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Now that the housing bubble has burst...

April 27, 2008|By BOB MAGINNIS

On Friday, Thomas A. Firey, a native of Washington County native who now makes his home in Arlington, Va., took me to task for a question I asked in my April 18 column.

If you missed it, my query went as follows: "What happened to all of the people who argued against things such as impact fees because they said it would make housing unaffordable here? Now that it's become a whole lot tougher for the average Joe or Jane to buy a home, what is their remedy?"

Firey said their remedy would be - or ought to be - to eliminate the county's fees on development.

He also said that I had previously charged the opponents of rural rezoning to tell the community how they would lower housing costs. He said it was up to me and others who support such fees and the rural rezoning to provide our own answers.

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I'm up for that, but first I need to note that Firey is affiliated with the CATO Institute, a libertarian "think tank" in Washington, D.C.

Its mission is "to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets, and peace."

We are where we are now in regard to housing because the "free markets" ran amok, giving mortgages to many people who weren't even required to produce proof of their income.

Based on many buyers' belief that home prices would continue to increase as quickly as they have in recent years, those who should have known better plunged ahead, taking on a lot of debt and betting that increasing prices would cover their bets.

We all know what happened. But unlike the stock market, when a stock is priced too high, there is no quick correction for too-high housing prices. In part, that's because everyone who might be tempted to cut the price of the house they're trying to sell has to ask themselves one question: If I take less, will I have enough money to buy something else?

And so it goes, with many people who can't get their asking price opting to rent out their places instead. How this dilemma might be solved I'm not sure, because every solution involves someone, or some institution, taking a loss. I haven't heard anyone volunteering for that yet.

As to Firey's other arguments, here are my comments.

On impact fees, excise taxes or whatever you want to call them, they're necessary because residential growth costs more than it takes in. I've done the math - the cost of public schools for my children cost far more than we paid in taxes.

When growth was slow and steady, Washington County kept up, because new students weren't outpacing the county's ability to pay for school construction and operation.

Not so anymore, which is why the county is opening three new multi-million-dollar schools, complete with additional staff.

Somebody's got to pay and spreading it among every taxpayer is unfair, because long-time residents don't get many benefits from new growth.

On rural rezoning, state officials might have been coy about how they communicated it, but they sent the message that the old one-home-per-acre standard, as was allowed in agricultural areas, wasn't going to fly forever.

As far back as 2001, then-County Planning Director Robert Arch said Maryland officials had told local governments that they could approve large, multi-unit developments in rural areas, but if problems resulted, they would have to pay for them without state help.

If you've been around long enough, you probably remember the Martin's Crossroads situation, in which contaminated wells were linked to hepatitis. If the county approved 100 homes on 100 acres and wells became polluted, every taxpayer might get stuck with the bill for installing a municipal water treatment system.

What's my answer on affordable housing? I've written about this before, but the plan would go something like this: The county would purchase a tract (or two) of land and seek companies to build homes of 2,000 square feet or less.

If you met certain income guidelines, you could purchase one. Additions would not be allowed, so that turnover would occur as families got larger and/or the family income justified a larger place.

When the property was sold, a percentage of the profit would go back to the county, to help subsidize the next buyer.

As I recall, Firey didn't like this idea when I first proposed it, because it would prevent buyers from sharing fully in the growth of their homes' value.

I agree with him, but no one would be forced to accept those conditions. Buyers who didn't like the arrangement would be free to purchase elsewhere.

If I were a builder who wasn't too busy, I'd like this idea, because it would provide my company with work. And if buyers liked the workmanship, they might seek out that builder again, when it was time to relocate.

No doubt Firey will respond, explaining in detail how wrong I am and why. The Herald-Mail will provide him, in a timely manner, with space to do so.




Bob Maginnis is editorial page editor of The Herald-Mail newspapers.

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