This post originally appeared at https://www.badgerinstitute.org/hot-demand-for-houses-runs-into-dane-countys-land-of-no/

Many things can stymie development, but there are pathways to yes

If a home in Madison, Wisconsin’s most rapidly growing metropolis, is increasingly hard to afford…

And it is: The median single-family home sold in metropolitan Madison, which went for $470,800 this spring, cost well over five times the median household income.

… And if most young families really do prefer a single-family house …

Which they do, in survey after survey.

… And if metropolitan Madison is surrounded by flat, buildable farmland, what’s the problem?

Why not build enough houses to satisfy buyers?

One reason is that it’s so easy for people who are not in the business of building houses and not in the market to buy them to say no.

“Housing dies the death of a thousand cuts,” said Kurt Paulsen, who teaches urban planning at the University of Wisconsin and helps practice it as a member of the Middleton Plan Commission. A lot of those wounds happen at the very local level — when municipal plan commissions put conditions on developments that make for fewer, costlier houses.

Sure, regulations affect the cost of building houses, “but there’s not some faceless bureaucrat imposing 10,000-square foot lot sizes,” he said. That’s local officials, listening to local residents who want less traffic and ritzier neighbors, if neighbors they must gain.

Don’t want to grow

It’s hard enough to build. To make a subdivision of a cornfield, a developer must borrow to buy the land, borrow more to grade it into buildable sites, borrow to install roads, sewers and parkland that he will gift to the municipality, and borrow to pay up-front municipal planning fees. Higher interest rates can kill a project. So can being told that all those costs, eventually paid by home buyers, must be spread over fewer houses on larger lots.

That happens regularly. “There are communities that have decided they just don’t want to grow,” said Chad Lawler, who heads the Madison Area Builders Association. He diplomatically refrains from naming them, but there are communities that “try to find a way to get to no instead of how to get to yes.”

All this is atop an ongoing shakeout in home builders after the Great Recession and shortages of skilled labor. Builders are funding trades apprenticeship programs, but they still face the bright lines drawn on maps in municipalities’ comprehensive plans.

These, redrawn once a decade by statute, sometimes sooner if a community wants, specify the boundaries in which new development can be considered. Outside the boundaries? It’s not getting developed — unless a municipality redraws the plan.

Usually, the people who show up at public meetings are nearby residents who prefer green space and nature to new neighbors. Most often, said Lawler, the objections seem to be that new houses will bring more traffic and maybe crime. So the boundary stays put, and even within it, development can be quashed.

But metropolitan Madison remains attractive: For 20, maybe 30 years, Paulsen points out, job growth has exceeded home construction. And while the City of Madison has arguments about apartment construction, that discussion is separate from the market for single-family homes. People will find those somewhere. Say no on fields adjacent to the city, said Paulsen, and “you’ll start building in Cross Plains. And if you can’t build it there, you’re going to build it in Mazomanie.”

There are ways to “yes.”

Middleton greenlighted a subdivision of single-family homes, two-flats and apartments on 128 acres of farmland. The houses, on lots of a size you’d see in Milwaukee, are priced in the $400s, but as Paulsen puts it, “Any bit of supply helps in a stuck market.” If someone moves in, it may open up their older, cheaper house in Middleton, a process called “filtering.”

Countering interests

But that works only if enough new places get built, and, he says, Dane County’s been seeing only about 5,000 new houses a year when the market’s been clamoring for 7,000.

Paulsen hastens to say he’s not impugning people’s motives. Your house is usually your biggest asset, and “you cannot insure it against its value going down” because the woods nearby become a subdivision. Residents have an interest in telling the plan commission to say no, while future residents are wholly hypothetical, are never there to say yes.

He suggests a way around, pointing to the new subdivision of starter-priced houses being built in Sheboygan County by a consortium of manufacturers who want employees to be able to move in. The houses, owned by residents, can be sold to anyone working in the county and not just to those working for the sponsoring employers.

It’s innovative, said Paulsen, because someone with an interest in there being enough houses intervened to make it happen.

This could help elsewhere, he said — businesses telling plan commissions they’re having a hard time finding workers. It can counter the natural tendency toward “no.”

“If the Chamber of Commerce is there saying, ‘Yes, yes, yes,’” he said, “that gives growth some support.”

Patrick McIlheran is the Director of Policy at the Badger Institute.

Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.

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