A new study by University of Washington economics professor Theo Eicher finds middle-class families are being priced out of the Seattle real estate market due to land-use regulations that drive up home prices by more than $200,000 per home. Eicher identifies Washington’s smart-growth-movement-inspired Growth Management Act as one of the main culprits for the inflated prices in the region, but similar land-use regulations are driving down home ownership rates in major metropolitan areas through out the country, creating an involuntary “rent belt” throughout the United States as millions of moderate income families are excluded from homeownership and are pushed into apartments.
Eicher is quick to point out he received no outside funding for the project and stresses he makes no value judgments about whether the regulations are good or bad. Instead, he wants to educate the public on “the impact of their choices. There’s always a cost associated with the cityscape. Who wants to have no parks in the city? Or, a 10-story high-rise in Blue Ridge? But there’s a cost to that.”
Kriss Sjoblom of the nonpartisan Washington Research Council explains how government intervention in property rights inevitably leads to inflated home prices: “If you’re a homeowner and growth controls are imposed and housing prices shoot up, you’re grandfathered because you own the place. In theory people will say it’s [rising prices] a bad thing, but in practice it’s not hurting them. … When you bring up specific things, like allowing multifamily housing in their neighborhood, they have misgivings.”
One of the first things you’ll learn in any good economics course is that there is no such thing as a free lunch. People may like smart growth policies because they reduce ‘sprawl’ but too often voters are not informed about what costs come with those regulations.