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Housing Supply Too High For More Development
by David Stanowski
16 August 2007

This article originally appeared in the Galveston County Daily News on 16 August 2007. The text version of the article appears below. 

Housing Supply Too High For More Development

Galveston has a long history with vacant houses and buildings but, as their number has declined, in recent years, there seems to be little concern that anything could reverse this trend.

Unfortunately, most people in Galveston seem to be blissfully ignorant of the recent national real-estate bubble and, if they are aware of it, they believe that it has not affected the island.

Analysis of price growth and inventory levels contradict that belief and confirm that Galveston fully participated in the bubble.

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The hope that the new housing units, built during the past couple of years, will be snapped up by eager buyers is belied by the fact that Galveston had a 20.8-month supply of inventory in June.

That's a higher level than in most areas of the country.

With 6,300 more housing units due to be completed this year, this is no time to be breaking ground on more projects without considering their impact on existing inventory.

If housing development is not limited, we could be creating ghost towns out of new subdivisions and empty skeletons, instead of fully occupied condominium projects, as Phoenix and Miami are discovering the hard way.

The recent building boom has already doubled the number of vacant housing units in this country.

In addition, more supply will only add to the downward price pressure and prolong the recovery from the post-bubble fallout.

Vacant housing units are already becoming a blight on other cities around the country.

With poor maintenance and overgrown landscaping, they are eyesores that directly impact the quality of life and property values nearby.

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Houses with untended swimming pools become breeding grounds for mosquitoes and hazards for children.

Of course, the most negative impact of vacant housing is realized when these units are gutted by scavengers and become shelters for vagrants, shooting galleries for drug addicts, centers of prostitution and headquarters for drug dealers.

In the Cleveland area, some local governments have been forced to spend millions of dollars to install alarm systems and to do maintenance and yard work, to minimize the negative impact of vacant houses on their community. Phoenix is experiencing similar problems.

Government interference and regulation in the markets always causes problems and this is certainly true of its planning and zoning functions.

However, it has long been the conventional wisdom that property owners must gain approval for their projects, as the impact of the use of their land and buildings on the surrounding community is more important than their rights to use their real estate in
any manner that they choose.

For this reason, it is no longer necessary to maintain any pretense that the truly free use of real estate still exists.

So it is time to take a more comprehensive approach to the planning and zoning functions.

The Galveston Planning Commission seems to be focused primarily on the impact of population density, building height, traffic congestion and environmental issues, when it comes to reviewing proposed development.

It is now time for Galveston's city council to direct the planning commission to refocus its attention from its usual decision-making criteria so that it includes and considers the supply of proposed new housing units versus the projected demand for them.

If new construction adds to our stock of vacant houses and condos, these units will create a more negative impact on our community than any of the other issues that the planning commission normally considers.

However, projections of the need for new housing units must be done in a reasonable and unbiased manner by the planning commission, rather than by relying on feasibility studies commissioned by developers.

As long as developers can borrow money, they will demonstrate a need to keep building.

Also see The Plague of Vacant Houses

For more information on the Galveston Economy:


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