Can’t Afford a Home? Blame the Government

Part 3 of 3

In my earlier reports, we discovered how federal and state government regulations and restrictions have added tens of thousands of dollars to the cost of a home. But what about your local government; do town planners and zoning boards contribute to the high cost of housing in New Hampshire and across the nation? As you might expect, according to the evidence, the answer appears to be ‘yes.’

The evidence begins with the basic economic premise that scarcity raises prices. Local governments have piggy-backed upon state government restrictive land use policies, such as New Hampshire’s Shoreline Protection Act, with more and more zoning regulations that restrict land use. These restrictions often include wetland buffer zones, open space, minimum lots sizes, unit construction limits, and expensive impact fees that create a scarcity of land in places people want to live. The result of this prescribed scarcity is predictable – higher housing prices.

The trends in local zoning regulation over the past few decades have been to further and further restrict land use. Initially, this trend began with local officials and town planners operating under the assumption that if something is good, more is better. If the state required a 100-foot setback to protect the environment, then we’ll require an additional 50-foot setback from the state requirement. That will protect the environment even more. As many landowners can tell you, the consequences of these “more is better” policies backed by little or no science can be result in what is essentially a land taking. Thousands of acres of land throughout New Hampshire have been rendered unbuildable as a direct result of restrictive local land use policies. More recently, this problem has been exacerbated by the so-called “smart growth” management policies that codify restrictive land use policies on a macro level creating a greater scarcity of land for housing.

New Hampshire cities and towns have practiced restrictive land use policy for decades so this is not a new problem. However, in recent years, the appetite for more and more restrictive policies by localities has grown, and along with it, the cost of housing has escalated accordingly.

Research by Raven Saks of the Federal Reserve Board indicated that a place with relatively few barriers to construction results in moderate housing prices whereas “places with more regulation [with equal demand for housing] experience a 17 percent smaller expansion of the housing stock and almost double the increase in housing prices.” New Hampshire appears to be one of those places.

The New Hampshire House Price Index has increased by 50 percent in the past decade, despite the recent downturn in the market, and by 296 percent over the past 30 years.

As the cry for affordable housing grows louder and louder, it would serve the federal, state, and local governments well to reexamine their policies toward the regulation and restriction of housing activities. The two issues are intricately linked, and to ignore that fact has its perils. And if you are one of those people who can’t afford a home, maybe it’s time to talk to your local, state, and federal elected officials.

Author: Paul Young

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