Are housing initiatives driving up prices?

Those neatly planned neighborhoods with the perfectly landscaped yards and tree-lined sidewalks are pushing home prices out of sight for ordinary citizens, according to a new report.

"Smart-growth" planning initiatives, which can include everything from restrictive design codes and open space requirements to lengthy permitting processes and growth caps, are highly regressive to first-time homebuyers while providing windfall gains for wealthy homeowners, according to Randal O'Toole, author of the report and an economist with the American Dream Coalition, an Oregon-based organization promoting affordable housing.

But a representative of planning group Envision Utah said Thursday that what he has heard of O'Toole's report is "problematic."

In 2005, the report said, U.S. homebuyers had to pay roughly $275 billion more for their homes because of such initiatives. The report looked at 350 U.S. cities and estimated a "planning penalty" based on a median-home-value to median-household-income ratio.

O'Toole said he accounted for other factors that influence house-price appreciation, like shortages of private land, but found those reasons to be responsible for the high cost of housing in only a few areas. Further, O'Toole said he discounted high demand as a factor in high home prices. Developers and builders, he said, have shown that they can meet demand no matter how high it gets.

In general, O'Toole said that regions with growth-management planning have seen prices increase by 4 percent to 14 percent per year. Regions without such planning have seen prices increase by only 1 percent to 3 percent.

O'Toole added that Utah is on the verge of a housing crisis because of smart-growth initiatives promoted by groups like Envision Utah. Salt Lake homebuyers in 2005, the report said, paid a $17,607 premium on their homes because of such planning initiatives.

And smart-growth initiatives have added as much as $500 million to 2005 Utah housing costs alone, according to Paul Mero, president of the Sutherland Institute, a Salt Lake-based conservative think tank.

Mero said he is not opposed to planning, but he is opposed to aggressive planning that adds bureaucratic delays and costs to developers that are eventually passed to homebuyers.