zoning

Mortgage interest rates are climbing quickly, while housing prices are still mostly high. These factors combined means that it is much more expensive to buy a home than in the recent past. But how much more expensive? And how does this compare with the past 50 years of history?

The chart below is my attempt to answer those questions. It shows the number of hours you would need to work at the average wage to make a mortgage payment (principal and interest) on the median new home in the US.

My goal here was to provide the most up-to-date estimate of this number consistent with the historical data. Thus, I had to use average wage data rather than median wage data, since the median hourly wage data is not available for 2022 yet. But as I’ve discussed before, while median and average wages are different, their rate of increase is roughly the same year-to-year, so it would show the same trends.

The final point plotted on the blue line in the chart is for August 2022, the last month for which we have median home price data, average wage data, and 30-year mortgage rates. Mortgage rates are the yearly average (or monthly average in the case of August 2022).

You’ll also notice a red dot at the very end of the series. This is my guess of where the line will be in October 2022, once we have complete data for these three variables (right now only mortgage rates are available in October for the three series I am using). I’m doing my best here to provide as much of a real-time picture as possible, given that rates are rising very sharply right now, while still providing consistent historical comparisons. If that estimate is roughly correct, mortgage costs on new homes are now less affordable than any year since 1990.

What do you notice in the chart?

Continue reading →

As you drive, walk, or bike around your city, what do you think about as you see the various buildings and other structures? Perhaps you think about the lives of the people in them, or the architecture of the buildings themselves, or the products and services that the businesses offer for sale. For me, lately I’ve been thinking about one thing as I make my way around town: zoning. It’s not something I had thought about before very much, but after reading Nolan Gray’s new book Arbitrary Lines: How Zoning Broke the American City and How to Fix It, I’ve been thinking about zoning a lot more.

(Disclosure: I know the author of the book, but I paid for my own copy and got it in advance through the luck of the Amazon-pre-order draw.)

The book does a wonderful job of explaining what zoning is (and importantly, also what it is not), where zoning comes from historically (it’s a development of the early 20th century), and how zoning affects our cities. I really like the way that the book encourages the reader to be a part of the story of zoning. In Chapter 2, Gray encourages you to put down the book and locate your city’s zoning map to learn more about how zoning impacts your life.

I immediately did so and had no trouble finding zoning maps for the city I live in, Conway, Arkansas. Conveniently, my city provides both a simple PDF map and an interactive map, which provides a lot more detail. The interactive map even has embedded links with historical information on different pieces of property. For example, I found the ordinance for when my college, the University of Central Arkansas (previously Arkansas State Teachers College), was annexed by the City in 1958. Pretty cool!

Looking over the map, it’s pretty clear that most of the city that I live in is covered by R-1 and R-2 zoning. But what exactly do these designations mean? You can probably guess that “R” designates residential, but what does it proscribe about land use?

For that, you must dig into the zoning ordinances. And as Gray cautions in the book (somewhat tongue-in-cheek), you might not want to get in too deep with your zoning ordinances, since they can run hundreds or thousands of pages. But I was brave enough to do so, and located my zoning code online (the PDF runs a modest 253 pages).

What did I learn about the zoning that covers my city?

Continue reading →