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Urban Containment Undermines Housing Affordability

By: Contributor - Jan 29, 2014, 8:10 am

The Frontier Center for Public Policy in Canada has recently promoted the release of Demographia’s 10th Annual Housing Affordability Survey, a study that ranks 360 metropolitan markets in nine nations: Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the United Kingdom, and the United States. Although it is a goldmine of data for various uses, the primary objective of the study is to examine the relationship between urban planning — be it well-intentioned or not — and people’s standard of living when it comes to their ability to buy houses.

chart_plainThe study’s key data and ranking point is the “median multiple.” That is the ratio between the median house price and the median annual household income in a given city or market. In other words, it is the number of years of a household’s gross income that go into the house price.

This number represents how easy it is for anyone of that geographical region, but particularly the impoverished, to purchase and obtain their own homes without stifling their upward mobility — something Demographia believes is extremely important when it comes to handling the growth of cities. A median multiple of 3.0 and lower signifies affordable housing (three times gross annual household earnings or less), 3.1-4.0 is moderately affordable, 4.1-5.0 is seriously unaffordable and 5.1+ is severely unaffordable.

Demographia’s survey has found that those markets with sustained or increased median multiples also tend to possess more restrictive land use policies. They propose that city planners give up on their “abstract objectives” of what good communities should strive towards and begin focusing on two real, measurable outcomes that have always been the most important to a prospective buyer of a house: the worker’s spatial mobility and housing affordability in the market.

According to the United States Department of Labor, urban planners “advocate the best use of a community’s land and resources for residential, commercial, educational, and recreational purposes.” There are several types of urban planning mandates designed to control every aspect of a growing community; out of the many policies that are executed, though, the one that seems to have the most impact is urban containment. A study by Semra Atyur and his associates describes urban containment policies as an “attempt to manage the location and timing of urban growth to support goals such as compact development, preservation of open space, promotion of social equity, and efficient use of infrastructure.”

These intentions of urban containment — at least on paper — are for the betterment of our ourselves, our environment, and our community as a whole. One would hope that the genuine goal of these government officials and urban planners is to raise our standard of living, as the constituents seek.

Unfortunately, the analysis of the last nine Annual Housing Affordability Surveys, suggests either ignorance or alternative motives. These detailed studies showcase the destructive results these urban containment policies, implemented by state and local governments, have had over time.

Source: Demographia‘s 10th Annual Housing Affordability Survey
This data beckons us to question whether all these actions to preserve green space around cities and residential integrity should be put before the needs and living standards of poor families. Upward mobility is the key to a more satisfied community and while all the metropolitan areas in the survey are encountering increasing economic uncertainty, this means more risk in the lives of youth and low-income workers.