ON-Lion Letter
Bankers, politicians, and policymakers are often blamed for the housing bust. Land-use planners generally are not. In a June paper for the National Center for Policy Analysis (NCPA) in Dallas, though, Wendell Cox argues that "smart-growth" land-use restrictions and planning policies fueled property prices and became the engine of the housing boom and bust.

Cox is an Illinois-based consultant and an adjunct fellow of NCPA, which is substantially supported by Milwaukee's Lynde and Harry Bradley Foundation.

"Smart growth" is generally defined as land-use policies that encourage mixed-use development that reins in suburban sprawl and long commutes by car. The aim is to preserve open space and farmland by pushing development toward public transportation and more-walkable communities.

Cox argues in "The Housing Crash and Smart Growth" that the housing bust was concentrated in "prescriptively regulated" areas, or those with extensive barriers to development. These differ from "responsively regulated" metro areas, which allow development to meet demand. San Diego, for example, is prescriptive; Dallas is not.
From the peak of the bubble in 2006 to Lehman Brothers' collapse in September 2008, Cox writes, 11 heavily regulated metropolitan markets accounted for 73% of aggregate home-value losses, with an average loss of $175,000 per house. Homes in less-regulated markets lost only an average of $12,000 per house.
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