Connecting the Dots on Housing

tannerwood 2

Tannerwood, North Bend. The developer calls this “low impact development”.

It’s not often that national news and policy affects us directly, but there’s at least one issue that affects everyone: housing.  The US has built in incentives to sprawling houses for decades, and a recent report estimates this subsidy at $450B a year.  The Atlantic Cities published an excellent summary of this report this Tuesday that’s worth reading. 

Smart Growth America’s report counted 50 federal programs that lean on the real estate scales in some way, whether through tax credits like the home mortgage interest deduction, loan guarantees through the Small Business Administration or Federal Housing Administration, or grants for low-income housing. The report did not count investments by so-called “Government-Sponsored Enterprises” like Fannie Mae and Freddie Mac. It didn’t include non-direct spending on things like transportation or water infrastructure that also has a major impact on real estate. And it didn’t include federally owned real estate (of which there is a lot)…

Stepping back and looking at the whole collection, it’s clear that the federal government has favored many types of development at the expense of others, often with weak or outdated logic. The government dramatically favors homeowners over renters. Its support is heavily skewed toward single-family homes over multi-family developments (the FHA, for instance, funneled just one-tenth of its $1.2 trillion in loan guarantees over the past five years toward multi-family housing).

The mortgage interest deduction – a program first created in 1913 with the ostensible aim of boosting homeownership – curiously encourages investments in second homes. As we’ve written before at Cities, that massive tax break also primarily benefits upper-income households, despite its billing as a boon for the middle class.

In another story published in the Atlantic on the same day, it’s estimated that sprawling development will kill off tens of millions of acres of forest in the US by 2050:

Scientists at the U.S. Forest Service and partners at universities, non-profits and other agencies predict that urban and developed land areas in the US will increase 41 percent by 2060. Forested areas will be most impacted by this expansion, with losses ranging from 16 to 34 million acres in the lower 48 states. The agency highlighted the results of a new study in a press release issued last month.

And forests aren’t the only land we’re losing:

In 2010, a study by the American Farmland Trust found that 41 million acres of rural land had been permanently lost in the preceding 25 years to highways, shopping malls, and other development. The rate of recent farmland loss at the time of AFT’s report was an astounding acre per minute.

Bringing this all back to a local discussion, let’s look at for-sale housing inventory in King County:

Another record low for inventory, dropping below 4,000 single-family homes for the first time on record.

The next building cycle will probably come sooner rather than later, and if we get federal policy right maybe we can build up instead of out, saving the farmland and forests that help make this region great.

Comments

  1. Mark Y says

    I never understood the deduction for a second home. Who needs two homes, and why does the government feel the need to support that?
    It’s so dumb, I can claim the interest paid on my sailboat because the law says it’s a “second home”. As long as it has a galley a sleeping berth and a toilet you’re good to go.

      • AndrewN says

        You can have two homes. I believe Mark Y is trying to point out that taxpayers should not be subsidizing that decision. What public good comes from subsidizing it? Construction jobs? That money would be better spent elsewhere or going to debt reduction.

      • d.p. says

        And what business is it of yours whether people people have kids, or what their marital status is? For that matter, what business is it of yours whether a citizen or resident male happens to be of conscription age?

        Oh, whoops, it works both ways!

        The government mandates/prohibits/incentivizes/disincetivizes all sorts of things, subject to the needs and values of the citizens its purports to represent. Most, if asked, would probably find the second-home mortgage deduction to be misallocation of resources, as it only incentivizes a purchase that would likely happen anyway, contributing nothing to the economy at large and merely making the rich richer.

        In poll after poll this year, the country at large supported higher taxes on the wealthy by a wide margin. Your side was squarely at odds with public opinion on that one, which is why you have expended every last ounce of your political capital clinging to it.

        Enjoy your second home. Don’t expect anyone else to contribute a cent to it.

      • Daved says

        “Don’t expect anyone else to contribute a cent to it.”

        Nobody has and, by the way, it’s more of a weekend cabin.

        If you want to raise rents, go ahead, get rid of the mortgage tax deduction. Most folks I know with second “homes” rent them out and would immediately pass any increased costs for that home onto their renters. I know you all like to think “second home = rich people!” but fact is, the vast majority of second homes are rental properties.

      • Daved says

        ” the country at large supported higher taxes on the wealthy by a wide margin.”

        The country wants free stuff and wants someone else to pay for it. Taxes are the most progressive they’ve been since 1979 according to the NYT, and those of us in the top 20% are paying far and away most of the taxes in this country. It’s the middle classes who need to cough up more.

        http://www.nytimes.com/interactive/2013/01/05/business/growing-tax-burden-for-the-wealthiest.html?ref=business

      • Matt Gangemi says

        Under Eisenhower the top rate was 91%. Taxes on capital gains were at 35% as recently as the ’80s – now at 15%.

        We tax the rich because they’re the people with all the money. We can debate (though probably in another forum) whether that’s fair, but they’re currently getting a pretty sweet deal. Giving up subsidies for vacation homes doesn’t sound like an unbearable hardship.

      • Bernie says

        A rental home does not qualify for the mortgage deduction. If most people you know are doing that it’s because they’re lying to the IRS about their rental income. Interest paid on a rental property is an expense which is a direct offset to income. So are property tax, repair costs, etc. The tax situation for a rental is actually significantly better than for owner occupied.

      • Lack Thereof says

        It’s the middle classes who need to cough up more.

        Problem is that the middle classes have less to cough up than they used to. Middle class wealth (inflation adjusted) peaked back in the 1970′s and has been on the decline ever sense. Remember, the middle 20% is only pulling in 32-69k per year and have a net worth around 72k. There’s not a whole lot of blood to squeeze out of those stones.

        As the wealth concentrates in particular classes, so must the taxes follow, lest they become a larger hindrance to the economy. There’s not a whole lot of blood in those lower stones, squeezing them will only hurt.

        I would complain that the fight to protect the “middle class” in Congress isn’t about the middle class at all – they’re bickering about the difference between 250k and 400k / yr. This is so far from the middle class that I don’t understand their reality, but it plays good on cable news I guess.

        Also, this is SO off topic.

      • d.p. says

        Thank you Bernie. Rental properties are irrelevant to this discussion.

        Daved, for someone so self-congratulatory about his “success”, shouldn’t you be smart enough to get that the left chart in your link clearly shows the exact opposite of what you claim?

        The tax rate on higher-income individuals has dropped precipitously. Period. Only because those at the very top have seen their income grossly inflated (in proportion to the role they actually play in the economy) have they continued to contribute a large portion of the total federal tax dollars collected.

        Short version: when the wealthy steal all the money from everyone else, they’re the only ones who will be making enough to pay taxes. Even when those taxes are much lower per dollar of income than when the income was more rationally distributed.

        Structural revenue deficit, defined.

        The chart on the right, of course, also ignores the significantly lower total share of the non-federal tax burden that the wealthy assume.

      • aw says

        Matt: “Taxes on capital gains were at 35% as recently as the ’80s – now at 15%.”

        Long-term capital gains are 20% for those above $400k (or 450k) in income. 15% only applies for those below the threshhold. Which is dumb, IMHO.

      • Bernie says

        Which brings up another tax advantage given to home ownership, that is the avoidance of capital gains. If you sell AAPL and buy AMZN you pay capital gains (unless it’s in a retirement account). If you sell a home and use the money to buy another there’s no capital gains. That was part of the reason for the real estate bubble. And there is a one time exemption for cashing out a home even if you don’t buy another one. Over 30+ years that can be a big chunk of change.

      • Nathanael says

        aw — you haven’t even listed the worst and most embarassing capital gains tax break — the first $35,350 (more if married) is taxed at ZERO PERCENT.

        All the capital gains tax breaks are unconscionable. Basically, they reward wealth and punish work. Now you know why the rich are getting richer, the poor are getting poorer, and the US has no social mobility (the children of the rich are rich, the children of the poor are poor).

        If you make $35,350 in long-term capital gains (and no other income), you pay ZERO in federal tax. Yes, that’s right, ZERO. The capital gains rate is ZERO. The Obamacare unearned income tax doesn’t kick in at that level. There’s no payroll tax. It’s just tax-free money!

        This makes no sense whatsoever as public policy (unless the policy is “work is for suckers”). If anything, the first $35,350 of EARNED income should be taxed at 0%.

      • Bernie says

        @Nathanael, you make a lot of good points. One counter point would be that a TINJ pays no SSI and doesn’t receive any benefits. So if they’re not part of the problem (entitlements) then they’re part of the solution. Of course it’s not that simple. Someone with a million dollar home pays more for insurance than someone with a $250k home. Wealthy people do get more from government assurance that we won’t become the next Syria than someone who’s destitute and should therefore pay more to guarantee the preservation of their wealth. But in large part we extract that through corporate taxes. You can’t really tax a corporation. You are really taking the tax/profit from the [rich] investors that own the corporation (i.e. the stock holders).

  2. RapidRider says

    I’ve never understood the deductions for any mortgages beyond your first. If you can’t afford a second house and mortgage without tax breaks, maybe you shouldn’t be risking the investment.

    • David B. says

      Oh, it’s completely understandable: it’s called class privilege. If you’re in a privileged position in society, you can use that privilege to shape society’s institutions so as to give yourself further privilege.

    • Eric says

      I think the benefit for middle-income taxpayers for even the first home mortgage deduction is overstated. Seattle’s median household income is just over $60k/year. Let’s suppose a married couple with one child at that income level manages to save up enough for a down payment on a small single-family home in Seattle that costs $300k. They borrow 80% of the value, or $240k.

      Mortgage interest goes under the itemized deduction section on a tax return, so the sum total of all itemized deductions must exceed the standard deduction ($11,900 per year for a married couple) to even be worth claiming. Some other common deductions that homeowners can take are property taxes, state sales taxes, and charitable contributions.

      Current interest rates on a 30-year mortgage are around 3.5%, so the family would pay about $8,400 in mortgage interest the first year. I looked up a few random Seattle single-family homes on the King Country Parcel Viewer, and the property tax tends to be approximately 1% of assessed value ($3,000 for this hypothetical family). The IRS sales tax deduction calculator says a three-person family making $60,000 can deduct $1,279 for sales taxes in Seattle (or actual expenses if they saved all receipts for the year). That brings the total deduction to $12,679 before charitable contributions or other deductions are factored in. Let’s assume $500 as a generous estimate for other deductions.

      All that brings total itemized deductions to $13,179, or $1,279 higher than the standard deduction. This family would likely be in the 15% tax bracket, meaning the mortgage interest deduction saves them a grand total of $191.85 on their tax return. That’s just the first year. As the family gradually pays off their mortgage, the amount they pay toward interest each year will decrease. Meanwhile the standard deduction will increase with inflation. After a few years of this, the standard deduction will catch up with this family’s itemized deductions, so the mortgage interest deduction will stop giving this family any benefit at all.

      The idea that this tax deduction acts a significant incentive toward homeownership for average people strikes me as rather absurd. The bulk of this deduction’s benefit goes to people who are rich enough to qualify for large mortgages on second homes but not quite rich enough to buy those homes without a mortgage at all.

      • Bernie says

        It only works out that way because interest rates are currently insanely low. Double that $8,400 to $16,800 for a more historically average 7% rate (it was low teens in the mid 80s) and it’s a pretty big deal. The amount paid in interest remains the bulk of the payment on a traditional 30 year mortgage for at least 10 years which is longer than most people stay in a home. Most likely someone will buy up when they move. Also, particularly in Seattle, it’s a single individual buying the home. Can’t claim the dog as a dependent so the standard deduction is only $5,950. About two thirds of taxpayers take the standard deduction. The home interest deduction is the single greatest tax break most people will ever see since it is the entree to being able to itemize.

      • Nathanael says

        FYI, a “traditional 30 year mortgage” (with the “traditional” 20% down) is actually an oddity too.

        Before the 1930s, a typical mortgage was 10 years or 20 years, 50% down. Which makes economic sense.

        The 30-year-mortgage, 20% down, was invented by FDR as a quick hack to deal with the problems of mass foreclosures during the Depression; by refinancing people into these extra-long mortgages, their payments dropped to managable levels and he didn’t have to simply tell the banks to pound sand.

        This mortgage policy, since the 1930s, has made buying-with-a-mortgage far more common than its historical 19th-century and earlier levels. This is not a good thing in the long run, as it turns out — it’s substantially reduced the rates of *actual* (outright) homeownership and given the banks a huge amount of leverage to cheat people.

      • Bernie says

        I’m old but not quiet old enough to remember the 30′s. Prior to the last meltdown, at least for the previous 30 years the “traditional” down payment was only 5%. We were really outliers in the 80′s to put down 10%!

        given the banks a huge amount of leverage to cheat people.

        Of course banks and credit card companies are predatory. But it’s really not that hard to out smart the banks. If you can buy, pay less in after tax income than renting, and benefit from long term appreciation what’s not to like?

      • Lack Thereof says

        Bleh. I’m putting down 15% on this short-sale I’ve been trying to pick up for months and months and months.

      • Nathanael says

        Lack: watch out for clouded title. Anything which has MERS involved is gonna have clouded title. If you want to own the property, rather than merely a claim on the property, you need a proper chain of title recorded at the correct time at the local courthouse.

        This did not happen with the resold/repackaged mortgages for the last 20 years. The banks shredded original paperwork and then forged documents to cover it up.

        The result: nobody who buys a house which went through one of these resold mortgages has clear title, unless they bother to go through a long string of quiet title cases.

        Bernie: THIS is what I’m talking about when it comes to predatory.

        Most of these national banks are businesses which you do not want to deal with at all; they have “foreclosed” on people who had made every payment they were supposed to, using various fraudulent techniques (including pretending they didn’t receive payments, making up fake fees, etc.) You want to have absolutely nothing to do with them.

        Back when the government actually regulated the banks, before the 2000s, you would likely be able to outsmart them. Now that they get away with lying to the courts — please do look up some of the history of foreclosure fraud, at Naked Capitalism, 4closurefraud, Foreclosure Hamlet, Matt Weidner’s blog etc — it has become a lot more difficult and the only safe thing to do is to have NO business relationship with the criminal megabanks.

      • Nathanael says

        FYI, Bernie, I feel lucky to have been taught about the past by my grandparents, who were born in the the 1890s and 1910s. (Long-lived families.) The result is that I have more second-hand information about how things changes in the 20th century than most do. It inspired me to do yet more research; history is interesting.

        Unfortunately, most people don’t know economic history, so we’re condemned to repeat it.

  3. Sam says

    The highest UN estimate has the world population reaching 16 billion people by the end of the century. “Build up not out” policies may slightly slow the destruction of the earth’s resources, but it won’t stop it. Stopping population growth has to be a part of any meaningful solution, otherwise you’re just rearranging deck chairs on the Titanic.

      • Nathanael says

        And, Sam, we know how to stop population growth.
        (1) educate women
        (2) give women legal rights
        (3) make those rights actually enforceable (still working on this in India)
        (4) make cheap birth control availabe to women

        Women will choose to have fewer babies within a generation. (Notice, men won’t; women will. Something about childbirth, probably. Women have to be given the power.)

        Want to do more?

        (5) reduce infant and child mortality
        High infant mortality is a major reason why women choose to have “extra” children.

    • Matt Gangemi says

      The equation is impact * population. Shrinking one is just as good as shrinking the other, though I’d prefer to shrink both.

      What’s your proposal to shrink the US population?

      • Matt Gangemi says

        That may actually increase world population, since the US has a lower birthrate than the countries people immigrate from.

      • Schuyler says

        And Daved’s hypocrisy is revealed! You don’t want the Gov. telling people what to do with their land, but support restrictions on immigration.

        Here’s a hint: the globe, for the most part, is a closed system. It doesn’t matter if climate changed by people in Guadalajara or Calgary or Dar es Salaam.

        The best way to reduce population growth is to improve the economy in a country. This leads to lower fertility rates.

      • Dave says

        “The best way to reduce population growth is to improve the economy in a country. ”

        You could try communism, that always kills off good portions of the population too.

      • Daved says

        “The best way to reduce population growth is to improve the economy in a country”

        …….and the best way to do that is through free market capitalism (regulated within reason) that respects and supports private property rights.

      • David L says

        Just to be clear, a mortgage interest deduction is in no way a property right. You’d still have all your property rights if the deduction were abolished this afternoon.

      • Mike Orr says

        “That may actually increase world population, since the US has a lower birthrate than the countries people immigrate from.”

        Birthrates are decreasing all over the world; Europe and the US just had a head start. But as women get educated and have more choices in Asia, Africa, and Mexico, their birthrates are falling too. There’s just a 20-year gap as their baby boomers grow up. Their will be more babies because those boomers are so numerous, but each of them will move toward the replacement rate (2.1 kids per woman) or below. The net estimate is for the population to rise from 6 billion to 9 billion and level off.

      • Nathanael says

        Dave d: there’s now more people migrating from the US to Mexico each year than there are migrating from Mexico to the US. Mission accomplished: the US now sucks so bad people prefer Mexico.

        Was that really what you wanted to do? Reduce immigration? Immigration is a sign of *desirability*. Reduced immigration is a really, really bad sign.

  4. Charles says

    I wouldn’t be too hasty to create a bandwagon behind the call to ditch home mortgage tax deductions. And I wouldn’t cite low inventory in King County as a symptom of what is wrong.

    I can agree that government policy has either by direct effort or by side-effect encouraged sprawl. But I see it as an artifact of our economic system over all that requires “growth”.

    Home ownership either has a sociological and economic benefit that government should encourage or it doesn’t.

    As for the housing inventory concern, when you have lots of people with underwater mortgages, it doesn’t encourage sales until they can recover their investment. Further, foreclosed properties now in bank or financial firm possession often are held off the market. There are in excess of 3 million unoccupied dwelling units in the US. Not all of those are 2nd homes.

    • David L says

      Home ownership arguably has a sociological benefit to a certain extent, although we have gone beyond helping people own homes into the realm of punishing renters.

      Expensive home ownership and second home ownership doesn’t have any sociological benefit.

      Get rid of the deduction on interest for any mortgage other than one on a primary residence. Limit the mortgage interest deduction to a percentage of reasonable market-rate interest on a single mortgage of no more than, say, $350,000. To avoid a shock to existing homeowners, phase in the limit.

      • RossB says

        I think there is a cultural benefit to home ownership (although it is debatable). As David said, the way we go about it is flawed. I’m not sure why it has to be tied to mortgage interest. I think a better system would be to simply award a first time tax credit to home buyers. Like all tax proposals, it could end up getting messy (as the mortgage tax deduction has become) but a tax credit benefits low income folks more than a tax deduction. A tax deduction encourages someone to buy a more expensive house, which is certainly doubt is what we, as a society want.

        As he mentioned, you would want to phase out the old mortgage tax deduction.

      • Nathanael says

        I strongly support home OWNERSHIP. What I don’t support is MORTGAGES. When people make enough money to buy homes outright, that’s when we’ll have higher home OWNERSHIP.

      • Nathanael says

        Please note that it should be possible to buy rowhouses and condos and half of a duplex, as well as to buy detached single-family houses.

    • Matt Gangemi says

      “And I wouldn’t cite low inventory in King County as a symptom of what is wrong.” I didn’t intend to. I cited inventory to show that the next building boom might hit us soon, and I’d prefer we build inward instead of outward.

    • John Bailo says

      60% of the deduction goes to high value property owners in Manhattan and San Francisco. It’s at present a political reward for large campaign donors of the Democrat party.

  5. Brent says

    The overwhelming burden of the city code tells developers “We would prefer you go build somewhere else. Now, go away, please.” It pretty much undoes whatever success the Growth Management Act has achieved.

  6. Sam says

    My proposal to shrink the US and world population is to first start the conversation about how it’s is a critical issue. The topic is taboo. It’s the third rail of topics when resource destruction is being discussed. Let’s say we build up not out, 500 years from now, without population control, do you see there being any fish left in the sea, or any forest left? We can’t prefer to do both, we have to do both.

      • Ryan Carson says

        Free, readily-available birth control for every person that wants it, including family planning education, and increased funding for planned parenthood. It’s a start.

      • Nathanael says

        Ryan: I’d add government policy encouraging the emancipation of women, worldwide. This isn’t so much of an issue in the US, or even China, but in places like Saudi Arabia, it’s a huge issue. The US needs to stop propping up regressive, sexist governments like Saudi Arabia.

        There’s a reason the male government of Saudi Arabia supports the oppression of women and is opposed to birth control. Look up how many children Ibn Saud had. (Hint: nobody’s actually sure how many there are, but there were at least *41*.)

        This sort of behavior is the reason *women* need to be in charge of reproductive rights in order to stabilize and reduce the population.

    • John Bailo says

      The US population would have shrunk in the last few decades if it were not for immigration…probably about 270 million. And most countries are heading down towards replacement rate or below (Europe has been there for years).

      Mexico’s birth rate has dropped from 6 to 2! Immigration from there ground to a halt in 2006. I am just back from a trip to Puerto Vallarta on the west coast…while that city is not truly representative, there are more jobs than people who can fill them! The only areas that have recently kept up high birth rates are the Middle East and Africa…and those are slowly coming down.

      Most estimates for world population growth peg it at around 8 billion by the middle of the century…but there are other estimates that think the population crash is coming sooner, or may have already started in places.

      • Lack Thereof says

        The US population would not have shrunk. Everyone is repeating this misrepresentation all over the internet.

        Birth rates are down, it is true. We are currently below 2 children per fertile woman. However, life expectancy is up and births still outnumber deaths 2:1 annually, as they have for a long time.

        The US native-born population will only begin to shrink once the baby-boom generation begins to die from old age. Until that day, even if you somehow halted immigration, the US would continue to grow.

      • John Bailo says

        What’s Driving the Decline in U.S. Population Growth?

        (May 2012) Between 2010 and 2011, the U.S. population increased by 0.7 percent, after averaging 0.9 percent growth each year from 2000 through 2010.1 The United States added just 2.3 million people from 2010 to 2011, compared with 2.9 million from 2005 to 2006, just five years earlier.

        The decline in U.S. population growth is likely due to a confluence of factors: lower levels of immigration, population aging, and declining fertility rates.

        A drop in net immigration to the United States is a key factor in the country’s declining population growth rate.

        http://www.prb.org/Articles/2012/us-population-growth-decline.aspx

      • Mike Orr says

        “life expectancy is up”

        Life expectancy shot up dramatically in the first half of the 20th century. It has now leveled off and may be declining, as the effects of hormones and plastics and pharmaceutical waste and toxins in the food chain become more manifest. Plus the fact that “the 99%” are losing purchasing power and more of them are wondering, “Why would I want to live to 100 when my money will probably run out by then and I may need a nursing home?” Fear and pessimism drive down life expectancy as well as birth rates.

      • Bernie says

        . It has now leveled off and may be declining,

        Looks to be still on a steady increase to me. The double whammy for medicare and medicaid in our world’s most expensive health care system is that it isn’t making us any healthier it’s just keeping sick people breathing longer. For transit that means expensive relatively low ridership programs like Access will steadily eat more and more of the budget unless social welfare programs are severed from the mission of providing transit for the general public.

  7. Bernie says

    It would be nice if the GMA prevented clearcut disasters like Cascadia, now named Tehaleh or the planned cluster out in Black Diamond. However, I don’t see the mortgage deduction for second homes being the driver here. A second home could just as easily be a condo at a ski area or tropical paradise. I do agree the deduction needs to be scaled back, again, because the Treasury is broke. But it has to be done slowly to prevent turmoil in the housing market and the overall economy. Start by limiting the overall deduction to something like $70k per year. I’m pretty sure that would only affect the top 1-2%. That’s fairer than saying Norman can write of $100k on his McMansion but Andrew can only write of the $50k on his villa and not the $50k on his penthouse. Then slowly bring down the total or let inflation do the job of scaling it back. I could also support a lifetime cap on the total deducted of say $2 million.

    • David L says

      We need to do both. Limit the amount and restrict it to one mortgage that must be a primary residence.

    • Nathanael says

      Would work.

      It’s worth remembering that the mortgage interest deduction is a leftover from an older tax code in which ALL interest on ALL loans, including credit cards etc., was deductible.

      There’s actually an argument for going back to that tax code, but as long as student loan interest (etc) is not deductible, the mortgage interest deduction needs to be phased out.

  8. John Bailo says

    Developed Land- Despite all the hand wringing over sprawl and urbanization, only 66 million acres are considered developed lands. This amounts to 3 percent of the land area in the U.S., yet this small land base is home to 75 percent of the population. In general, urban lands are nearly useless for biodiversity preservation. Furthermore, urbanized lands, once converted, usually do not shift to another use.

    http://www.westernwatersheds.org/watmess/watmess_2002/2002html_summer/article6.htm

    • Lack Thereof says

      Your paper and Matt’s study seem to contradict one another. Your paper claims a total of 66 million acres are developed land. Matt’s study claims in the past 25 years we have developed 41 million acres of pre-existing farmland into housing, in addition to whatever wild land was developed.

      This can’t add up, or else we would have had practically no developed land 25 years ago, and that’s not how I remember it.

      It’s possible that all the land conversions counted in Matt’s study are in areas considered “Rural Residential” in your paper, which would have considered this development a lateral move, and no significant change in land use. However, the consumption of farmland for housing here must result in the creation of new farmland somewhere else, where it will likely consume new wild lands. If this is true, then it would show that we have nearly doubled our developed lands over the past 25 years, since the “rural residential” category is around the same size as “developed land”.

      Also, 3% is a lot, considering the sheer size of the US with respect to our population. There’s little we can do about the size of our farmlands (reducing farm subsidies would be a start, but that puts us head-to-head with agribusiness lobbyists), but suburbs have impacts far beyond simple land loss. Energy costs would be an obvious one.

      • John Bailo says

        Analysis of “energy costs” need to have numbers attached to them.

        It’s like the circular argument of using the word “sprawl” without defining it.

        Overall, think that there is a real misunderstanding of scaling in many areas of environmental and planning issues.

        One basic perspective of understanding the amount of developed land is an appreciation that when viewed in the content of the vast amount of undeveloped land, the difference between a suburban and urban household becomes trivial as they are relatively the same.

      • Lack Thereof says

        Let me google that for you.

        If a household moved from a single–family, detached home
        in a conventional suburban development (CSD) to a house of the same size in a compact, transit-oriented neighborhood (TOD), its energy use would be reduced by 38 percent. If that home included Energy Star energy efficiency measures and if the residents drove a fuel-efficient car, then the household’s total energy use would be reduced by 53 percent compared to the conventional, low-density suburban scenario

        http://www.epa.gov/smartgrowth/pdf/location_efficiency_BTU.pdf

        Plenty of numbers in the full text, broken down many ways.

      • John Bailo says

        The big jump in savings seems to be going from CSD to TOD. However, I challenge the notion of having to have your house itself near a transit station versus having a car fueled by renewables such as solar & wind produced hydrogen or electricity does not get the same benefit and at the same time allows for the desired house with a yard and flexible retail destinations including the very efficient warehouse-retail model where the car does the “last mile” of goods distribution, even heavy goods.

      • Nathanael says

        John: it’s true that you can get nearly as good a carbon footprint from a super-insulated detached house with an electric car (etc.) as you can from a walkable TOD rowhouse.

        The trouble is that the superinsulation is more expensive in the rural detached house than in the rowhouse/apartment, the electric car adds a huge capital cost which the person in the walkable TOD rowhouse doesn’t need, etc.

        In other words, the TOD rowhouse is the *affordable* version. The carbon-efficient rural house is the *expensive* version.

      • Nathanael says

        FYI, for various reasons (I have strong reasons to stay in my city, but *none* of the downtown housing or apartments were wheelchair-accessible when I was shopping for a house), I am actually doing the expensive version: superinsulation, electric car, the whole bundle.

        It *is* expensive.

      • Lack Thereof says

        I challenge you to find a politically viable way to get the average American family to swap their F-150 and Camry for a Tacoma and a Fiesta, let alone get into a fuel cell car.

        The feds are putting a ton of support behind EV’s, and that’s good. I’m very glad for the EV purchase subsidies, and the loan programs backing EV companies.

        But the middle class is not going to be ready for the purchase cost any time soon. We need to start getting a million or more EVs into driveways a year in order to even start to make a dent in the fuel mix of our commuter fleet, and there’s just no way we’re getting one for every american family within half a century. If we were to subsidize it enough to get one into every suburban driveway, well, good luck finding a way to pay for it.

      • Mike Orr says

        The article is right that there would be a dramatic benefit if Americans became vegetarians or even part-time vegetarians. Oil use would drop significantly, farms could shrink to a quarter of their size, etc. That may be enough to compensate for the higher energy use of people in low-density suburbs and exurbs. Mainstream America is not really aware yet of these costs of a predominately meat-based national diet. Another issue is all the “hidden” animal products in processed food, where the consumer doesn’t even benefit from a delicious chewy steak and wouldn’t care if something else was substituted, but the food companies are lazy and go with what they’re used to.

        But this is really a different issue from the impact of sprawl. And JB, there’s no disagreement on what sprawl is; there’s just disagreement on what the boundary of it is. A big-box power center surrounded by 1-4 acre lots is sprawl. A strip mall is sprawl, since strip malls are amost by definition 1-2 stories with surface parking around them, so difficult to walk to and not enough variety of shops to walk between. A strip mall surrounded by 0.2 – 1 acre lots is, perhaps, less sprawly than a big-box power center surrounded by exurban estates. And there are multiple ways to look at commercial/residential centers like Crossroads and East Hill. In one sense they’re sprawl; in another sense they’re more urban than the houses surrounding them, and have the potential to become more urban than that.

        When you get to a townhouse district with most needed retail within walking distance, then it’s definitely not sprawl. But then you get into the difference between city neighborhoods and “master planned” communities like the Bonney Lake proposal. It’s great that the latter has retail and jobs alongside the housing. But experience says these will not be enough to make the neighborhood a self-contained community; a lot of residents will still drive to jobs in Tacoma and shopping that’s not available in the neighborhood. This is where such neighborhoods need to be on a regular transit line closer to the city.

      • Mike Orr says

        ” If we were to subsidize it enough to get one into every suburban driveway, well, good luck finding a way to pay for it.”

        We could probably build all the subways in Seattle and other cities for that money. There’s also the fact that it would be a new subsidy rather than an existing one. It’s hard for transit projects to compete against highways, but it would be much easier for them to compete against a massive new subsidy to replace suburbanites’ cars.

  9. Mike Orr says

    “The mortgage interest deduction – a program first created in 1913 with the ostensible aim of boosting homeownership – curiously encourages investments in second homes.”

    No, it comes from a time when taxing any kind of interest payment was considered illegitimate. “It was not designed to encourage home ownership. Indeed, when the interest rate deduction was first considered, home financing was non-existent.” Also, at the time, only “the 1%” paid income tax anyway.

    After the government got heavily involved in promoting home ownership after WWII, people reinterpreted the purpose of the mortgage-interest deduction. Interestingly, the reason second homes qualify for it is probably because it was not intended to promote ownership. If it had been, it would likely be more like the special FHA loans available only to “first-time” buyers.

    We should phase out the deduction, with a 10-year concession to existing mortgages (and allow refinancing). That would cover the bulk of the period when almost all the payment goes to interest, and would give people ten years to make arrangements if they won’t be able to afford the payments after the deduction expires. And second homes should definitely be phased out even if first homes aren’t.

    • Nathanael says

      I was doing tax forms in the early 1980s, and it was still true that all interest payments were deductible at that time.

      There’s been a nasty shift from taxing people’s *net* income to taxing people’s *gross* income. This is another part of the immiseration of the middle class. If you tax *net* income you mostly hit the very, very rich.

  10. Zed says

    Tannerwood is not pictured in the photo included with your post. The large plot on the left was cleared at least a decade ago and is zoned commercial. Then there’s the truck stop which has been around for about 40 years and Cadman’s gravel pit. The large warehouse is Genie’s distribution center. None of this is related to the Tannerwood subdivision. The only neighborhood pictured is Wood River, which was developed about twenty years ago.

    • Matt Gangemi says

      Ah, you’re right. The map on their website wasn’t very precise, and I thought the development on the top left was it. This must be it, the partially cleared forest just to the west.

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