Houston housing (plus toll roads)I've been meaning to get to this one for a while. For the fifth straight year, Houston ranked as one of the most affordable metros in Demographia's International Housing Affordability Survey (hat tip to Hugh, sorry for the delay). Our median multiple of house prices to income is a very modest 2.9. They have some great data in there - check it out. And be sure to also check out Hugh's new web site too - "Performance Urban Planning" - chock full of data and insights on planning, regulations, and affordability.
Getting back to Houston: going forward is a good news/bad news situation, as explained in this article. We're healthier than the rest of the country, but that's not really saying much. It's all relative. Excerpts:
Continuing on the Houston housing theme, Kendall Miller of Houstonians for Responsible Growth had an excellent op-ed in the Chronicle recently defending Houston's free market approach to land use and planning. Definitely read the whole thing, but here are some good excerpts:
Texas' regulatory laws, relative to those of other states, make it easier and faster for builders to respond to demand, which helped the state avoid developing a bubble, said Metrostudy's Jack Inselmann.
The absence of a bubble, he added, also made Texas less attractive to speculators who exacerbate inflated conditions.
On the other hand, above-average job growth in recent years, particularly in Houston's energy and Dallas' financial sectors, drove real, sustainable housing demand, Minich said.
Many builders are still counting on the state's recent history of economic growth and price stability.
Meritage, despite its cautious stance, says Texas remains its "strongest region." No. 3 U.S. builder Centex Corp (CTX.N) said during a recent conference call that it would develop land in a few "relatively robust" markets, including Texas.
"We continue to believe that Texas will not experience anywhere near the same level of housing price declines that we've seen in other more distressed markets," said Horne. "However, outperformance is a relative term."
Moving on to something completely different, a quick response to Ft. Bend County Commissioner Richard Morrison's op-ed against toll roads in Sunday's Chronicle: get used to it. Road needs far outstrip demand in fast-growing Texas, we refuse to inflation index or increase the gas tax (which will soon barely cover maintenance on our existing network), and we refuse to convert historically free freeways to toll roads. The only solution left is tolling all new capacity, and it's the fairest too: users pay, non-users don't. You know, if EZ-tag had been available 60 years ago, I think every freeway in Houston - and probably in the country - would have been tolled from the start. It just makes sense. People should bear the full costs of their housing and commuting choices. And it has the added benefit of a congestion pricing option to push flexible drivers to non rush hours. I don't know why I'm surprised when a politician promises services without costs... but it does get me just a little angry.
While other major cities have priced low- and moderate-income buyers and renters out of the housing market, we have largely avoided prescriptive policy demands on building design. And, for the most part, we have recognized that shifting public infrastructure costs to builders inevitably ends up coming out of the consumer’s pocket.
This has not gone unnoticed, with many economists and land use experts citing Houston over the past year as the city that “got it right.” By that, the experts mean we are the leading “opportunity city,” where our growth policies don’t freeze out upward mobility in favor of attracting an “elite class” of professionals. When real estate prices are artificially increased through both government restrictions and inducements to the “creative class,” it is always low- and middle-income residents who are first hurt, with the entire economy almost always affected later.
But because there has been some friction as Houston’s population has become denser, especially inside the Inner Loop, there still exists the temptation to take a well-intentioned but nevertheless wrong path toward centralized government control of growth. City after American city has belatedly discovered “Smart Growth” and “New Urbanism” policies look good — right up until the cost to consumers, the economy and taxpayers is considered. By then, the damage has been done.
Planning for growth is healthy, but Houston’s model has been to plan for public expenditures that support privately invested growth instead of requiring private expenditures for public uses. Houston can improve further in this area by creating a long-range plan for public infrastructure that rationally plans for growth while avoiding the temptation to shift such costs to those risking their own capital for growth. Can deed restrictions be made to work better? The answer is most certainly “yes.” Renewal of deed restrictions is cumbersome and requires significant legal costs. The city should help neighborhoods by lending legal help, by making deed restrictions highly visible and by making apparent to buyers what areas on the edges of neighborhoods are subject to development. Regulatory barriers to pedestrian-oriented development should be removed so costly variances can be avoided, but such development should succeed because of consumer acceptance, not regulatory mandates that increase consumer costs.
In Houston, we have a diversified economy that produces healthy tax revenues for everything from police and fire protection to improvements in drainage to more parks and more books in our public libraries. Part of our success is derived from the men and women who risk their own wealth to build apartments, homes, office buildings, movie theaters and grocery stores. In truth, developers hire carpenters, electricians, roofers, pavers, design professionals, architects and scores of other Houstonians. Developers and builders don’t deserve disdain for risking their savings and investments on future growth. Neither should local government leaders who understand that policies that foster growth lead to a better standard of living, robust job creation and an economy far healthier than most other major American cities.
Finally, I wanted to end with a little Happy Birthday acknowledgment for Houston Strategies: we're four years old as of yesterday (Sunday). Hope you've enjoyed 'em as much as I have.