Expensive Living, by Design

Life in a ski town can be expensive, with real estate being a prime component of the expense. Sometimes the topographical features of the area don’t give much room suitable for development. In addition, skiing and snowboarding, being expensive activities on their own, tend to attract people with disposable income with which they can bid up housing prices.

But the biggest reason for elevated housing prices, at least in some areas, may be the law. Government ownership can take a lot of land out of circulation, or at least subject it to an extra layer of scrutiny and thus, make development more expensive. For example, nearly 80 percent of Gunnison County (home to Crested Butte Mountain Resort) is owned by the U.S. Government. In Cook County, Minnesota (home to Lutsen Mountains), roughly 90 percent of the land is owned by the state or federal government.

Aside from owning land outright, governments have the power to regulate what happens on private land. As we’ve seen in the housing bubble of recent years, government policies can affect the demand for land as well. The Cato Institute, recently addressed the role of regulations in Truckee, California, a town close to the Northstar-at-Tahoe resort.

The town of Truckee, CA is an upscale community nestled in the Sierra Nevadas near Donner Summit off I-80. Housing is expensive. Truckee’s origins were as a railroad town, so there is older housing. In Truckee, however, downscale is funky and comes with upscale prices. The Truckee Town Council has decided to provide “downpayment assistance” with loans at interest rates as low as 2 percent.

Those who work in Truckee often cannot afford to live there and the Truckee Town Council hopes to make housing affordable for them. The program is thus paved with good intentions, but we know where that road leads. Cato’s Randall O’Toole and Hoover’s Thomas Sowell have shown that land-use restrictions and zoning are principal causes of high-priced housing. The recent housing boom and bust demonstrated how efforts to make housing “more affordable” largely made it more expensive. And they ended up putting many into homes that they could not ultimately afford.

There are no reports that the Truckee Town Council is planning to ease land-use restrictions. So they have done nothing to address the problem of pricey homes. It’s supply and demand, and the Council is working the wrong side of the equation.

Of course, if you have, through birth or the outlay of money, found a way to live in such a location, you may prefer that sort of arrangement, since it tends to keep the area undeveloped.