Tuesday, October 27, 2009

Parking and Smart Growth

I received a mass email yesterday from Todd Litman at the Victoria Transport Policy Institute. The email contained links to reports, and I thought I would share two of the more interesting ones.

The first report is called “Where We Want - To Be Home Location Preferences and their Implications for Smart Growth”. Litman points out that there is a shift in market preference from single-family housing to smart-growth housing. The reasons for this shift are: our aging population, smaller households and fewer households with children, rising fuel prices and financial constraints, growing congestions, changing attitudes about urban living, increasing health and environmental concerns, and shifting assumptions about suburban real estate values.

The second report I found interesting is called “Who is Really Paying for Your Parking Space? Estimating the Marginal Implicit Value of Off-Street Parking Spaces for Condominiums in Central Edmonton, Canada” by Owen Jung. Jung states that it costs developers more money to provide underground (covered) parking then they can charge suggesting that there is an over-supply of parking in central Edmonton. He suggests that minimum parking requirements as set out by most municipalities in Canada are a bad idea.
As explained by Shoup (2005), this burden’s negative effect on profits likely induces developers to build larger and fewer condos per unit area and/or build them with fewer bedrooms. Such construction behaviour may ultimately act as a constraint on housing supply and therefore, assuming demand is unaffected, lead to a higher market-clearing price. Thus, the “bargain” on off-street parking spaces may in fact be an illusion since consumers may in the end face higher overall housing prices due to the oversupply of parking spaces. In other words, the misallocation of scarce resources (i.e., too much parking) will likely affect housing affordability in an adverse manner, whether directly or indirectly.

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