Jonathan Higuera in the Arizona Republic asks: “Are home costs scaring firms off?” The article consists of the dutiful transcription of the unfounded fears of “Barry Broome, president of the Greater Phoenix Economic Council.”
If you are intrepid enough to read the article all the way to the penultimate paragraph, you will discover the answer to Higuera’s question: No.
[N]o GPEC client has actually said they were not coming because of high housing costs[.]
It’s annoying to have to issue all the usual caveats, but not as annoying as all these sky-is-falling ‘news’ stories.
For the record:
- Phoenix homes are very cheap in comparison to the real estate markets from which established businesses might move.
- The repeated incantation that Phoenix homes sell for 20% above the national median is meaningless; we’re not competing with Iowa.
- While potential home buyers might cast a wary eye at our recent appreciation boom, they are going to be much more interested in our future appreciation prospects in order to reap a windfall of unearned increment for themselves–an unlikely prospect in many real estate markets.
- Our future appreciation prospects are excellent: 1. It’s always snowing and freezing in the Great Lakes states, from which we draw thousands of newcomers every year. 2. Housing prices are between two and four times higher in California, from which we draw thousands of newcomers every year. 3. Hundreds of thousands of house-rich baby-boomers are looking for a warm place for their retirement homes. 4. The states along the Gulf of Mexico have proved themselves to be unacceptably hazardous.
- We have a large, educated, money-hungry work force.
The fact is that Phoenix is still the most affordable big city in the Western United States, and it is among the most affordable of the biggest cities in the United States as a whole.
It seems likely to me that the best way to attract the kinds of businesses Mr. Broome might hope to entertain is to offer them the usual Christmas Tree packages of tax-abatements. The best way to attract real entrepreneurs, not corporate welfare cases, is to cut taxes, cut regulation, cut red tape, eliminate zoning and building-permit hassles, etc.
For example, Higuera laments the high cost of land, but zoning rules in Phoenix-area cities require that even the smallest-footprint single-family homes use more than twice as much land as small-footprint homes in California and Nevada. This drives up the cost of those homes and limits the availability of that land for alternative purposes. (However, if you believe there is a shortage of available land in Maricopa County, you should immediately apply for a job on the Business pages of the Arizona Republic.)
I think the true purpose of the article is buried near the end:
In the next month or so, a task force on workforce housing formed last year will release recommendations on maintaining and adding to the area’s stock of affordable housing.
Task force chairman Gregg Holmes said the recommendations will seek public policies that create stronger incentives for home builders to provide moderately priced housing, offer ways to attract private and public financing that can be leveraged and grow the public and political will to address the issue.
This will be a disaster, of course. We will bestow unearned rewards on the thriftless by taxing the thrifty, the age-old game of Grasshopper versus Ant that governments have played forever. The difference is, in a global economy the Grasshoppers get everything they’ve always deserved, and the Ants get down to business–everyplace the Grasshoppers aren’t. If Broome thinks ‘More taxes! More red tape! More busy-body government!’ is a useful battle cry in his crusade, he may be fighting for the wrong side.
This part–“attract private and public financing that can be leveraged and grow the public and political will to address the issue”–is interesting. People always tell the truth if you train your mind to listen. What it says is they want to use donated and taxed funds to hector you with more Soviet-style propaganda in support of affordable housing–in support of massive tax increases to pay for affordable housing. Thoughtful Ants are well-advised to guard their assets. The Grasshoppers may rejoice, because Grasshoppers never read the fine print. But so-called ‘affordable’ housing cannot be sold at its appreciated value, but only at prices set by the government. It’s a pantomime of homeownership devised to make sure the thriftless Grasshoppers never discover the enduring value of life as a thrifty Ant.
There is nothing wrong with the Valley’s housing market, although there is something badly amiss in our news market. In any case, if Valley cities want to attract new businesses, they should get the hell out of the way.
