Deregulation is key to affordable housing

Overregulation of housing — from restrictive zoning laws to onerous building codes — is implicated in a great many of America's problems. A lot of people who have studied the issue, from varying political viewpoints, have reached that same understanding.

The most obvious ramification of overregulation is that it keeps housing supply too low and prices too high, so that affordable housing is less available. It also reduces economic mobility if people can't afford to live where the best jobs are.

For a long time, relocations helped to narrow the economic differences between regions of the U.S. In recent decades, those differences have been widening.

The cost of housing lurks behind other issues. Racial segregation is one: The desire to keep Black and white people apart formed part of the motivation of zoning laws, and they still advance that ugly purpose.

Eric Kober, a retired city planner for New York City who is now a senior fellow at the Manhattan Institute, observes that zoning rules have also promoted age segregation by reducing the supply of new housing. "Older neighborhoods become retirement communities where young people can't find housing," he tells me.

Estimates of the economic cost of overregulation of housing are eye-popping. One paper found that if New York City and the San Francisco Bay Area had had land-use practices as free as those in the median U.S. city over the last 50 years, the national economy would be at least 14% larger now.

The places with the tightest restrictions tend to have progressive politics. Nodding to this fact, Richard Kahlenberg recently wrote an essay for the New York Times urging progressives to take up the cause of zoning reform as a matter of social justice. They should ally with conservatives who want to deregulate land use, he urged, passing federal legislation that would prod localities to loosen their rules.

The liberal journalist Matthew Yglesias shares Kahlenberg's interest in allowing more housing to be built. But he brought up some of the political difficulties with Kahlenberg's project.

Framing zoning reform as a way to make suburbs advance racial justice will make it a hard sell to conservatives, who associate such phrases with policies they dislike. Talking about it in terms of liberalizing markets, on the other hand, will alienate progressives.

Then there's the level-of-government issue. Zoning has traditionally been under the control of local governments. It's the quintessential local issue. This arrangement allows for sensitivity to community tastes, but also creates a misalignment of costs and benefits.

A neighborhood that allows new home construction is inviting more traffic and noise, and may see reduced property values. The economic gains of this expansion, though, accrue to larger entities: cities, regions, states, the country as a whole.

Proponents of housing deregulation have therefore been interested in getting higher levels of government to intervene. Kahlenberg wants the federal government to use carrots and sticks to get localities to allow more housing, as does the conservative economist Edward Glaeser. But federal interference in a historically local function alarms a lot of conservatives, even if they favor fewer restrictions on economic development.

Nor does it solve the political problem. The federal government has long had the authority to use funding to change local housing policies. If voters in the Bay Area and New York are dead-set against allowing more housing there, it is hard to imagine that a Democratic administration, working in concert with a House speaker from San Francisco and a Senate majority leader from Brooklyn, is really going to force them to start.

None of this has to spell doom for changing the housing laws. Those residents of progressive places might change their minds if more permissive housing rules become more associated with social justice. In that case, though, progressive cities won't have to wait for the federal government to make them adopt new policies.