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Hopeful News on Housing

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Hopeful News on Housing

In 2019, Republican- and Democratic-dominated states and municipalities took some positive steps to encourage construction and improve affordability. January 3, 2020
Economy, finance, and budgets

Last year, Democratic- and Republican-led states and municipalities passed legislation addressing housing affordability, a hopeful sign that housing deregulation is beginning to attract bipartisan support, at least at the state and local level. The measures taken—from rolling back regulation to strengthening homeowner rights—vary widely, depending on geography and the housing-market issues involved.

In areas where land is cheap, lowering the cost of homebuilding is paramount—as Georgians can attest. In Bryan County, for instance, new homes must include brick or “hardi-plank” siding, and facades must be limited to two materials. In Marietta, northwest of Atlanta, all walls must include brick, stone, stucco, or fiber-cement, while in Brookhaven, the walls must be brick-clad. These localities also ban cheaper materials, like vinyl siding. Such restrictive regulations drive up the cost of building and owning homes.

Encouragingly, Arkansas and Texas have squelched such requirements through bipartisan state legislation. Arkansas has restored autonomy to homeowners on virtually all building-design choices, from color to roof pitch, while Texas has purged local restrictions on building materials. While Arkansas permits “overlay districts” that allow property exemptions, Texas limits strict enforcement to sites of historic importance. Similar legislation in Georgia failed to advance, however—a reminder that removing regulation is difficult once cities and counties become accustomed to enforcing it.

Bureaucratic delays also inflate construction costs, driving up housing costs. According to a study of residential construction in eight California cities, the average approval time for projects that meet local standards was between seven and 30 months. Projects requiring variances or other exemptions took even longer. Such delays will not creep into North Carolina and Texas, though, where newly passed legislation requires cities and counties to issue project approvals within a few weeks. In Texas, a developer can now move forward with construction if a municipality takes more than 30 days to review a completed application. North Carolina now imposes a 15-business-day limit for building permits involving one- and two-family dwellings.

Another factor behind rising housing prices: minimum unit-size regulations. Des Moines, for example, considered a proposal requiring that new homes encompass at least 1,400 square feet—larger than the average existing home in the city. Public outcry, led by Habitat for Humanity, forced the city to abandon that proposal, but other jurisdictions around the country enforce similar rules. Here, too, North Carolina has a better approach: it now prohibits any local zoning requirements that impose a minimum square footage for one- and two-family homes.

An older Arizona law might offer a template for other states looking to balance private property rights with local public interests. Rather than chipping away at specific local restrictions, the state passed the Property Ownership Fairness Act in 2006, reframing the question of regulation in terms of eminent domain. If a local regulation diminishes the value of land by imposing new limitations on the use of the property— such as increasing the minimum lot size or changing the zoning to lower-value uses—the jurisdiction must compensate the property owner for his loss. Arizona’s approach helps achieve a middle ground, where neither the city government’s mandate nor the landowner’s property right is absolute.

State legislators will likely continue to address housing-supply restrictions in the years ahead. More states could imitate Arizona’s property-ownership law, for example. Others might challenge minimum parking requirements. While no state has yet banned these requirements, cities as different as San Francisco and Fargo have done so, allowing the market to determine parking supply in at least some areas. The battle over rent control and inclusionary zoning could intensify as well, as it already has in California and Oregon. Looking forward, policymakers in blue and red states alike should consider how current regulations restrict housing supply and drive up prices—and they should continue to work across the aisle to devise constructive solutions.

Photo: Andrei-Stanescu/iStock

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