Tuesday, January 15, 2008

Quote of the Day: Thomas Sowell

In the 1970s, severe government restrictions on building became common in coastal California. With supply restricted and demand not restricted, it was inevitable that prices would soar beyond many people's ability to pay.

The main impetus behind severe restrictions on building is environmentalist zealots who demand that vast amounts of land be set aside as "open space" on which nothing can be built.
It is not uncommon for substantial proportions of all the land in an entire county -- sometimes more than half -- to be set aside as "open space."

Environmentalists often talk as if they are trying to save the last few patches of greenery from being paved over, when in fact 90% of the land in the United States is undeveloped and forests alone cover more area than all the cities and towns in the country combined.

Read more here.


At 1/15/2008 9:44 AM, Anonymous Anonymous said...

I sincerely doubt that the environmentalists knew they were being used by developers and other interested parties when preservation of open spaces and neighborhood character was instituted.

One of the time honored methods to increase the value of ones own land is to reduce the amount of available land in the surrounding area. What better way to do that than by having someone else do it for a supposedly good reason.

In Vancouver, Canada, Stanley Park came about for that very reason. The land was donated to the city for use as a park for the sole purpose of increasing the commercial value of nearby parcels of land.

In San Jose, California sprawl rather than denser development is the rule. The result is sprawl and congestion with a patchwork of crowded and inferior roads reminiscent of Michigan's highways in the early 1990s and hardly any tall buildings relative to other U.S. cities of one million people. San Jose's tallest building is the 18- story city hall opened in 2005.) For some reason San Jose does not seem to want denser neighborhoods.

Sprawl means that homes closer to the center of the city are often priced much higher than those farther from the city center.

One of the other reasons that Silicon Valley real estate is expensive is that for the time being it is one of the centers for high tech development and the median household income is around $85,000. An $85,000 income applied to a subprime loan with teaser rates gets a big loan and that makes people willing to spend more for a home.

At 1/15/2008 10:20 PM, Anonymous Anonymous said...

Anyone know where I can find source data on Sowell's statement that 90% of US land is undeveloped?



At 1/16/2008 2:50 AM, Anonymous Ian Random said...

California has LAFCO's which severely restrict new city formation. I lived there until age 16 and never heard about them. I think the equivalent in Oregon, which has been my home since 1986, are the Boundary Commissions. These planning organizations sound real innocent until you realize that only existing cities can grow. The big cities won't expand their urban boundaries, so you get denser and pricier housing. The new houses I see in Eugene are real nice with no backyards. Now cities aren't real close, so the small cities are adding residents like mad, who commute long distances to work. Between Cottage Grove and Eugene there is plenty of land, but no city can be formed there and that's way too much land for a small town like Cottage Grove to annex. Same thing with my childhood town, Santa Cruz. There is plenty of coastal farmland that has remained undeveloped to this day. My friend couldn't afford to move out of his parents place since he only made $50k. There's plenty of land everywhere, it just can't it be built upon. I heard it said the the price of the price of a home minus the house and land, is the value of the right to build on it.

At 1/16/2008 5:56 PM, Blogger jalyo said...

I believe that came out of Thomas book Applied Economics: Thinking Beyond Stage One. Good read very infomative.


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