Comments on: Restricted Supply Means Faster Return

By: BC

BC — Sat, 04 Nov 2006 06:06:47 +0000

I remember that supply constraint article, and thought it had plenty of insights. Part of it is the standard observation about geographic restrictions -- if you have a river to the east, west, and north, and a harbor to the south, the only way to build is up.

What we're seeing in Arlington, VA, a 25-square mile inner-ring suburb of DC, is regulations running amok. I attended a lecture by Enrique Norten last week who called for better urban design and fewer non-professional busybodies opining on architecture. What the council members heard was 'create design regulations', 'require competitions for everything', and 'use LEED on all projects, even where inappropriate'.

Great. We have a lack of new affordable dwellings, an excellent but shrinking school system, and county board members who conflate developers with Santa Claus. LEED is unofficially required on nearly every project now, and design elements or materials by proscription will lead to all sorts of unintended consequences. Affordable housing in Northern Virginia is hampered by the cost of land, construction, and lack of wage growth. Localities clamor for it, but they won't alter their tax structure to favor this type of development.

Sorry this turned into a rant on affordable housing, but its merely one more way that government 'influences' the cost, type, and location of development in somewhat nefarious ways.

By: Jonathan J. Miller

Jonathan J. Miller — Mon, 30 Oct 2006 19:59:58 +0000

Thats sort of out of context isn’t it? Apples and oranges, or perhaps dried bananas? While its true that small suburban communities around NYC have tough building restrictions, I think that primarily 1-family communities are resistant to multi-unit dwellings. Then why is the assemblage of development sites so difficult and expensive, require extensive consulting services including expeditors? There are many lawyers who specialize in zoning laws here.

By: WT Economist

WT Economist — Mon, 30 Oct 2006 19:52:49 +0000

NYC has the most liberal zoning in the United States. Period. You have to wonder what those complaining about zoning restrictions want.

Go try to build a 6.0 FAR building with no parking in Darien. In fact, go try to build a two-family house.

By: Sandy Mattingly

Sandy Mattingly — Mon, 30 Oct 2006 17:07:58 +0000

Maybe there is undisclosed data behind the BW analysis, but I donâ€™t see support for the view that prices are more volatile downward in certain cities, just that the recovery is quicker and larger in those cities (basically, cities in which supply is â€“ in economic terms â€“ artificially restricted).

I canâ€™t think of any logical reason why those cities should fall harder or faster than cities that crawled back from the last bust.

This article meshed nicely with something I posted on my blog last week, positing that the costs of construction are more of a drag on price appreciation in cities in which construction is relatively easy (I picked Houston, as did BW), compared to New York City.

So thanks for the additional fodder JM.