Houston is often looked down upon by urban planners for the reason that it essentially lacks land use and planning regulations altogether. Many will (justifiably) argue that Houston is the epitome of unsustainable urban sprawl, with its endless suburbs and expansive freeway system that makes the region almost completely dependent on driving. Yet, Houston has a lot that it can teach us as well; in fact, over the past few decades it has enjoyed one of the most dynamic and affordable housing markets even with massive demand and growth, earning the city the title of the “Capital of the Middle Class.” I examined this dichotomy last December in a paper entitled Houston and Deregulation: Can a Truly Free Market City Suceed?
While the subprime mortgage crisis and the housing crash have wreaked havoc on the national economy, Houston’s housing market has remained stable and it’s economy relatively strong. In spite of it’s GDP growing as much as 40% faster than the Bay Area, coupled with an influx of 150,000 Katrina refugees in 2005, Houston’s housing prices have remained stable and low over the past decade because housing supply had consistently met demand. At the time of my research (going by October 2007-2008 housing prices), Houston’s median housing price had declined from $146,000 to $142,000, a mere 2.7%. Prices have dropped since then as credit markets have frozen up, yet still, Houston’s median home price for March 2009 is $138,000, or about 2.25 times the median family income, making housing still very affordable even in hard times.
In contrast, the Bay Area housing market has completely plummeted in the past year and a half. The Bay Area saw prices skyrocket over the past decade as demand for housing outpaced supply (in Arizona, Nevada, and Florida, the opposite occurred– housing supply outpaced economic growth). In late 2007, the bubble finally burst, and median housing prices dropped from $631,000 in October 2007 to 375,000 in October 2008 to 299,000 in March 2009, a total of 53%. Yet, compared to Houston’s housing market, Bay Area homes remain much less affordable, at around 3.25 times the median family income (not too bad considering in 2007 a family would have to spend 7 times their income to buy a house). With these overinflated prices, it’s no coincidence that government-subsidized housing and subprime mortages (essentially affordable housing loans) were much more popular in the Bay Area than Houston.
Yet, Houston is by no means free of problems. It leads the nation in highest daily vehicle passenger mileage (1st), highest individual transportation cost (1st), lowest public transportation ridership (1st), worst traffic (7th), worst ozone pollution (4th), worst smog (2nd), most traffic fatalities (1st), and most pedestrian fatalities (5th: keep in mind nobody walks!). Thus, Houston is among the most unlivable, unsustainable, and unhealthy cities to live in.
Can you have a city that is both affordable and sustainable? Believe it or not, the solution for Houston might not lie in more land use regulation, but less. Houston’s biggest public works expenses come from massive investments in automobile infrastructure. This sprawling transportation model manifests itself in the city’s parking, street and lot size regulations, which effectively prevent high density development and limit Houston from becoming a truly urban environment (even bars must provide 10 parking space from every 1000 square feet!). By liberalizing these requirements and shifting investments to transit (which is slowly but steadily occurring), Houston’s adaptive housing market could very well be one of America’s most transit oriented cities in 2030.
Of course, this last point is just speculation, but if there’s one thing I took away from this project, it is that when regulations are minimized and developers can quickly respond to shifts in the housing market, anything is possible. If there’s one thing the Bay Area can learn from Houston, it is that no-growth policies will wreak havoc on the economies and citizens of a region. We must make it easier for smart growth to occur, and speed up projects like Treasure Island, Alameda Point, and Hunter’s Point as long as they provide transit options and do not displace current residents. Otherwise, our housing market will end up just how it was before: unaffordable and unstable.
Want to learn more? Read my paper here