Development patterns appear to be not so free market-driven after all

There tends to be agreement among Americans that the way our communities are built is due to free-market demand. But as it turns out, government incentives have long influenced the way our communities develop, and have long favored suburban development patterns. More from The Atlantic:

According to a new report released by Smart Growth America, the federal government influences our real estate sector – with tax credits here, loan guarantees there, grants and other programs – to a tune of more than $450 billion a year. All that money (and the incentives implied by it) subtly skews what we build. Meanwhile we keep talking about about other, more obvious interventions in the real estate market, like regulation through zoning codes and infrastructure decisions about where to put roads and sewer lines.

Stepping back and looking at the whole collection, it’s clear that the federal government has favored many types of development at the expense of others, often with weak or outdated logic. The government dramatically favors homeowners over renters. Its support is heavily skewed toward single-family homes over multi-family developments (the FHA, for instance, funneled just one-tenth of its $1.2 trillion in loan guarantees over the past five years toward multi-family housing).

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  • Mark Christol

    I would imagine that job creation is a major factor in government reasoning. A tract of 100 single family homes requires a lot more gadgets, materials, infrastructure, services & labor than a 100 unit apartment building.