The Plank Is Now Raised
I hope if you wanted to buy a house in Virginia, you bought it before today.
Governor Tim Kaine was just sworn in and will give his first public policy speech to the General Assembly tonight. In it, he will offer his solution to our transportation problems: halting housing development until roads are "adequate." He says he'll allow local governments to put the kibosh on development unless they decide roads are sufficient to handle the traffic.
If you don't think too much about it, it sounds reasonable. But I've spent a fair chunk of my life in areas where development was subject to such things (and things even more subjective, like "aesthetics" in the case of Telluride, CO) and here's how it usually works: Development slows to a crawl. In an spot like the DC Metro area, that's a boon for our already sky-high real estate prices. We have robust demand and limited supply, meaning prices go high and stay high. And now we're talking about limiting supply further, meaning those prices will go higher.
This is all fine in theory of course, but let's talk dollars. Specifically, mine. I bought my house six years ago. I had the place appraised a few months ago and it has tripled in value. In six years. Now it's one heck of an appreciation on my initial investment, but then if I want to move I'm going to have to buy at that price unless I want to live in West Virginia. With this new proposal, there would be little chance of that ever coming down in the near future. Which is fine for me, I guess. I got mine six years ago, mostly through dumb luck in buying at the right time and I now have enough equity to realistically buy another house nearby if I wanted. But what about those people who don't have theirs yet?
That's right. This is even more dire for those who are scrimping and saving to buy their own houses...you know, the working class joes the Democrats in the state are claiming to want to help. By limiting development, Kaine is limiting the supply of new housing, meaning existing housing will again rise in price and make home ownership more difficult for those working guys (and lest we forget, property taxes are based on assessed value, meaning our taxes will go up as a result...).
Oh, Kaine might say....but the development could only be limited until roads are "adequate." OK, I might reply, but is VDOT going to spend a lot of money and resources building a road BEFORE it's needed? That's to say, in a time when they are complaining about not having enough money despite an unnecessary $1 billion tax increase a couple of years ago, are they going to use their money to expand roads in an area that isn't even developed? Or are they going to focus where people are complaining...ie where it's already developed? And what's "adequate," anyway? That's why I say this will slow development to a crawl.
So if you have yours now, congratulations. Kaine is raising the plank behind y'all so others can't get theirs.
Posted by John Tant at January 16, 2006 10:19 AM
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|# January 16th, 2006 2:54 PM james|
|the dc area housing market is so out of control that i've decided to abandon it - why should i spend $500k on a tiny little house that still leaves me with a couple hour commute when i can buy a house 3x as big for half the cost almost anywhere else in the country?
also, i dont think that the market is particularly stable here. for example, compare to the market in NYC - in NYC, your investment in property is sound, since there is nowhere left for the city to expand. but in the DC area, we have tons and tons of space, and a building boom will only cause house prices to drop.
that's what's really going on here - property owners are using traffic gridlock as a way to limit expansion.
|# January 16th, 2006 9:45 PM gem2|
|We've had a similar situation here in SF bay area. It's called "smart development"--don't build the roads and they will not come. But strangely, they do come. Now we have long (time and mileage) commutes. And we have had one of the hottest housing markets within the nation. Boy are we smart. |