mark nottingham

Another, More Disturbing Reason Not to Buy a House

Thursday, 23 June 2005

As you might guess, I’m not too keen on buying a house at the moment, due to what I (and others) perceive to be a bubble in prices.

That’s a situation that will undoubtedly correct itself in the long term. However, the Supreme Court has just made buying a house in the US a much more risky proposition, and because of the way that the legal system works here, there isn’t much recourse.

In a nutshell, they’ve decided that towns, cities and presumably other jurisdictions can decide that the public good outweighs your property rights, effectively forcing you to sell them your property for a price that they name (as long as it’s a ‘fair market’ price).

This is called eminent domain, and it’s not new. What’s changed? In the past, the new use of the property had to be for the public good — e.g., for a highway, school or air force base (so that we can bomb other countries more effectively). No more; now public good includes selling the property to a private developer, with the notion that what they’ll do with the land you previously owned will generate jobs and tax revenue.

That’s right, it turns out that your locality’s tax revenue is more important than your fifth amendment rights.

“Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random,” O’Connor wrote. “The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.”

Now, if you’re familiar with the details of the case, which involves a few houses in a burned-out neighborhood that’s essentially on the wrong side of the tracks, you’ll say “it won’t happen to me, in my nice neighborhood.” Don’t be so sure; the reality is now that there’s a decision from the Supreme Court directly authorizing whatever nut-ball manages to get into your town council to take your property. I bet you’ll vote in that local election now, won’t you?

One of the functions of government is to provide a stable environment where contracts are honoured and property is sacrosanct. There are many examples of third-world economies that can’t get off the ground because there’s too much corruption, and because people and businesses don’t trust the government to protect their property; why invest in a country, or work hard, if the government can take away what you “own” on a whim?

What a nasty precedent. It shows the arrogance and mislaid faith in redevelopment that Jane Jacobs railed against in The Death and Life of Great American Cities;

The economic rationale of current city rebuilding is a hoax. The economics of city rebuilding do not rest soundly on reasoned investment of public tax subsidies, as urban renewal theory proclaims, but also on vast, involuntary subsidies wrung out of helpless site victims. And the increased tax returns from such sites, accruing to cities as a result of this “investment,” are a mirage, a pitiful gesture against the ever increasing sums of public money needed to combat disintegration and instability that flow from the cruelly shaken-up city. The means to planned city rebuilding are as deplorable as the ends.

She was writing about urban renewall in the 1950’s, but I have little more confidence in today’s developers, despite the advent of new urbanism and its limited charms.