Sometimes The Market Demands Higher Density -- Even If Libertarians Don't

 

SB 375 has left a lot of public commentary in its wake, but none more hilarious than a hostile editorial in the reliably libertarian Orange County Register, which refuses to believe that anyone in the homebuying marketplace would ever want to purchase anything other than a single-family house on a large lot.

The editorial -- titled “Want to live in a condo by the train tracks?” – provides a few chuckles in the way it characterizes SB 375’s impetus (calling smart growth a “highly controversial and authoritarian concept”) and outright guffaws in the way it mischaracterizes what the law actually does. The editorial claims: “SB375 will transfer decisions about local developments from property owners and local cities to state environmental officials.” (In fact, the law specifically states that local land-use authority is not being usurped.) Indeed, the Register makes Tom McClintock’s remarks on the same topic seem measured in comparison.

Most amusing of all, however, is the way the Register conflates the free-market idea of what people want with the socially conservative idea of what people should want. Simply put: Despite its supposedly free-market orientation, the Register can’t imagine a world in which some people might answer their derisive question –“Want to live in a condo by the tracks?” – by saying yes.

The Register’s underlying assumption is that everybody wants to live in a single-family house on the largest possible lot. Left to its own devices, the market would produce only single-family subdivisions and nothing else. Therefore, the construction of anything other than single-family houses must, ipso facto, be the result of government coercion rather than market choice.

In fact, the opposite is true – especially in a crowded and expensive place like Orange County. Left to its own devices, the market would probably produce more high-density housing, because a significant portion of the market either does not want or cannot afford a traditional suburban lifestyle. Meanwhile, local government regulation – zoning -- often interferes with the market by ensuring low-density development in many areas where higher-density housing would succeed in the marketplace. This is especially true in affluent conservative suburbs, where homeowners use regulation ferociously to protect their turf. In recent years, two Orange County cities -- Mission Viejo and San Juan Capistrano -- have blocked higher-density housing proposals because of public opposition. This is part of the reason SB 375 is necessary.

But this is an inconvenient truth for the Register and the rest of the libertarian-leaning anti-anti-sprawl crowd. It seems to me that these folks – including such pundits as Randall O’Toole and sometimes even Sam Staley, who I’ve worked with and like – are so tied to conservative social values that they can’t tell the difference between what people want and what they should want. In fact, however, conservative social values and the free market sometimes part.

It may be that social conservatives believes that everyone should live in a traditional family setting, and to them this may well mean everybody should live in a traditional single-family suburban neighborhood. But that is not the same as saying that this is what the market actually demands.

Even in Orange County, the homebuying (and renting) public is more diverse than ever before. There are singles and childless couples (some same-sex) and empty-nesters, many of whom prefer and can afford a more suburban lifestyle. There are vast numbers of families with modest incomes who might aspire to a suburban lifestyle but will never be able to afford it. There are even a growing number of working-class and middle-class families who are unwilling to endure the long commutes required to have a traditional suburban lifestyle in Southern California. All these different groups put together represent a large portion of the home market – maybe not a majority, but probably 30-40% at least.

And even if all these folks wanted single-family homes in Orange County, the market couldn’t accommodate them. Land there is so expensive now that most developers would choose to build higher-density projects; maintaining a single-family landscape would require enormously heavy-handed government regulation. And even if all new housing in Orange County consisted of detached single-family homes, those houses built would cost millions of dollars each. (Even in the recent real estate crash, the median price of a single-family home in August was $959,000.) That’s far beyond the reach of most of “the market”.

It would be one thing for the Register to argue, Peter Gordon-style, that government has no business regulating land use, so zoning should be abolished and let the chips fall where they may. That’s an intellectually honest libertarian position and I can respect that.

But it is unfair to smart growth advocates – and to the idea of libertarianism – to suggest that the free market should be unshackled only for those who agree with the Register’s social values – and not for anybody else.

-- Bill Fulton