(October 12, 2016) – Traditional "Large Lot Zoning" is "Greener" than "Smart Growth" within Urban Growth Boundaries . . . Copyright 2009 – 2016 . . . Tom Lane . . . Photographing California, Arizona, Nevada, New Mexico, Colorado, Utah, Oregon, and Seattle, Washington.
(Under Construction.) We are creative beings. Naturally, in a traditional neighborhood with large homes on large lots, we remodel our homes and add more landscaping. Traditional properties mature and become more attractive; their truly is no place like home. Properties increase in value (appreciation, defined here) as homes increase in size and become more aesthetically pleasing with landscaping, such as in Kirkland, Washington below (Seattle metro) and Flagstaff, Arizona above (Flagstaff metro).
In contrast, tiny smart growth homes on 1/10th acre lots (4000 square feet), or 1000 square foot townhomes stacked on top of each other, are governed by HOA rules (home owners’ associations). These restrictions prevent major modifications and appreciation, with few opportunities for appreciation, such as the attached townhomes in Midland, Washington below (Seattle metro).
Where I was raised, most homes over the past 30 years have increased in size by at least 25%. Many homeowners have invested in landscaping and other improvements (i.e. garages, shops, pools, and playhouses). Of course, creativity is the driving force behind these changes, while financial resources are a requirement.
Low impact fees for remodeling and constructing swimming pools and garages are also a requirement for home value appreciation over time. Often, cities with high land use regulations have high impact fees and permits, and resulting higher housing costs, as Dr. Edward Glaeser and Dr. Joseph Gyourko discuss.
As a given neighborhood matures over several decades, it may become a historic district withing its greater metro area, due to many factors discussed at the previous link on appreciation: 1) Appreciation due to remodeling and landscaping 2) Supply and Demand 3) Inflation 4) Proximity to parks, recreation, good schools, and shorter commute times
Densification by way of tiny homes and HOA’s will stifle creativity and the natural maturization process of urban neighborhoods, spawned by human creativity and capital. The return on investing time on remodeling can be phenomenal. A detached 4 car garage for an RV, boat, and shop could add over $100,000 to a property with only $20,000 in building materials.
An irony to this is that City Councils frequently are anti-remodeling, pro-smart growth, and pro-impact fees. However, allowing large lots and canceling impact fees allows homeowners to exercise their creativity, and make capital improvements. In an extreme case, a home might be purchased for $200,000 and double in value due to appreciation. A $400,000 house will give the city twice the property taxes of a $200,000 house. This shows how low impact fees and low regulations on remodeling are good for increasing city budget revenues.
And, owning a home, versus renting a smart growth townhome, provides capital to start a small business within the city, further increasing tax revenues. One could go on and on of why growth leads to appreciation and wealth creation.
One would ask if today’s smart growth, high density infill communities will appreciate, or depreciate. Density leads to gradually increasing traffic, air pollution, crime, and drugs. Of course, a larger question for this year (2010) is the very real risk of commercial foreclosures on these smart growth properties. The smart growth condos below are in a dangerous area near Seattle, and are unattractive due to a vacant lot of asphalt debris (not shown):
Therefore, in aggregate, the total value of all real estate properties over time in a “given metro” may increase at a slower rate with the presence of smart growth developments that may not appreciate. I have yet to read anything on this, however, I’ve noticed many smart growth infill developments with for rent signs. They’re not selling, and $300,000 is a lot for a 1200 square foot 2BD/2BA condo.
Meanwhile, historic, with the exception of the housing crash, older neighborhoods will continue to appreciate, on a theoretical basis.
Historic neighborhoods in larger metros (parenthesis) that I’ve visited include:
Boulder, Colorado (Denver metro)
Orinda-Moraga-Lafayette, California (San Francisco metro)
Boulder City, Nevada (Las Vegas metro)
Kirkland, Washington (Seattle metro)
Cave Creek-Carefree, Arizona (Phoenix metro)
This photo in Carefree, Arizona near The Boulders shows new desert landscaping (trees and tree stakes) in progress:
Fortuunately, some newer neighborhoods using smart growth principles may “survive” in 60 years. While these areas still have HOA restrictions, they still offer larger lots and ability for capital improvements, i.e. Gold Canyon, Arizona (Phoenix metro) and Oro Valley, Arizona (Tucson metro).
Finally, mixed-use developments allow storekeepers limited opportunities for expansion, modifying parking arrangements to satisfy more customers, etc. The street level businesses in this development (below condos) remains for lease: