slide 1 slide presentation appendix a the impact of smart growth on housing affordability analysis...
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Slide 1Slide 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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Housing Affordability: A Tale of Two Nations
Kansas City Portland
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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 ResearchSMART GROWTH & HOUSING AFFORDABILITY
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0
2
4
6
8
10
12
Housing Affordability Distribution: 2006MAJOR METROPOLITAN MARKETS
MEDIAN MULTIPLE (Median House Price/ Median Household Income)
MEDIAN MULTIPLE 3.0 AFFORDABILITY MAXIMUM
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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
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Planning Types & Markets
RESPONSIVEPLANNING
(Liberal)
AtlantaDallas-Fort Worth
IndianapolisKansas City
PRESCRIPTIVEPLANNING
(Smart Growth)
BostonPortland (Oregon)
San DiegoWashington (DC)
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0%
5%
10%
15%
20%
25%
30%
35%
40%
ATL DFW IPS KC BOS POR SD WDC
Population Growth:1996-2006METROPOLITAN MARKETS
Calculated fromUS Census Bureau Data
Slide 9
Existing House Analysis: Median Prices
PortlandKansas City
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
Existing House: Structure Replacement METROPOLITAN MARKETS: 2006
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
Existing House: Market Upper Limit METROPOLITAN MARKETS: 2006
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
Existing House: Median Price METROPOLITAN MARKETS: 2006
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
Existing House: Median Price Trend METROPOLITAN MARKETS: 1996 & 2006
2006$
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
Median Price & Market Upper Limit METROPOLITAN MARKETS: 2006
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
Median Price & Market Upper Limit METROPOLITAN MARKETS: 1996
2006$
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Median Price & Market Upper Limit Trend RESPONSIVE MARKET AVERAGE: 1996-2006 (2006$)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
1996 2006
Median House Price
Market Upper Limit
2006$
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Median Price & Market Upper Limit Trend PRESCRIPTIVE MARKETS AVERAGE: 1996-2006 (2006$)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
1996 2006
Market Upper Limit
Median House Price 2006$
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
2006$
Market Upper Limit & Regulatory Excess EXISTING HOUSE: METROPOLITAN MARKETS: 1996
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
ATL DFW IPS KC BOS POR SD WDC
2006$
Market Upper Limit & Regulatory Excess EXISTING HOUSE: METROPOLITAN MARKETS: 1996
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Share of Difference in Price IncreasesBY PLANNING SYSTEM TYPE: 1996-2006
RegulatoryExcess
98%
Non-Smart
Growth MarketFactors: 2%
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-$50,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
BOS POR SD WDC
Predicted & Actual Smart Growth Impact “COSTS OF SPRAWL-2000” V. ACTUAL: 2000-2006
Change in Cost per House
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-25%
0%
25%
50%
75%
100%
125%
150%
175%
200%
ATL DFW IPS KC BOS POR SD WDC
Demand & Median Prices: 1996-2006 METROPOLITAN MARKETS
Change
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New HouseAnalysis
PortlandKansas City
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$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Responsive Planning Prescriptive Planning National Average
New House: Structure CostNATIONAL & BY PLANNING TYPE
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
ATL DFW IPS KC BOS POR SD WDC
New House: Structure Cost METROPOLITAN MARKETS
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
ATL DFW IPS KC BOS POR SD WDC
New House: Finished Lot Cost METROPOLITAN MARKETS
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Market Upper Limit & Production Price METROPOLITAN MARKETS
$0
$100,000
$200,000
$300,000
$400,000
$500,000
ATL DFW IPS KC BOS POR SD WDC
Slide 28
Actual Price & Market Upper Limit NEW HOUSE: METROPOLITAN MARKETS
$0
$100,000
$200,000
$300,000
$400,000
$500,000
ATL DFW IPS KC BOS POR SD WDC
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$0
$100,000
$200,000
$300,000
$400,000
$500,000
ATL DFW IPS KC BOS POR SD WDC
Market Upper Limit & Regulatory Excess NEW HOUSE: METROPOLITAN MARKETS
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The Negative Externalities ofSmart Growth
PortlandKansas City
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Price Difference ComponentsPRESCRIPTIVE V. RESPONSIVE MARKET PRICES
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Existing House:1996
Existing House:2006
New House: 2007
2006$
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0%
20%
40%
60%
80%
100%
Existing House:1996
Existing House:2006
New House: 2007
Share of Price Difference PRESCRIPTIVE V. RESPONSIVE MARKET PRICES
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0
1
2
3
4
5
6
7
8
1980 1985 1990 1995 2000 2005
Median Multiple: 1980-2006 MAJOR METROPOLITAN MARKETS BY PLANNING TYPE
Prescriptive Planning
Responsive Planning
Calculated from JFKSchool of Government,Harvard University Data
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0
2
4
6
8
10
12MEDIAN MULTIPLE (Median House Price/ Median Household Income)
Housing Affordability Distribution: 1996MAJOR METROPOLITAN MARKETS
MEDIAN MULTIPLE 3.0 AFFORDABILITY MAXIMUM
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0
1
2
3
4
5
6
7
8
9
10
1950 1960 1970 1980 1990 2000
House Value:Income Ratio: 1950-2006 CALIFORNIA, TEXAS & UNITED STATES
California
United States
Texas
Median House Value/ Median Household Income
Calculated fromUS Census Bureau Data
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0123456789
101112
Housing Affordability Distribution: 2006MAJOR METROPOLITAN MARKETS
MEDIAN MULTIPLE (Median House Price/ Median Household Income)
MEDIAN MULTIPLE 3.0 AFFORDABILITY MAXIMUM
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Relocation Bonus: From Smart GrowthMOVE TO RESPONSIVE MARKET (AVERAGE)
Additional Years
Gained: Purchase andFinance the
Median PricedHouse
(MedianIncome in
New Market)
40-Year Career
11.4 YearsMedian
HouseholdIncome
RelocationBonus
$646,000
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Relocation Bonus: Move from BostonMOVE TO RESPONSIVE MARKET (AVERAGE)
Additional Years
Gained: Purchase andFinance the
Median PricedHouse
(MedianIncome in
New Market)
40-Year Career
10.6 YearsMedian
HouseholdIncome
RelocationBonus
$598,000
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Additional Years
Gained: Purchase andFinance the
Median PricedHouse
(MedianIncome in
New Market)
40-Year Career
5.4 YearsMedian
HouseholdIncome
Relocation Bonus: Move from PortlandMOVE TO RESPONSIVE MARKET (AVERAGE)
RelocationBonus
$305,000
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Additional Years
Gained: Purchase andFinance the
Median PricedHouse
(MedianIncome in
New Market)
40-Year Career
18.3 YearsMedian
HouseholdIncome
Relocation Bonus: Move from San DiegoMOVE TO RESPONSIVE MARKET (AVERAGE)
RelocationBonus
$1,035,000
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Relocation Bonus: Move from WashingtonMOVE TO RESPONSIVE MARKET (AVERAGE)
Additional Years
Gained: Purchase andFinance the
Median PricedHouse
(MedianIncome in
New Market)
40-Year Career
11.4 YearsMedian
HouseholdIncome
RelocationBonus
$645,000
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-1
0
1
2
3
4
5
6
7
8
House Prices & Income RequiredMAJOR METROPOLITAN MARKETS: 1996-2006
Change in Years Income: Required to Purchase Median Priced House
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-2
0
2
4
6
8
10
12
14
16
18
House Financing & Income RequiredMAJOR METROPOLITAN MARKETS: 1996-2006
Change in Years Income:Purchase & Finance MedianPriced House
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-300,000
-200,000
-100,000
0
100,000
200,000
300,000
ATL DFW IPS KC BOS POR SD WDC
Domestic Migration: 2006-2006METROPOLITAN MARKETS BY PLANNING TYPE
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-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
ATL DFW IPS KC BOS POR SD WDC
Domestic Migration Rate: 2006-2006METROPOLITAN MARKETS
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0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Inside UGB Outside UGB
Domestic Migration: Portland: 2000-2006INSIDE & OUTSIDE URBAN GROWTH BOUNDARY
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-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%San Diego Pittsburgh Buffalo Cleveland Detroit
Migration: San Diego & Rust BeltNET DOMESTIC MIGRATION: 2000 TO 2006
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Conclusion
After accounting for non-regulatory (non-smart growth) differences, it is
concluded that smart growth materially increases housing
prices.