It’s time to get serious about solving America’s housing crisis.
America is in a housing crisis. Home prices today are 41% higher than the peak of the housing bubble in 2006, while median incomes rose just 8.8% over the same period. Once-affordable Charlotte, Dallas, Denver, and even Cleveland are joining the pricier coastal cities of Boston and Seattle in record home price rises over the past year. Just 3% of homes sold nationally this August went for under $200,000, roughly the price of a once-typical starter home.
Pro-housing advocates argue that home prices are artificially high because the supply of homes is dangerously low, thanks to red tape and costly bureaucracy. Less supply and rising demand mean higher prices—it’s Economics 101. Indeed, America is nearly 4 million homes short of demand. Zoning rules carve up cities and towns with top-down dictates on what property owners can do with their own land, like mandates for single-family homes on enormous lots with lots of required parking.
“It is illegal on 75% of the residential land in many American cities to build anything other than a detached single-family home,” observes The New York Times’s Emily Badger. Worse yet, any American who wants a new home must run a gauntlet of time-sucking permits and public meetings where only their outraged neighbors care to show up.
Unsurprisingly, a new Manhattan Institute/Echelon Insights poll shows people are fed up with the high cost of shelter—and they want more affordable choices in homes. This outranks Covid-19, public safety, taxes, education, and jobs as their top local concern. Housing affordability is especially top of mind in boomtowns like Denver, Seattle, San Francisco, and Austin. But finding a place to call home is quickly becoming a concern in all corners of America.
The price of housing used to march in lockstep with the cost of construction—pay more and you get a better house. But starting in the 1970s, right when zoning began spreading nationwide, those two prices diverged, with home prices soaring while building costs remained stable. That gap is like a “zoning tax” that falls hardest on the poorest Americans and raises the price of entry to cities with the most jobs and opportunity. Today’s housing crisis is the American Dream turned nightmare.
The basic shortage of shelter is disastrous for many reasons. For one thing, high housing costs harm families: It becomes harder to afford to have kids, to move back home after college, or to stay in your neighborhood after you’ve retired. Workers live farther away from jobs or turn down great job opportunities in pricey areas. Zoning leads to segregated races and classes long after the Supreme Court banned racial zoning.
But it gets worse: Take education, for instance. Gains from building good schools are soaked up in housing costs as parents bid up homes in the “right” district and use zoning restrictions to keep out other families. According to one study, homes are nearly two-and-a-half times more expensive near high-scoring schools—mortgages have become “tuition” for public schools. Simply allowing low-income families to access housing in high-opportunity areas means their children are far likelier to attend college, earn more over their lifetimes, and raise stable families themselves.
Yet, at the local level, new housing still faces enormous pushback. You hear two main arguments in defense of zoning: Neighbors want control over the pace of change in their own neighborhood, and they want some way to get newcomers to pay for the costs they bring when they move in, whether more traffic or crowded classrooms.
What sort of change do neighbors want to regulate? The kind that destroys neighborhood character, for one thing, like when Miami’s “Harlem of the South” was bulldozed for a highway. Or when a poor community is swamped with newer, wealthier residents—a process often derided as “gentrification.” More fundamentally, people just like the sort of place they first bought into.
Regulating change—done well—does not mean freezing change altogether. No one wants a landfill next to a daycare, or more clogged streets and higher school taxes. Some of these changes can be controlled. But too often, calls to regulate change are short-hand for keeping neighborhoods frozen in time: In Massachusetts, 99.7% of land with single-family homes in 1970 had the same use thirty years later. You often hear that zoning means local control. But wouldn’t real local control mean letting property owners decide what to do with their own land?
Even zoning fans admit these rules are rarely about stopping belching smokestacks. Meanwhile, whatever traffic costs a neighbor might see on their street ignores the benefits of more homes for an entire region facing a housing crisis. In many neighborhoods, allowing more homes near jobs and shops just means more walking and biking, especially when we don’t mandate acres of parking in between.
And when most folks protesting housing at local meetings are older, whiter, and wealthier, you must wonder: Is this really about schools? Zoning took off in the 1970s right when homes became a key source of household wealth. This is when the “threats” came. Highways brought industry and commerce to the suburbs. The civil rights-era bans on racist zoning meant towns switched to “neutral” policies banning all development. New laws gave neighbors the power to stop development on environmental grounds. New local planning commissions and zoning boards meant everyone got a veto and a vote—a recipe for gridlock.
In truth, the mindset of “Not-In-My-Back-Yard” (NIMBYism) succeeds through a fear of change fueled by the financial self-interest of incumbent homeowners who dominate gridlocked local politics.
No wonder that Americans in growing metro areas, according to polling, support making it easier to build more homes. Nearly seven in ten favor streamlining regulations that get more housing approved faster. There’s now a bipartisan movement (“Yes-In-My-Backyard”) pushing for reforms like this. They’re chalking up wins from California to Massachusetts—most recently with California’s bills allowinghomeowners to build on their own land—and now spreading to red states with groups like Texans for Housing Reform.
States can help. They could put limits on lot sizes and parking. They could free up restrictions on garage apartments or housing near transit and in commercial areas. They could set a “shot clock” on building permits, so that if a decision isn’t provided in 60-days, the permit is automatically granted.
Or they could really go big, by requiring every major city to plan for a 50% increase in housing supply over the next decade. The economic benefits would be enormous: One estimate shows that loosening regulations on housing supply in New York, San Francisco, and San Jose alone would boost America’s growth rate by an incredible 36%.
Want more growth? Build more houses. Want to improve racial and economic equality? Build more houses. Want to help working families who are struggling to make ends meet? Build more houses. What are we waiting for?
This piece originally appeared at Persuasion
______________________
Michael Hendrix is the director of state & local policy at the Manhattan Institute.
This piece originally appeared in Persuasion