By RICHARD A. OPPEL Jr.
Published: Tuesday, December 26, 2000
Until this year, Habitat for Humanity affiliates in Arizona and Colorado never felt a need to get involved in a political fight. But in the fall they jumped into a battle against a seemingly unlikely foe: the environmental movement.
In one of the most far-reaching efforts yet to curb suburban sprawl, ballot initiatives in both states proposed giving voters an unprecedented level of power to designate wide swaths of land off limits to new housing.
Officials with Habitat, which builds low-income housing for needy families, feared that the measures would drive up the cost of land and ''basically shut down our ability to acquire land and lots for growth,'' said Chris Wolf, the organization's director in Phoenix. So the Habitat affiliates joined with developers to oppose the initiatives; in Colorado, opponents even made a television commercial highlighting Habitat's objections.
Nobody argues in favor of suburban congestion. But increasingly the debate over sprawl has turned to whether laws intended to fight it are playing a role in driving up housing prices, at a time when housing affordability in many parts of the country has dipped to its lowest level in almost a decade.
The success of anti-sprawl efforts is evident in the increasing number of communities that have adopted measures like low-density zoning, moratoriums on building permits or voter-approved growth boundaries. Although the Arizona and Colorado initiatives were defeated last month, many similar local proposals in California passed, and battles over anti-sprawl laws continue to rage in suburbs outside Washington, Atlanta, Dallas and other big cities.
Although the battles have been concentrated in the rapidly growing South and West, sprawl has been a concern in the densely populated Northeast as well. Only two years ago voters in New Jersey approved borrowing $1 billion to help preserve about a million acres of farmland and woodland.
As anti-sprawl measures proliferate, developers have enlisted affordable-housing advocates to promote the view that the restrictions make higher home prices inevitable, in effect amounting to a tax on prospective home buyers that hits the working and middle classes hardest.
''One of the unintentional byproducts of efforts to control sprawl is to restrict the amount of land available for housing,'' said Nicolas P. Retsinas, a former Clinton administration housing official who is director of the Joint Center for Housing Studies, at Harvard University. ''When you restrict supply in the face of increased demand, what a surprise! Prices go up.''
Efforts to limit construction, critics say, can affect all types of housing, from apartments to mansions. Builders and other opponents contend that even when the limits mainly affect more expensive homes, the trickle-down consequences include rising prices for more modest housing.
But environmentalists and other supporters of growth controls say there is little proof that such measures have any significant impact on housing prices. Susan LeFever, director of the Rocky Mountain chapter of the Sierra Club, notes that cities without strong growth-control laws have seen huge run-ups in home prices, a result of the nation's economic boom.
''It's certainly easy to pull out examples of places with growth restrictions where the cost of housing has gone up,'' she said. ''But it's equally easy to pull out places that don't have growth restrictions where the cost of housing has gone up just as much.''
Unless there is a recession severe enough to slow suburban development, experts expect anti-sprawl measures to remain popular with voters and local elected officials.
California saw more growth-related proposals on local ballots this year than at any other time since 1990, before the state plunged into recession, said Bill Fulton, president of the Solimar Research Group, public policy analysts in Ventura, Calif. During the last four years, he said, there have been 118 slow-growth initiatives in California, nearly twice as many as in the prior four-year period.
Most of the proposals in California this year were approved, although a few larger ones failed, notably in San Francisco and Sonoma County.
''In an economic boom is when you see growth restrictions come back,'' Mr. Fulton said, ''but they tend to lag behind a few years.''
In King County, Wash. -- Seattle and environs -- housing costs have soared so high that county officials recently ordered a study of whether the state's rules restricting development outside cities was helping drive up prices.
The ''surprising conclusion'' of the report, due out next month, is that there is no proof the rules have more than a negligible effect on home prices, said Ron Sims, the county executive. He attributes the jump in housing costs to the region's tremendous prosperity and rising incomes, noting that the housing market flattened out this year after the Nasdaq swooned.
In Cary, N.C., though, an affluent town of nearly 100,000 outside Raleigh, Mayor Glen Lang says home prices are already being affected by slow-growth measures approved in the last few years.
''When you have demand and decrease supply, prices rise dramatically,'' Mr. Lang said.
Both sides of the debate point to the same example: Portland, Ore.
Development is limited outside the growth boundary that has ringed Portland since the 1970's, and critics contend that this is why the city has seen home prices skyrocket. According to the government's Office of Federal Housing Enterprise Oversight, average home prices in the Portland-Vancouver, Wash., metropolitan area have risen 148 percent in the last dozen years.
''The development controls have acted as a long-run drag on housing supplies,'' said Gerard Mildner, an associate professor of urban studies and planning at Portland State University. ''The desire to protect open space and farmland has trumped people's concerns about housing affordability.''
Defenders of the Portland boundary, however, note that cities without similar growth controls have also seen steep price increases over the same period, including a 128 percent rise in Denver and a 116 percent rise in Salt Lake City-Ogden, Utah.
A study published this summer in the journal Contemporary Economic Policy concluded that while the Portland growth boundary ''has likely imposed upward pressure on prices, the results indicate that the effect has been fairly modest,'' most likely less than $10,000 for a typical home. Higher land prices have been offset by a trend toward smaller lots and other elements of higher-density housing, said one of the study's authors, Eban Goodstein, an economics professor at Lewis and Clark College in Portland.
The debate over growth controls is made all the more intense because of the unequal way the nation's long economic boom has treated Americans. While the last decade has created tremendous wealth, many people -- teachers, police officers, nurses and many others in middle-class jobs -- have watched the cost of housing rise faster than their incomes.
The median price for a single-family home rose about 45 percent during the 1990's, according to the National Association of Realtors. For the wealthiest fifth of American families, that was no problem, as their mean incomes rose 57 percent during that time, according to the Census Bureau.
But the incomes of most other families failed to keep pace with housing prices. The least affluent two-fifths of American families, for example, saw their incomes grow just 35 percent.
While the hottest housing markets have cooled recently -- prices fell slightly in the San Francisco Bay Area, Seattle and Portland during the third quarter, according to the National Association of Realtors -- there has been no letup in much of the rest of the country. Prices rose 5 percent in the Midwest and 4 percent in the South during the quarter.
In the last decade, the rise in home prices has been offset somewhat by lower mortgage rates. But during the third quarter, housing affordability reached its worst level since 1992. (Affordability should improve in the fourth quarter, as rates have dropped a good bit since the summer.) Some experts are concerned that the drop in affordability will slow recent gains in the percentage of American families who own their own homes -- advances that have resulted partly from loans made on such less-restrictive terms as smaller down payments.
And concerns about affordability extend to renters: a study issued this year by the Department of Housing and Urban Development found that 5.4 million renter families either spent more than half their income on rent or lived in ''severely inadequate'' housing in 1997.
In Congress, developers have used the affordability issue to seek relief from restrictions on construction. But while builders argue that excessive growth controls can hurt the local economy, some local elected officials say there is also an economic danger in not doing enough to preserve natural amenities.
''If you're going to manage growth, you can't kill the goose that laid the golden egg,'' said Kirk Watson, the mayor here in Austin, where home prices have soared during the technology boom. Much of the credit for Austin's boom belongs to the city's beautiful rolling hills and other natural features, which have helped attract a talented labor force, the mayor said.
''The new economic paradigm is about the knowledge economy, and that is always going to follow the quality of life,'' Mr. Watson said. ''Part of managing this boom and growth is preserving what the knowledge economy was looking for in the first place.''
Photos: A recently completed housing development in growing Phoenix nearly encroaches on a park. (Associated Press); Chris Wolf of Habitat for Humanity says an Arizona ballot initiative would have crippled the Phoenix affiliate. (Jeff Topping for The New York Times) Chart: ''STATUS REPORT: Elusive Dream'' For all but the wealthiest families, income did not keep up with the rising cost of a home during the 1990's. All changes: 1990 through 1999. Chart shows cost of homes for poorest and wealthiest familes since 1990. (Sources: Census Bureau; National Association of Realtors)
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