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A High Stakes Bet

At any given moment in the Up for Growth office, you will likely hear someone talking about “the Four Ls”, our colloquial catch-all for the external drivers of housing costs – Land, Labor, Lumber, and Lending.[1]  Last month was no exception. As part of a package of new actions [2] to lower housing costs for American families, the Biden-Harris administration called on all federal agencies to assess surplus federal land that can be repurposed to build more affordable housing across the country.

This supply-side intervention was welcomed by housing advocates, industry voices, and policy-wonks alike. The federal government is, after all, the largest landholder in the nation, and this move could open a meaningful amount of land to new housing production, especially in the American West where the government owns ~50% of land in the eleven contiguous western states.[3]

A 2022 paper by the Joint Economic Committee for Republicans claims policies like this one could “allow substantial progress in increasing housing supply and thus making housing more affordable in Western states—without any federal spending, without any interference with local decision-making, and with very little loss in federal land holdings.”[4]

But despite widespread enthusiasm around this announcement, NIMBY grumblings in the depths of Xwitter seemed to center around one question, will opening public lands to housing development encourage lower-density development on the outskirts of existing cities? A.K.A. Urban Sprawl? And if it does, can we really call it a win?

Visualization of Federally Administered Lands, 2021

Let’s Back Up

For the sake of argument, let’s suppose these NIMBYs are raising a good-faith concern. Why should we worry about where the new development is placed? While building homes on the urban fringes can be more cost-effective from a development perspective, doing so generally requires the expansion of civic infrastructure and public services whose costs may not be easily borne by a locality.

Moreover, new development outside of existing communities often means that those new residents must travel further for day-to-day activities, such as shopping for groceries, attending school or work, or utilizing parks. Generally, the effects of sprawl have negative outcomes in terms of the environment, equity, and sustainability.

It is reasonable to imagine that the land holdings of the federal government—especially those of the Bureau of Land Management (BLM) and the U.S. Forestry Service (USFS), both named in the administration’s announcement, would be on the outskirts of existing communities. But BLM and USFS are not the only federal agencies that the administration has called on to survey excess land. The United States Postal Service (USPS) also holds around 8,500 properties around the country [5], and its land is generally well positioned in transit and amenity-rich neighborhoods.

What Happens In Vegas…

An effort to free up public lands for housing development is already underway in Nevada where BLM is selling land at rates significantly below-market [6] in areas in and around the Las Vegas Valley for the sole purpose of building affordable housing.

Cities like Las Vegas, Boise, and Austin were able to expand to maintain affordability in the face of population growth from 1990 – 2010. More recently, these sprawling communities still became more expensive.

In many ways, the Las Vegas metro area is the perfect test case to watch and see if there will be a forced tradeoff between more housing and urban sprawl.

As of 2021, Las Vegas had the 25^th worst underproduction of any metro in the country (32,833 missing units; or 3.6% of the total housing stock).[7] It was also one of the cities that most clearly illustrated the limits of Expensive v. Expansive growth – a way of constraining housing price growth through expansion of city limits.

Expanding the city’s footprint seemed to work for the Las Vegas metro from 1990 through most of the 2000s. But in 2020, it reached an aggressive and abrupt point of diminishing returns. By 2021, home prices in the metro area were some of the fastest rising in the nation. Home prices have grown five times faster than wage growth since 2011.[8]

Fittingly, then, the administration’s announcement touted the pending sale of a 20-acre parcel in Clark County, NV, where Las Vegas is the county seat, to the Clark County Department of Social Services to construct an affordable housing development[9]. While not exactly in an urban core, the parcel is not isolated, either. It appears to fill a gap between existing neighborhoods.

BLM is also soon expected to announce the proposed below-market sale of an additional 18 acres to the City of Henderson, also part of Las Vegas Metro. This sale, which the city estimates will provide nearly 300 affordable housing units for rent, is among the first affordable housing sales conducted under a memorandum of understanding[10] between BLM and the

 

20-acre parcel of land for sale in Clark County, Nevada. Source: Google Maps

Department of Housing and Urban Development (HUD) that improves the sale process and lowers the cost for affordable housing parcels. Through the Southern Nevada Public Lands Management Act, there are more than 550 acres under the jurisdiction of the Secretary of the Interior [11] that could be developed into housing.

If even a small portion of those parcels are like the one in Vegas, it could make a dramatic difference in the availability and affordability of homes. If you are a Nevadan, desperately searching for housing, that might be all that matters.

Key Takeaways

Endnotes

[1] To give credit where credit is due, we borrowed the term from stalwart pro-housing champion Denny Heck, who probably borrowed it from someone else.

[2] Biden-Harris Administration. (2024, July 16). FACT SHEET: President Biden Announces Major New Actions to Lower Housing Costs by Limiting Rent Increases and Building More Homes. The White House. https://www.whitehouse.gov/briefing-room/statements-releases/2024/07/16/fact-sheet-president-biden-announces-major-new-actions-to-lower-housing-costs-by-limiting-rent-increases-and-building-more-homes/

[3] Congressional Research Service. (2020). Federal Land Ownership: Overview & Data. https://crsreports.congress.gov/product/pdf/R/R42346

[4] Joint Economic Committee. (2022). The HOUSES Act: Addressing the National Housing Shortage by Building on Federal Land. https://www.jec.senate.gov/public/index.cfm/republicans/2022/8/the-houses-act-addressing-the-national-housing-shortage-by-building-on-federal-land

[5] U.S. Postal Service. (2015). Facilities Management. U.S. Postal Service. https://about.usps.com/who-we-are/financials/annual-reports/fy2015/annual_report2015_tech_040.htm#:~:text=Our%20real%20estate%20portfolio%20of

[6] Bureau of Land Management. (2024, July 16). BLM seeks input on proposed sale of public lands for affordable housing. https://www.blm.gov/press-release/blm-seeks-input-proposed-sale-public-lands-affordable-housing

[7] Up for Growth. (2023, September). 2023 Housing Underproduction^TM in the U.S. Up for Growth. https://upforgrowth.org/apply-the-vision/2023-housing-underproduction/

[8]Blennerhassett, P. (2024, January 18). Las Vegas home prices going up 5 times faster than wages, report says. Las Vegas Review-Journal. https://www.reviewjournal.com/business/housing/las-vegas-home-prices-going-up-5-times-faster-than-wages-report-says-2983985/#:~:text=The%20Las%20Vegas%20Valley%20ranked

[9] Bureau of Land Management. (2024, July 16). BLM seeks input on proposed sale of public lands for affordable housing. https://www.blm.gov/press-release/blm-seeks-input-proposed-sale-public-lands-affordable-housing

[10] U.S. Department of Interior, & U.S. Department of Housing and Urban Development. (2023). Policy and Procedures for Public Land Disposal for Affordable Housing . https://www.doi.gov/sites/doi.gov/files/joint-doi-hud-mou-esb46-011979-public-land-disposal-for-affordable-housing-pursuant-to-snplma-2023-07-13-signed.pdf

[11] Bureau of Land Management. (2024). Availability of Public Lands for Affordable Housing Purposes in the Las Vegas Valley. https://www.blm.gov/programs/lands-and-realty/regional-information/nevada/snplma/affordable-housing-reservations