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Category Zoning

Collective Action Problems Are Similar For Land Use And Schools

I just read a law review article complaining that some white areas in integrated southern counties were trying to secede from integrated school systems (thus ensuring that the countywide systems become almost all-black while the seceding areas get to have white schools), and it occurred to me that there are some similarities between American school systems and American land use regulation.  In both situations, localism creates gaps between what is rational for an individual suburb or neighborhood and what is rational for a region as a whole. In particular, it is rational for each suburb to have high home prices (because that means a bigger tax base)- but I don’t think San Francisco-size rents and home prices are rational for a region as a whole.  Similarly, it is rational for each individual neighborhood within a city to have restrictive regulations, because if one neighborhood is less restrictive it suffers from whatever burdens might result from new housing, without the broader benefit of lower citywide housing costs. How are school districts similar?  Since the prestige of a neighborhood is related to its school district, and the prestige of school districts depends on their socio-economic makeup, it is rational for each suburb (or city neighborhood) to be part of a school district dominated by white  children from affluent families, rather than to be part of a socially and racially diverse district.  But if every middle-class or affluent area draws school district lines in a way that excludes lower-income children, the poor people are all concentrated in a few poor school districts (such as urban school districts in Detroit and Cleveland). Is this rational for the region as a whole?  I suspect not.

‘Who better to determine local needs than property owners and concerned citizens themselves?’

The Cato Institute’s Vanessa Brown Calder is skeptical of the Obama administration’s suggestion that state governments can play a role in liberalizing land-use regulation, a policy area usually dominated by local governments. In an otherwise thoughtful post responding to a variety of proposals, she writes that federal and state-level bureaucrats should step aside to allow local advocacy groups to fill the void. She asks, “Who better to determine local needs than property owners and concerned citizens themselves?” Pretty much anyone, really. Local control of land-use regulation is a mistake and concerned citizens in particular are ill-suited for making decisions about their neighbors’ property. Supporters of free societies usually oppose local control of basic rights for good reason. Exercising one’s rights can be inconvenient for or offensive to nearby third parties. Protesters slow traffic, writers blaspheme, rock bands use foul words, post-apartheid blacks live wherever they choose with no regard for long-held South African social conventions, and so on. These inconveniences obviously don’t override rights to freedom of expression, but lower levels of government might be persuaded by people whose sensibilities are offended by these expressions. People are more likely to favor restrictions on rights when presented with a specific situation than they are when asked about general principles. People are even more likely to favor restricting a specific, disliked person’s rights. The landmark First Amendment case, National Socialist Party of America v. Village of Skokie, is instructive. The plaintiffs, American Nazis planning a parade through a neighborhood populated by Holocaust survivors in Illinois, sued on First Amendment grounds when the local government tried to prevent them from carrying swastikas. The Supreme Court eventually ruled in favor of the Nazis because the First Amendment protects peaceful demonstrations with no regard for the vile or hateful content of the ideas being promoted […]

Where Do Upzonings Happen?

  I think the most useful way to think about NIMBYism is as a neighborhood-centered phenomenon. When people shop for homes, they shop for specific, physical features of a dwelling, of course, but mainly they shop for neighborhoods. The quality of neighborhood amenities — interpreted broadly to include things like school quality and access to the CBD — varies wildly from neighborhood to neighborhood, and thus does the amount people are willing to pay for those amenities. What NIMBYs are really after is limiting access to neighborhood amenities, mostly by limiting the quantity of housing. Neighborhoods (at least the ones empowered politically) do their best to hold housing below the market-clearing quantity. This ensures that the value of neighborhood amenities is capitalized into home prices. Without quantity controls, the “nicest” neighborhoods would be the densest. Instead, thanks to zoning, they’re simply the most expensive. There’s a steep premium for buying into the neighborhood club. Here’s evidence in favor of the “club” theory from L.A. planner C.J. Gabbe. (H/t Urbanize.LA.) Gabbe asks the question, “Where do upzonings and downzonings happen?” To answer it, he looked at how the zoning of each of L.A.’s 780,000 parcels changed between 2002 and 2014, and tallied whether a lot was “upzoned” or “downzoned”, as measured by the change in allowed residential density. The first striking result was how few of the parcels were either upzoned or downzoned: an average of just 225 acres were upzoned and 216 acres downzoned annually between 2002 and 2014. That is, less than two-tenths of one percent of L.A.’s land area was upzoned or downzoned each year. Given the surge in demand for housing in L.A., especially over the last 6 years or so, that’s remarkably little. But the other thing Gabbe documents is that resistance to zoning really does seem to […]

4 Things Austin’s City Council Could Do Today To Fight The Housing Shortage

Central Austin needs more housing. Prices have been rising, more and more people want to live where they have short commutes, but are only able to afford homes near the periphery. We have a long-term plan to alter our land development code in a way that would help…but our need is now. What options are available today? END PARKING REQUIREMENTS IN WEST CAMPUS Every year, West Campus adds more and more dense student housing, and, along with it, pedestrian amenities like wide sidewalks and street trees. A parking benefit district meters on-street parking with proceeds plowed back into neighborhood improvements. Surveys have shown the vast majority of West Campus students get around without cars. Allowing housing for students without parking could allow denser housing, lower construction costs, or allow more creative buildings that take advantage of unique lots. Removing minimum parking rules has already resulted in a few buildings downtown targeting markets that either don’t need cars or have other places to park them; this could be even more true in student-rich West Campus. REDUCE PARKING REQUIREMENTS NEAR TRANSIT ROUTES The same logic of reducing parking requirements applies outside the student market to apartments near transit routes. More and more people in Austin want to live car-free or car-light. That is easiest to do in buildings created with that lifestyle in mind–a step that can both reduce construction costs and allow room for improving other amenities. Long-term, if Austin wants to be a sustainable city, parking-free typologies should be allowed everywhere. However, in much of Austin, we wrongly treat scarce on-street parking as an endless “commons” rather than managing it as a scarce resource. This means that it may be wiser to improve incrementally–reducing off-street parking requirements, improving on-street parking management, and improving transportation options. IMPLEMENT THE DOWNTOWN AUSTIN PLAN New high-rise towers are being constructed in downtown Austin all the time–but downtown is more than just the Central Business District. […]

Econ 101 And The Missing Middle

HUD has released 2015 building permit tallies. Austin’s tallies for 2015: Single Family Units: 2,846 Duplex units: 326 Units in 3-4 unit buildings: 30 Units in 5+ unit buildings: 6,890 This bipolar split is typical of American cities. Some cities build more single-family than multi-family. Some build more multi-family than single-family. But the fourplex is dead. We build very little small-scale multi-family these days, which is why the “missing middle” is a focus of zoning code rewrites and a meme among the New Urbanist crowd. Although “missing middle” housing could easily be added to established single-family neighborhoods while preserving “neighborhood character,” it is mostly illegal in Austin and most other American cities, at least within the single-family districts, and it is often staunchly resisted by homeowners in older neighborhoods, where the form of housing makes most sense. Some homeowners, in fact, seem to dislike “missing middle” housing more than any other kind of housing. It is worth thinking about why. It is useful to first think about building technologies.  After manufactured housing, the simplest, cheapest housing technology is the low-rise, wood-frame construction used in  detached single-family homes. Small apartment buildings can be built using essentially the same techniques. Most large suburban apartment projects, in fact, are developed as a cluster of two-three story buildings containing 8-12 units each. These buildings would actually form nice low-rise, urban neighborhoods if they were arranged around a public street grid, but instead they are arranged around parking lots, private drives and landscaped common areas in garden-style developments. The next step up from low-rise, wood-frame technology is the mid-rise apartment building of four to seven stories. This type of development requires elevators (and thus a concrete elevator core) and usually consists of “stick and brick” construction over a concrete podium. It is at least twice as expensive per square foot as similar quality single-family housing — more if it includes structured […]

NIMBYism as an Argument Against Urbanism

In his new book The Human City, Joel Kotkin tries to use NIMBYism as an argument against urbanism.  He cites numerous examples of NIMBYism in wealthy city neighborhoods, and suggests that these examples rebut “the largely unsupported notion that ever more people want to move ‘back to the city’.” This argument is nonsense for two reasons. First, the NIMBYs themselves clearly want city life and a certain level of density–otherwise they would have moved to suburbia.  In cities like Los Angeles and New York, a wide range of housing choices exist for those who can afford them. Second, the fact that some people want to prohibit new housing does not show that there is no demand for new housing.  To draw an analogy: the War on Drugs prohibits many drugs.  Does that mean that there is no demand for drugs?  Of course not.  If anything, it proves that there is lots of demand for drugs; otherwise government would not bother to prohibit it. For my more in-depth review of The Human City, read:  Joel Kotkin’s New Book Lays Out His Sprawling Vision For America

Airbnb Crowding Out Is A Symptom, Not A Cause Of Housing Shortages

  When journalists, NIMBYs, politicians, and activists make claims about Airbnb taking potential full-time housing stock and converting it to leisure space, they operate under the assumption that the housing supply must be fixed. This assumption is half true: By no means must the housing supply be fixed, just as the supply of laptops, shoes, or milk has no requirement to be fixed. In reality, though, the supply is, yes, somewhat fixed, but that is merely an option, chosen by NIMBY residents, politicians, and misguided housing activists* that force through restrictive construction policies that either largely inhibit or outright prohibit new housing development. Economists Ed Glaeser, Joseph Gyourko, and Raven Saks estimate that what they call the “zoning tax” accounts for, on average, more than 10 percent of the price of the average U.S. home. In cities with extreme restrictions like San Francisco, the zoning tax is as high as 50%! Here’s a thought exercise: Imagine the U.S. had very restrictive laws regarding smartphone production. If a new Apple factory wanted to produce more iPhones, each phone would have to go through a long, onerous, and costly approval process by the local government and regulatory agencies. In addition, nearby established phone factories or incumbent phone owners in many areas could successfully pressure the local government to prohibit the new factory from producing phones. Because of these burdens, the supply of phones rises only very slowly (far less than the growth in phone demand), and many people have to go about sharing a phone with family or friends or diverting huge portions of their monthly budget to owning/renting a scarce phone. In this alternative phone regulation reality, the criticism that “some tiny portion of phones are used for leisure like social media and games rather than important things like work or talking to […]

Home-Sharing and Housing Supply

One common argument against Airbnb and other home-sharing companies is that they reduce housing supply by taking housing units off the long-term market.* As I have written elsewhere, I don’t think home-sharing affects housing supply enough to matter.  But even leaving aside the empirical question of whether this will always be true, there’s a theoretical problem with the argument that if someone fails to use their land for long-term rental housing, government must step in. It seems to me that this argument, if applied with even a minimal degree of consistency, leads to absurd results.  For example, suppose that Grandma has a spare room in her house, and instead of renting it on Airbnb she allows the room to be unused.  Should Grandma be forced to rent out the room?  Of course not. A home-sharing critic might argue that an unused room is different from a room that is likely to be rented out to a long-term tenant.  Indeed it is- but in fact, Grandma’s failure to rent the room to anyone is more socially harmful than her renting the room on Airbnb.  In the latter situation, a traveler benefits (from a cheaper rate than a hotel, or at least for a different kind of experience) and Grandma benefits by getting money from the traveler.  By contrast, in the former situation, no one benefits. It could be argued that Grandma’s rights should be unimpeded, but that regulation should be targeted towards the amateur hotelier who seeks to rent out an entire building all-year round, rather than using the building for more traditional tenants. Even here, the argument based on housing scarcity leads to absurd results.  Suppose the evil landlord Snidely Whiplash decides, instead of renting out his building on Airbnb, to use the building for a vacation house one day a year […]

Shut Out: How Land-Use Regulations Hurt the Poor

People sometimes support regulations, often with the best of intentions, but these wind up creating outcomes they don’t like. Land-use regulations are a prime example. My colleague Emily Washington and I are reviewing the literature on how land-use regulations disproportionately raise the cost of real estate for the poor. I’d like to share a few of our findings with you. Zoning One kind of regulation that was actually intended to harm the poor, and especially poor minorities, was zoning. The ostensible reason for zoning was to address unhealthy conditions in cities by functionally separating land uses, which is called “exclusionary zoning.” But prior to passage of the Civil Rights Act of 1968, some municipalities had race-based exclusionary land-use regulations. Early in the 20th century, several California cities masked their racist intent by specifically excluding laundry businesses, predominantly Chinese owned, from certain areas of the cities. Today, of course, explicitly race-based, exclusionary zoning policies are illegal. But some zoning regulations nevertheless price certain demographics out of particular neighborhoods by forbidding multifamily dwellings, which are more affordable to low- or middle-income individuals. When the government artificially separates land uses and forbids building certain kinds of residences in entire districts, it restricts the supply of housing and increases the cost of the land, and the price of housing reflects those restrictions. Moreover, when cities implement zoning rules that make it difficult to secure permits to build new housing, land that is already developed becomes more valuable because you no longer need a permit. The demand for such developed land is therefore artificially higher, and that again raises its price. Minimum lot sizes Other things equal, the larger the lot, the more you’ll pay for it. Regulations that specify minimum lot sizes — that say you can’t build on land smaller than that minimum […]

The Answer to Expensive Housing: Build More

If you restrict the supply of housing, other things equal, what will happen to the price? That’s not a trick question. Any competent Econ 101 student would answer correctly that the price will rise. One reporter for the Washington Post gets it. In a hopeful sign of spreading economic literacy, Emily Badger writes: In tight markets, poor and middle-class households are forced to compete with each other for scarce homes. And so new market-rate housing eases that competition, even if the poor aren’t the ones living in it. Over time, new housing also filters down to the more affordable supply, because housing becomes less desirable as it ages. That means the luxury housing we’re building today will contribute to the middle-class supply 30 years from now; it means today’s middle-class housing was luxury housing 30 years ago. Typical critics of soaring housing prices have a much harder time grasping this. They don’t see that zoning rules and restrictions meant to make urban life more “livable” (often for the well-established homeowner) reduce supply and put strong upward pressure on prices. Minimum lot sizes, maximum density restrictions, minimum parking requirements, and so on all contribute to reducing the supply. And it raises prices not only for the wealthy, but also for middle- and lower- income families, as well. Instead, they think that new construction of market-rate housing is somehow the source of the problem, rather than a solution. (Emily Washington and I recently published a useful summary of the literature on the regressive effects of land-use regulation.) Ever wonder how ordinary people could afford to live in major cities before there were rent controls and land-use regulations? Builders built wherever it was the most profitable. The middle-incomers didn’t have to compete with the wealthy for middle-income housing, and the poor then didn’t have to compete with the middle-incomers for low-priced […]

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