Democratizing Prosperity:

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Democratizing Prosperity The Role of Home
Ownership
Presentation By Wendell Cox American Dream
Conference Minneapolis-St. Paul 25 June 2005
Greek Dream Athens
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A BROADER CONTEXT Home Ownership Land
Use Future of the economy and the quality of lif
e
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OUTLINE
DEMOCRATIZING PROSPERITY
THE ROLE OF HOME OWNERSHIP
THREATENING THE DREAM
CONSEQUENCES
PRESERVING THE DREAM PROSPERITY
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Democratizing Prosperity
Swedish Dream Stockholm
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All Societies Have Their Rich
Luxury Condos Near Rocinda Favela Rio de Janeiro
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Poverty is the Overwhelming Reality
Rocinda Favela Rio de Janeiro
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Different About High Income Economies? Democratiza
tion of Prosperity
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How Urban Residents Used to Live
Central Athens
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Density Profile of New York Urban Area 1900 and
2000
1900 4 Million In 100 Sq.Mi. 2000 18 Million In
3,100 Sq.Mi.
?1900
Population per Square Mile
?2000?
?Urban Land Area Square Miles ?
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History of the World is the History of Poverty
United States
GDP-PPP Per Capita 1990 (OECD)
Japan
?Western Europe
Australia
US Poverty Threshold
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Moving from Rural to Urban Areas
Grundy County Illinois
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History of Urban Growth History of Sprawl
Australian Dream Melbourne
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Democratization of Prosperity is Associated with
Urban Growth
US Growth x1,000,000
Urban
Rural
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Democratization of Prosperity is Associated with
Suburbanization
Canada from 1951, US from 1950 Others from 1965
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Milan
MODERN SPRAWL AUTO ORIENTED DEVELOPMENT Merri
am Webster the spreading of urban developments
on undeveloped land near a city Sprawl is
suburbanization. Sprawl is urban growth
nearly all urban growth in the high-income world
has been suburban in recent decades. Sprawl
Automobile oriented development (especially in
the US, Canada, Western Europe, Australia, Japan).
Toronto
Tokyo
Portland
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Latest Criticism of Modern Urban Growth SPRAWL
DRIVES AWAY ECONOMIC GROWTH Reality is the
opposite. ATLANTA Most sprawling major urban
area in the high income world (lowest population
density) ATLANTA Fastest growing major urban
area in the high income world.
American Dream Atlanta
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Democratization of Prosperity is Associated with
Personal Mobility
Mass Transit Market Share
Automobile Market Share
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The Role of Home Ownership
Japanese Dream Sapporo
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GDP/Capita 2002 (PPP)
2002
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GDP/Capita 1992 (PPP)
2002
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STRENGTH OF THE AMERICAN ECONOMY Competitive int
ensity Examples Less restrictive land
regulation Retailing
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Acapulco
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Bucharest
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Democratization of Prosperity is Associated with
Rising Home Ownership
Renters
Home Owners
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Economic Impact of Home Ownership
of Assets in House Equity USA 1998
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Threatening the Dream
Mexican Dream Guadalajara
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Smart Growth Strategies Housing Impacts
STRATEGIES EXAMPLES IMPACTS
Urban Growth Boundaries Green Belts Portland, Denver Australia, London, Toronto Raises housing prices
Down-zoning Northern Virginia, Boston Raises housing prices
Excessive Development Impact Fees California Raises housing prices
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BASIC ECONOMIC PRINCIPLE SCARCITY RATIONING
TEND TO RAISE PRICES This means Rationing
land for housing development tends to raise
house prices.
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BASIC ECONOMIC PRINCIPLE HIGHER PRICES TEND TO
MEAN FEWER BUYERS This means Higher
housing prices tend to lead to lower rates of
home ownership.
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Consequences
Spanish Dream Barcelona
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ANDRES DUANY There is NO question that urban
growth boundaries and that elaborate
environmental public processes increase the
cost of housing by creating scarcity. (And
dont tell me otherwise, because I am not
stupid, nor am I inexperienced, nor do I have
underdeveloped powers of observation).
Sun Rises in the West studies
Italian Dream Milan
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BROOKINGS (Nelson et al) the housing price
effects of growth management policies depend
heavily on how they are designed and
implemented. If the policies tend to restrict
land supplies then housing price increases
are expected.
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HARVARD STATE OF THE NATIONS HOUSING 2005 Deve
lopment constraints drive up land and
construction costs as well as prevent new
housing from keeping pace with rising demand.
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WACHOVIA BANK We have identified three major
factors which have worked to restrain supply
over the past decade, all of which remain very
much alive and well today. The first is the
spread of the Smart Growth, Slow Growth and
No Growth movements throughout the country.
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our evidence suggests that zoning and other
land use controls play the dominant role in
making housing expensive.
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LAND USE REGULATION RETARDS ECONOMIC GROWTH metro
politan areas with stringent development
regulations generate less employment growth
than expected given their industrial bases
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African-American Home Ownership Higher Where
there is More Sprawl
Kahn (Tufts University)
Lower Density
Higher Density
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THOMAS RIVERA INSTITUTE Principal barriers
to home ownership for Hispanics in
California Land regulation Growth
controls Impact fees
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Housing Affordability States2000 CENSUS
House Value Household Income Multiple 2000
Census
Strongly Regulated Markets ?
? More Affordable
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US Housing Cost Multiple CHANGE 1970-2000
Policy Driven Land Scarcity ?(Red)
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Housing Affordability Largest Urban Areas2000
CENSUS
House Value Household Income Multiple 2000
Census
Strongly Regulated Markets ?
? More Affordable
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House Value Multiple 2000 US CENSUS DATA LARGE
URBAN AREAS
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International Housing Affordability Ratings And R
ankings 2005.02
Kiwi Dream Auckland
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International Housing Cost Multiple
Median House Value/ Median Household Income
? Land Rationing Policies
Fast Growing Affordable Atlanta Dallas-Fort
Worth Houston
Market
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Preserving the Dream
Portuguese Dream Porto
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Smart Growth Toward a Nation of Renters
Eventual Rates Based Upon Housing Price Multiples
Renters
Home Owners
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70
50
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Democratization of Prosperity is Not Complete US
Home Ownership Rates by Race
Renters
Home Owners
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STRONG ECONOMIC GROWTH IS NECESSARY But Smart
Growth constitutes an assault on the economy.
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WHY? Their Vision doesnt add
up Auto- based sprawl is here to stay
Urban Population Denstiy
1900
Now
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Paris Atlas Where People Live and Work ?
Tourist ( Planners) Map of Paris ?
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WHY? Their imperatives dont stand-up to
scrutiny. There is no justification for the
destructive strategies of Smart Growth
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THERE IS NO REASON TO STOP DEMOCRATIZING PROSPERI
TY
Canadian Dream Toronto
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The Universal Dream Living in the Future Tense
New House Billboards Suburban Valencia, Spain
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THE STANDARD LONE MOUNTAIN COMPACT absent
a material threat to other individuals or the
community, people should be allowed to live
and work where and how they like.
German Dream Frieburg
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BACK TO BASICS THE ROLE OF PLANNING Not
telling people how to live Rather, helping
people live as they prefer
Peoples Route ? ?
Planners Route ? ?
Paris Suburbs