Growth-management advocates say that their policies protect farms and open space,
save energy and reduce air pollution, and reduce urban service costs. However, farms
and open space hardly need saving, as the nation has an abundance of both. There
are much better ways of saving energy and reducing pollution that cost less and don’t
make housing unaffordable. Finally, the costs of growth management are far greater
than the costs of letting people live in densities that they prefer.
As compared to the trivial or nonexistent benefits of growth management, the costs
are huge. Median home prices in growth-managed regions are typically two to four
times more than those in unmanaged areas. Growth restrictions also dramatically increase
home price volatility, making home ownership a riskier investment.
Growth management slows regional growth, exacerbates income inequality, and particularly
harms low-income families, especially minorities such as African Americans and Latinos.
The key to keeping housing affordable is exactly the opposite of what growth management
prescribes: minimizing the regulation of vacant lands outside of incorporated cities.
Allowing developers to build on those lands in response to market demand will also
discourage cities from overregulation lest they unnecessarily push development outside
Why CALIFORNIA is so EXPENSIVE
In 1963, the California legislature passed AB 1662, sometimes called the Knox-Nesbit
Act, to regulate city annexations and the formation of new cities and service districts.
The cities soon realized that they could force most new development (and associated
tax revenues) to stay within their borders by denying applications for new cities
and service districts.
The barriers to growth created by this law were compounded by the 1970 passage of
the California Environmental Quality Act, which required a detailed analysis prior
to any public actions. State courts held that expanding an urban-growth boundary
required such an analysis, the cost of which became so prohibitive that boundaries
are almost never expanded.
For example, only 34 percent of the five counties in which the San Francisco–Oakland
urban area is located have been urbanized. About 20 percent is public land, leaving
45 percent available for urbanization. But this land, although it is private, cannot
be developed because of growth boundaries and other government restrictions. Similarly,
two-thirds of the three-county Los Angeles area (Los Angeles, Orange, and Ventura
counties) and more than 80 percent of San Diego County are undeveloped rural land.
Between 1970 and 2000, 11 more states passed statewide planning laws, most of which
ended up requiring urban-growth boundaries around most or all cities in those states:
Vermont (1970), Oregon (1973), Connecticut (1974), Florida (1985), New Hampshire
(1985), New Jersey (1986), Maine (1988), Rhode Island (1988), Washington (1990),
Maryland (1992), and Delaware (1995). Georgia passed a state planning law in 1989
but never implemented growth boundaries. Tennessee passed a 1998 planning law that
requires urban-growth boundaries, but those boundaries are solely used to determine
where cities may annex land, not to manage growth. Florida partially repealed its
law in 2011.
Loudoun County, in northern Virginia, uses large-lot zoning to discourage new development,
while Montgomery County, Maryland, has placed most of the undeveloped land in the
county in either an agricultural reserve or in easements. Together, these limit the
growth of the Washington, D.C. urban area.
Most other cities in America have zoning, but zoning is not growth management. In
most cases, zoning exists to protect existing neighborhoods from unwanted intrusions,
and many cities and counties readily change zoning at the request of landowners when
the changes will not significantly affect neighbors.
Growth management also affects housing markets in cities adjacent to those states.
Since Connecticut and New Jersey both have growth management, New York City is affected.
Since Maryland and northern Virginia counties both have growth management, Washington,
D.C. is affected. In total, around 40 percent of all American housing is made artificially
expensive by growth management.
Saving Farms, Forests, and Open Spaces
The supposed need to protect farms, forests, and open space from urban sprawl is
probably the most cited reason for growth management. Yet America is a big country
and urbanization is no threat to the nation’s abundance of green spaces. Creating
artificial shortages of housing and other urban land uses in order to protect lands
that are abundant is poor policy.
The U.S. Department of Agriculture says that, as of 2012, the 48 contiguous states
have more than 900 million acres of agricultural land, of which only about 362 million
acres (40 percent) is used for growing crops. Moreover, the number of acres needed
for growing crops has shrunk from 421 million acres in 1982 because per-acre yields
of most major crops have grown faster than our population.16 As a result, says the
department, urbanization “is not considered a threat to the Nation’s food production.”
Forests are also abundant. The Forest Service says that the United States had 766
million acres of forests in 2012, up from 721 million acres in 1920.18 The increase
is mostly due to the automobile and other motor-powered vehicles that replaced horses
and other animal power and allowed farmers to convert tens of millions of acres of
pasture land to croplands and forests. Timber inventories have grown from 616 million
cubic feet of wood in 1953 to 972 million cubic feet in 2012 because forests have
been growing and continue to grow considerably faster than they have been cut.
The Census Bureau says that, as of 2010, only 107 million acres of land have been
urbanized in the contiguous 48 states, or just 3.6 percent of nearly 3 billion acres.
The most heavily developed state, New Jersey, is still 60 percent rural open space.20
Saving Energy and Reducing Pollution
The claim that denser development will save energy by reducing the distances people
need to drive was made in a 1973 book, Compact City, and has been an article of faith
among urban planners ever since. In fact, as explained in detail in a previous Cato
policy analysis, The Myth of the Compact City, the data fail to support this idea.
As noted in that paper, the Transportation Research Board asked David Brownstone,
an economist with the University of California– Irvine, to study this issue....Brownstone
concluded that the link between density and driving was “too small to be useful”
in saving energy or reducing pollution or greenhouse gas emissions.25
Minimizing Infrastructure and Urban Service Costs
The third major justification for growth management is that it reduces the costs
of infrastructure and urban services. A city that is twice as dense as another doesn’t
need as many miles of streets, water and sewer pipes, and other infrastructure lines.
This seems so obvious that urban planners rarely bother to test it.
However, at higher densities [higher than rural], urban service costs increased with
increasing densities, meaning that any urban density growth management could actually
lead to higher urban service costs.
THE COSTS OF GROWTH MANAGEMENT
Compared with the small and sometimes imaginary costs of sprawl, the costs of growth
management are huge and reverberate throughout the entire economy.
Housing and Real Estate Prices
The most visible effect of growth management is a dramatic increase in housing prices
and concurrent decline in housing affordability.
Home Price Volatility
Another predictable result of limiting the supply of land for housing is increased
volatility. “Restricting housing supply leads to greater volatility in housing prices,”
High housing and real estate prices depress growth rates for two reasons. First,
residents and investors are forced to put a higher share of their incomes into real
estate, leaving less money to save or invest in more productive assets. Second, businesses
are likely to move their operations to places with more afford able real estate.
According to Thomas Piketty in his book, Capital in the Twenty- First Century, income
inequality is growing because returns on capital are greater than the rate of economic
growth. But a refinement of Piketty’s work by MIT researcher Matthew Rognlie reveals
that housing is the main source of growing inequality.
Effect on Low-Income Groups
Low-income families are the hardest hit by growth management. Some urban areas have
seen an outward migration of low- and, in a few cases, middle-income families because
of high housing prices. As Glaeser writes, high housing prices will make a city “less
diverse and instead evolve into a boutique city catering only to a small, highly
Rebuilding existing neighborhoods to higher densities will fail to make housing more
First, construction of multifamily housing costs more per square foot than single-family
housing. A study in Portland found that a multifamily dwelling typically costs 23
percent more per square foot than a single-family one. The study also found that
high-rise housing costs per square foot were more than double the cost of two-story
Second, land costs in areas designated for high-density housing are often very high.
While an acre of land suitable for single-family homes at the urban fringe might
cost around $20,000, or $2,500 to $5,000 per developable lot, an acre of urban land
designated for redevelopment to higher densities may cost hundreds of thousands or
millions of dollars. Even if 50 units of housing are built on a single acre, the
land cost per housing unit can be much more than for low-density greenfield developments.
Third, the cost of installing infrastructure in areas of existing development to
support higher-density development is likely to be much higher than the cost of infrastructure
in greenfield development.
For all these reasons, high-density housing ends up being more affordable than low-density
housing only if residents are willing to accept much smaller quarters in the high-density