There's an article in this weeks Sunday NYT, Suburban Disequilibrium, about two nearby suburban communities of Los Angeles, wealthy
Bradbury and far poorer Azusa, and the building codes that keep them
apart.
The common explanation of these codes is that it raises the market value of property in the community, but I don't think that's true at all. Although a restriction
on supply raises prices, restrictions on development also reduce demand. Building restrictions mean you can't sell your house to a developer.
If
you could develop property in Bradbury, there would be more places to live in Bradbury, and it would be more affordable to live in Bradbury. But property in Bradbury would be more valuable, because it could be developed. Saying that reducing the usefulness of property increases the price of houses is conflating two different things, the price of housing and the price of the land on which houses sit. That isn't to say that restrictions on development don't increase the price of land,
but the effect is to increase the property values in neighboring
communities by pushing demand out. It's notable that Azusa also has
building restrictions.
There's also the assumption that density reduces the value of property in a neighborhood. People don't generally want someone to build up the property next to them. But other people is precisely what makes property valuable. If you look at the distribution of people in this country, it isn't spread out evenly. People choose to live next to other people.
That's why it's so strange when people talk about a city being "crowded". You're only crowded if you can't leave, but there isn't anything keeping people from moving from New York to North Dakota, except that they don't want to. There isn't a lot of things to do in Dakota: there aren't a lot of people.
All this depends on the size of the community we're talking about.
It doesn't raise the market
value of the land, it makes it valuable to some not others. Development restrictions like Bradbury's make the property peculiarly valuable to the types of people who live in Bradbury,
Whatever personal reasons the residents have for wanting restrictions on development, hopefully they would be less inclined to favor them if it was understood that they come at a cost to their property values. Instead
Then there's the idea, the obviously atrocious idea, that the residents
of Bradbury are raising the value of their property by keeping out
poorer people, and the absence of poorer people is valuable, either
because that way they don't have to share public services like schools
with others or that poor people are just inherently undesirable.
