that anti-growth sentiment and regulation in California is a significant factor in the state's high housing prices. Yet advocates of political control over growth, whether so-called "smart growth" or old-fashioned slow-growth, go to great lengths to deny that land use regulation has a significant effect on housing supply or affordability. Paul G. Lewis of the Public Policy Institute of California and Max Nieman of U.C. Riverside presented a paper at the 2001 American Political Science Association making exactly this case and offering a lengthy bibliography of studies backing up their thesis. (See "Cities Under Pressure: Local Growth Controls and Residential Development Policy," Public Policy Institute of California, available at www.ppic.org/publications/PPIC154/index.html.
New research from the Harvard Institute of Economic Research bolsters the common sense case that land use regulation does indeed push up housing prices especially in California. The paper, "The Impact of Zoning on Housing Affordability" by Prof. Edward Glaesser of Harvard and Prof. Joseph Gyourko of the Wharton School (available at http://post.economics.harvard.edu/hier/2002papers/2002list.html), conducted several different regression analyses on dynamic variables of the housing market nationwide trying to explain why the price of housing is close to the cost of construction in most areas of the nation, but way above the cost of construction in several areas clustered mostly on the two coasts. For the nation as a whole, the authors conclude, there isn't really an affordable housing crisis, which is one reason why the national home ownership rate is currently at an all time high. However, the home ownership rate in California is the second lowest in the nation and is falling. The Harvard authors rule out several explanations for this and fix their gaze on zoning and land use regulation. Using the average length of time required to obtain a building permit as the dependent variable, the Harvard study finds that "measures of zoning strictness are highly correlated with high prices. While our evidence is suggestive, not definitive, it seems to suggest that this form of government regulation is responsible for high housing costs where they exist."
When differences in median housing prices relative to median income are plotted on a map of the United States, the result resembles nothing so much as the now infamous map of red and blue American from the 2000 presidential election. Housing is most expensive on the two coasts, and more affordable the farther one travels into the heartland states, where land use regulation tends to be more permissive. (Scientific American published such a map based on Census data in the September 2002 edition, page 32.) Perhaps the ostensible cultural differences between red and blue America extend to their local government regulatory policies as well.