Why is it so hard to choose walkable neighborhoods?

In a post over at Smart Growth For Conservatives earlier this week, Ron Beitler discussed electric bikes as a means of transportation. Near the beginning of the post, Beitler included this illuminative paragraph, which also describes the choices I’ve made about where to live:

By design I live close enough to work to walk or bike if I choose. It’s something I enjoy doing. Once there, my office is located on a traditional Main Street where services like our bank and accountant are each less then 3 blocks away. We also have a half-dozen lunch options within walking or biking distance.

That’s a fantastic choice and like Beitler, I don’t want to spend a huge chunk of my life inside my car (yes, I have one). But unfortunately, a series of strange regulations can sometimes make it difficult or even impossible for people to choose more walkable neighborhoods.

I learned about these regulations when I moved to downtown Salt Lake City. Because Salt Lake is a fairly affordable city and housing prices are only expected to rise, I decided to buy a condo rather than rent. And then I discovered a major problem: the rules governing federally backed mortgages — the “normal” mortgage that most people get when they purchase single family home — lean heavily against higher density houses.

Here are some of the problems I ran into:

• I couldn’t get a conventional loan for a condo in a building with very small units (in the 400 square foot range). My unit wasn’t that small, but because there were in a few in the building (they were specially-zoned live-work units) the entire development was disqualified.

• I couldn’t get a conventional loan for a unit in a building that had a lot of commercial space. I tried for a condo in a building where the first floor included a bunch of shops, but was told that a recent expansion by a restaurant disqualified the entire building for conventional loans.

• In light of these problems some developments turned to FHA mortgages, but that put the burden on (only semi-competent) HOA managers to get approval, and disqualified a bunch of buyers who couldn’t afford the higher monthly payments.

• Eventually I got a private mortgage with a slightly higher interest rate, but I was lucky; not everyone who wants to move to a walkable neighborhood could qualify for that kind of mortgage or afford the higher payments.

If getting a mortgage was this difficult everywhere I wouldn’t complain. But as it turns out I bought a single family home in a traditional neighborhood about two years before that. In that case — and this was true for my neighbors as well — getting a conventional, federally-backed mortgage was a breeze. Most well-qualified people I know who have purchased single family homes have had similarly “painless” experiences.

Why is that? Why have we set up a bunch of rules that make it vastly more difficult to buy a home in a walkable, or dense, neighborhood?

I’m not a mortgage expert or historian, but if our goals are to maximize choice and encourage a free housing market — things I believe would result in more people choosing walkable neighborhoods — we should at least level the playing field. The situation we have now basically amounts to subsidies (federal backing, lower rates, etc.) being used to pick and choose housing types. And who knows, if we stopped stacking the deck we might discover that America’s love affair with sprawl only existed because we made sprawl cheaper and easier to choose.



  1. Aaron Guile

    “Why have we set up a bunch of rules that make it vastly more difficult to buy a home in a walkable, dense, (multi use), neighborhood?”
    What proportion of local US politics is controlled by real-estate agents? Real estate agents earn bigger commissions from suburban developments than from urban developments. The other side of the coin is many people perceive — accurately or not — urban schools and crime rates as being better than suburban equivalents. I also want a garden when buy a home — I want an urban home or condo for the exact reasons you list, but I hate those community gardens for the same reason I hate HOAs and gated-communities.

  2. Erik

    Having spent some time on the mortgage side of the fence I can tell you the entire industry is a mess. I think we’ve read the same books and usually in the same chapter called “How We F’d Things Up” is FHA and HUD. In theory great ideas, but they became monsters that shaped sprawl.

    I’d take your title even further and say, it’s hard to choose places that encourage any smart growth principles: walk/bikeability, mixed-uses, variety of housing types, etc… While trying to protect themselves from risk, they missed the lesson where having multiple owners in a building ultimately mitigates risk.

    Sucks that you had to be put through the mortgage torture chamber though. One thing I still don’t get is why Gross Income is used vs. Net Income. Seems like if you wanted to protect yourself against default, you’d use the number people have in their pocket since that’s what pays bills. Add the Mortgage Interest Deduction and you’ve got a lot of things that stack that deck even higher. A good read I just got done with is “The End of the Suburbs”

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