HOUSING: "People who care about housing affordability, income inequality, and/or economic stability need to recognize that government planners in both the U.S. and China... largely are responsible for rising housing prices, income inequality, and the resulting economic volatility.".

• Author: O'Toole, Randal
• Position: ECONOMICS

EVERGRANDE may not be China's "Lehman Brothers moment," but there are many parallels between the housing crises in China and the U.S. Both are due to government control or regulation of land. Both see government planners deflecting attention from their inept policies by blaming someone else. Both have seen resulting remedies fail to do anything about high housing prices.

More than half of China and nearly half the U.S. are agricultural lands, and in each case only a small portion of the total actually is used for growing crops. About four percent of China and three percent of the U.S. are urbanized, which is no threat to agricultural lands.

Despite this, in the 1960s through the 1980s, a panic over a cropland crisis led several states, starting with Hawaii and followed by California, Oregon, Washington, Florida, and Atlantic states between Massachusetts and Virginia to pass laws that attempted to save farmlands by curbing low-density suburban development, pejoratively known as sprawl. The laws confiscated, usually without compensation, the rights of rural landowners to develop their lands. In turn, they created an artificial shortage of land for housing.

In the 1970s, every county surrounding San Francisco, for instance, drew an urbangrowth boundary outside of which is off limits to development. Under California law, these boundaries cannot be moved without someone funding a multimillion dollar environmental impact report, and no one has ever funded one. Nearly 70% of the Bay Area is vacant land that could be used for housing but is illegal to develop.

In China, the government owns all land, but since about 1998 people have been allowed to own homes on land leased from the government, typically for 70 years. The government has been stingy with its leases partly because it fears its own cropland crisis. It has a policy called the red line which requires that at least 480,000 square miles of croplands be protected at all times.

These policies have led urban areas in California and China to be denser than their residents would prefer. Surveys indicate that 80% of Americans prefer or aspire to live in singlefamily homes, preferences that have been strengthened by the pandemic. As much as 77% of households in some states do live in such homes, but only 54% of households in the Los Angeles area and under 52% in the San Francisco Bay Area are in single-family homes. Outside of California, the average density of urban areas in the U.S. is about...