Minneapolis is the city de jour when it comes to housing policy. Planners across the nation herald the elimination of single-family zoning as a terrific move that will lead to the construction of more housing. More housing, as the story goes, will lower housing costs and perhaps desegregate. In effect, densification produces more and cheaper housing.
St. Paul seems to believe this too.
If only this were true. I find it ironic that erstwhile so-called progressives have bought into the idea that simply deregulating land use laws will produce more housing construction, especially that which is affordable. I can not think of two many other areas of social policy where progressives believe less regulation is good and that letting market forces operate will produce equitable solutions. Yes, in many cases and places markets make sense, but does it when it comes to housing, especially housing that is affordable for those of low and moderate income?
I have been a repeated critic of the direction Minneapolis is taking in terms of housing–specifically arguing that Minneapolis’s 2040 plan is highly flawed and naïve. The idea that “Let them build it and they will solve the housing problem” is a mantra of many. I have argued that the simple deregulation of housing markets will not produce more affordable housing. Left to their own devices, developers will build high-end housing for the rich and not units for low to moderate income people because the former is more profitable.
Such an approach is simply a neo-liberal pro free market approach.
Housing markets are segmented–the market for high end units does little to depress costs for other types of units. If we want more affordable units we need to build them, or create incentives and structures to do that–simply dezoning or deregulating housing markets will not accomplish that.
The best evidence to support my claim is a recent article that appeared in Urban Studies (a pre-publication version is found here). In a study by researchers at the Urban Institute they found that easing land use restrictions may not increase housing supply or decrease housing prices. Their study was based on generate(d) a dataset of a variety of land-use reforms across eight US metropolitan regions encompassing 1,136 cities from 2000 to 2019.
Their major conclusion: Let us quote:
“We find that reforms that loosen restrictions are associated with a statistically significant, 0.8% increase in housing supply within 3 to 9 years of reform passage, accounting for new and existing stock. This increase occurs predominantly for units at the higher end of the rent price distribution; we find no statistically significant evidence that additional lower-cost units became available or moderated in cost in the years following.”
The evidence is simply not there that unrestricted building that is supposed to occur as a result of deregulated zoning produces more affordable units.
There may be reasons to densify, but it will not yield the type of housing that is needed. It will instead produce the type of housing that is most profitable to developers.
Housing markets are segmented–the market for high end units does little to depress costs for other types of units. If we want more affordable units we need to build them, or create incentives and structures to do that–simply dezoning or deregulating housing markets will not accomplish that.
The best evidence to support my claim is a recent article that appeared in Urban Studies (a pre-publication version is found here). In a study by researchers at the Urban Institute they found that easing land use restrictions may not increase housing supply or decrease housing prices. Their study was based on generate(d) a dataset of a variety of land-use reforms across eight US metropolitan regions encompassing 1,136 cities from 2000 to 2019.
Their major conclusion: Let us quote:
“We find that reforms that loosen restrictions are associated with a statistically significant, 0.8% increase in housing supply within 3 to 9 years of reform passage, accounting for new and existing stock. This increase occurs predominantly for units at the higher end of the rent price distribution; we find no statistically significant evidence that additional lower-cost units became available or moderated in cost in the years following.”
The evidence is simply not there that unrestricted building that is supposed to occur as a result of deregulated zoning produces more affordable units.
There may be reasons to densify, but it will not yield the type of housing that is needed. It will instead produce the type of housing that is most profitable to developers.
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