ROBERT LANG: Humorist Will Rogers once famously observed that people should buy land because “they don’t make it anymore.” That message resonates with home buyers in some of the nation’s most land constrained metropolitan areas. The National Association of Realtors’ house price data for 2004 shows price spikes in places where land supplies are short (see USA Today for the data).
In Las Vegas the price of a median price home jumped over half (52.4 percent) in just one year (from mid 2003 to 2004), the biggest gain for any metro area in the nation. Ironically, Las Vegas would seem a place of vast open spaces with lots of land to develop, but most of that space is owned by the federal government which must transfer it to private developers. But the transfer has occurred to slowly to keep pace with the region’s rapid development and as a result lot prices have shot up.
In contrast to land-starved Las Vegas, the Phoenix region, which barely dents the vast spaces of Arizona’s privately held Central Valley, has room to boom. Its home prices rose just 8.6 percent last year, or just under the national average of 9.1 percent.
Land-constrained South Florida also saw impressive house price gains. Because of a federally imposed urban growth boundary to protect the fragile Everglades, the Miami, Fort Lauderdale, and West Palm Beach metro areas are rapidly approaching build out. House prices in these markets gained about a quarter since mid 2003.
The story is the same in Southern California where “sprawl has hit the wall”—the wall being the San Gabriel Mountains. Homes in Orange County, now the nation’s most expensive market at $655,300 for the median priced house, gained 38.7 percent in the past year. This was closely followed by Riverside and San Bernardino Counties—LA’s fastest growing areas—which experienced a 38.5 percent rise.
Finally, Portland, Ore., which has a self-imposed growth boundary, had a big gain as its home values rose 23.4 percent from 2003. This rise should trigger a new round of debate on what impact Portland-style growth management has on home prices.
Because this is an election season, the high cost of housing in many major markets could emerge as a sleeper issue in the presidential race, as part of what the Democrats call the “middle-class squeeze.” Many of the fastest price gains, and thus the greatest potential anxiety over housing costs, occurred in the hotly contested states of Florida, Nevada, and Oregon.