"Command and Control"
by Ryan Avent
As Matt often emphasizes, there are a great many ways in which the government shapes our land-use patterns. Sprawl apologists often argue that low-density, suburban-style development has dominated the American landscape over the past half century because it is clearly superior to alternatives. Now, there’s no doubt that many Americans prefer suburban life. At the same time, it’s impossible to ignore the overwhelming way in which government policy has encouraged such development, intentionally, and unintentionally. The government didn’t necessarily intend for a massive network of (largely) free-to-user highways to spur suburban growth and gut urban centers, but it indisputably did. Similarly, the government’s long-term commitment to increased rates of homeownership wasn’t necessarily about changing land-use patterns. But as economist Ed Glaeser notes at the New Republic, the relationship between the policy and the outcome is clear:
Roughly 87 percent of all single-family detached homes are owner-occupied. Roughly 87 percent of all homes in buildings with five or more units are rented. Multi-family dwellings have common spaces, such as lobbies, and common infrastructure; sharing joint control over these things can often be quite difficult. Landlord control over large buildings irons out the difficulties of dealing with the cacophony of collective control.
The connection between homeownership and structure type implies that when the federal government gets into the business of supporting homeownership, it also gets into the business of supporting single-family detached homes–and this means supporting lower-density living. New Yorkers have converted plenty of rental units into co-ops, but still 77 percent of the households in Manhattan rent. The government’s big post-war push into homeownership was inevitably also a push to suburbanize. You do not need to be an enemy of the suburbs to wonder why the government is implicitly urging Americans to drive longer distances and flee denser living.
Of course, this is just one of many reasons why we should be skeptical of policies that subsidize homeownership. Such subsidies are regressive. They encourage heavy, leveraged investments in undiversified assets that perform unexceptionally over time. They reduce mobility, which prevents households from responding to changing economic conditions. And should there be a massive housing bubble and collapse, they put millions of households at risk of foreclosure and bankruptcy, and contribute to global economic meltdown. But for all this, the odds of a reversal of these policies, like the mortgage interest reduction, are basically zero. Which is yet another reason that we ought to focus on undoing other suburban subsidies wherever its politically feasible. Congestion pricing, which could address crowded freeways while funding better urban transport, is a good place to start.