Zoning crowds out the starter home

Sleepy but exhilarated, Jason Wingo is one of the fortunate ones.

More than 100 people had signed up for 50 new town homes, priced from $97,000, that a builder is erecting in this booming St. Louis suburb. On a recent Saturday, after camping overnight in front of the developer's trailer, Mr. Wingo got his 1,000 square feet of the American dream.

"I've looked everywhere - you just can't find anything new for under $100,000 in this type of area," says the computer programmer, speaking over the roar of an earthmover.

Across the country, modest homes - in price and size - are vanishing from the new-construction landscape.

Part of it is simply the long economic boom: Developers see plenty of buyers for homes with granite bathrooms and gourmet kitchens. Yet experts also point to exclusionary zoning regulations as a central factor limiting construction of modest homes.

In some cases, the zoning reflects goals of limiting sprawl, preserving property values, or maximizing tax revenues. But to critics, measures such as minimums on lot size and square footage represent short-sighted planning and irrational fears.

The result is that people who work in a community - from cops to computer engineers - often can't afford to live there. For this reason, local employers are now leading the push to diversify the nation's housing stock.

"In order to have a diverse workforce ... we need a diverse housing plan," says Kevin Kast, chief executive of SSM St. Joseph Health Center in St. Peters, near St. Louis.

Early this year, he testified before the local Board of Aldermen before it voted in favor of higher minimum lot and home sizes. "From a moral standpoint, I wondered who or what they were trying to exclude," Mr. Kast says.

Residents want larger homes

The board's vote was unanimous, based in part on surveys showing residents want to remain in the city but are concerned there are no large homes for them to move up into.

As similar decisions echo in communities nationwide, the consequences are stark: New homes that are 1,500 square feet - costing $150,000 or less in areas like St. Louis and upwards of $250,000 in pricey coastal cities - are going the way of mauve bathrooms.

"There is a tremendous demand in the $150,000 price range, but there's also a tremendous problem with delivery," says Pat Sullivan, president of the St. Louis Homebuilders Association.

Consider the plans of Bill Taylor, who heads Taylor-Morely homes in St. Louis. He foresees building more than 300 houses this year in 17 or 18 suburban areas. Not one will be priced as low as $150,000. "People want them, but with what the cities are doing, the numbers just don't work," he claims.

Although the high cost of land in desirable locations is an obvious price inflator, it accounts for only part of the squeeze.

"In the midst of the economic growth of the last four or five years, communities have begun to decide they don't need any more jobs, growth, or people, so they begin erecting barriers," says David Crowe of the National Association of Homebuilders (NAHB).

For cities, a large, expensive home also translates into more property-tax revenue. At the same time, estate-type homes are generally purchased by older couples with fewer children living at home, which means fewer expensive public services like schools.

"You hear all this rhetoric coming out of communities about smart growth - to build denser, to cluster homes, and cut traffic, and all of that - but instead, we're seeing moderate-priced homes zoned out of existence," says Christopher Senior, also of the NAHB.

Nationally, the average price of a new home has risen from $62,500 in 1978 to $205,000 last year, the organization reports.

Critics say one solution is regional planning, or even statewide statutes that require communities to have a certain percentage of affordable homes. New Jersey has such a law on the books, though enforcement is said to be spotty.

Builder who can't build

Often, rapid job creation fuels a local housing crunch. In Broomfield, Colo., the ratio of jobs created to houses built has been roughly 7 to 1 over the past few years, with about half the new jobs being low-paying retail positions. Denver-based developer Paul Barru says he had initial approval for a 137-home development in Broomfield, but says steps taken by the city forced him to scale back to 86 houses.

"We went in there to provide lots for $225,000 houses, because the demography said the business park 12 miles away desperately needed that price housing, but we just couldn't do it," Mr. Barru says. In the end, the development's lowest price was $350,000.

He says that, in addition to zoning, towns sometimes set inflated fees for things like inspection and permits, adding further to costs.

Some builders have tried to fight back. Last year, developers in one Cincinnati-area community sued and won an injunction against higher minimum lot and home sizes.

But there has long been little political counterweight to such municipal restrictions. Although builders and low-cost housing advocates squawk, their protests have generally been ignored or chalked up to greed.

That may be changing as local companies, with clout as job providers and no stake in homebuilder profits, complain to city councils that workers can't afford to live nearby.

(c) Copyright 2001. The Christian Science Monitor