Gas Prices and Sprawl
Back in December, I wrote an op-ed for the Washington Post suggesting that rising oil prices might be having an impact on Americans’ taste for exurban homes. At the time, the data in support of this thesis was still very anecdotal. In the six months since then, more data has been gathered, and it points in the direction one would expect. The housing crisis, while severe, is not being experienced the same way by all homeowners. Owners of homes near urban centers and accessible to public transit are finding that their homes are holding their values pretty well. On the other hand, the largest declines in property values are being experienced in more far-flung developments, where the only way to get anything done is to hop into the car.
This makes good sense. In the debate over sprawl, proponents of the status quo have argued that suburban development has delivered for American homeowners a lot of home for very little money. Setting aside questions of taste and focusing on square footage, there’s a great deal of truth to this. But when you factor in the cost of transportation, the issue becomes far more complex. Housing that provides owners with no alternative to the private car is more expensive than it at first appears. That cost remained largely out of view when gas was $1.50 per gallon, but with gas prices nearly tripling over the past five years, and threatening to continue to increase for the foreseeable future, that hidden cost has jumped out into the foreground. (The average American family of four consumes roughly 1500 gallons of fuel per year, so, barring a shift to more fuel-efficient vehicles, every $1 rise in gas prices costs about $1500 per year, per family.) The people at the Center for Neighborhood Technology have put together a great interactive map that allows you to compare the cost of housing in different parts of various metropolitan areas with the cost of housing+transportation. The (predictable) consequence is that, when you factor in transportation, housing far from urban centers becomes much more expensive, and in many cases more expensive than housing in or near downtown.
In addition to causing people to sell (or to refuse to buy) housing in the exurbs, high gas prices are causing other behavioral changes as well. People are driving less by reducing the number of trips they take (e.g., by combining their tasks into as few round trips as possible) or consuming less gasoline by switching to more fuel-efficient cars. But (at the moment) gas prices are rising faster than car-makers can increase efficiency, and not everyone can afford to purchase a new car, so shifts in land use patterns promise to remain a vital coping strategy for cash-pressed families struggling with high gas prices.
This is interesting to me as a land-use teacher because it draws attention to a number of important questions. Key among them is the cost of delegating our system of land-use regulation to local governments. William Fischel’s influential theory of local government behavior predicts that local governments in fragmented metropolitan areas will regulate for artificially low residential densities, both to exclude land uses that consume more in government services than they generate in property tax revenue and in order to capitalize within home values the value of certain local government services, such as good public schools. Fischel recognizes that, given the incentives local governments face, fragmentation is likely to lead to increased sprawl. (This predicted relationship between fragmentation and dispersion is by and large, though not universally, borne out by the empirical studies. In the words of a 2006 memo by the Federal Reserve Bank of Boston, “research findings generally converge on the conclusion that fragmented government structure correlates with wider dispersion, i.e., more sprawl.”)
Sprawl notwithstanding, Fischel defends fragmented government because of the savings he thinks are generated by competition among local governments. Critics of (aspects of) Fischel’s theory, such as Lee Fennell, have pointed towards some of the pernicious social consequences of auctioning off certain services (such as education) through suburban housing markets. And many first-year property students have read the Mount Laurel line of cases, in which the New Jersey Supreme Court attempted to grapple with some of those consequences by requiring suburban governments to accept their “fair share” of low-income housing. Transportation costs represent a neglected piece of this puzzle. One of the downsides of dispersed, fragmented local government is heightened dependence on the private automobile to get from place to place. As gas prices go up, so do the costs of that dependence. Even if Fischel is right that fragmented local governments deliver certain services more efficiently than would a consolidated metropolitan government, in an environment in which rising gas prices exceed our ability to adapt by switching to more efficient automobiles, at some point the higher cost of moving people around within such a system will swamp out those benefits. (The problem of climate change represents another cost of this auto-dependent system. Thus, even if gas prices come down, or automakers come up with a cheap, electric car, we will have to grapple with the energy costs that fragmented local government encourages.)
Unless we are to consign lower-middle class Americans to a life on the sprawled out metropolitan fringe (or in tent cities), spending an increasing portion of their income to fuel their cars , we need to find ways to develop more affordable housing within the existing metropolitan footprint, where pedestrians, cyclists, and strap-hangers have a fighting chance. Given the incentives Fischel describes local governments as facing, it is unlikely that they will consent on their own to the provision of much low- and moderate-income housing within their borders. The solution seems to be either the creation of legal doctrines, like Mt. Laurel, that impose obligations on local governments to consider the good of the region in their land-use decisions or the shifting of land-use decision-making authority to higher levels of government, either at the regional or state level. (Of course, fights over schools are going to be a huge part of this.) Each solution has its pluses and minuses, but I’ve already frittered away enough time this afternoon, so I will have to save that issue for a future post.