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The Vast Collateral Damage of Zoning

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The Vast Collateral Damage of Zoning

Robert C. Ellickson exposes in convincing detail the deleterious impact of restrictions on new housing. October 27, 2022
Economy, finance, and budgets
Politics and law

America’s Frozen Neighborhoods: The Abuse of Zoning, by Robert C. Ellickson, (Yale University Press, 320 pp., $40)

As recently as the 1950s, the area we now call Silicon Valley was an agricultural region, filled with fruit orchards. But as the American population shifted West, a vast influx of more than a million newcomers transformed the area between San Jose and San Francisco. Among those accommodating this population boom was housing developer Joseph Eichler, who would, with the encouragement of local officials, build hundreds of modest homes for the newcomers and, in the process, help create a new economy. As recounted in Robert Ellickson’s America’s Frozen Neighborhoods, Eichler sold 1,500 square-foot homes for $16,000 apiece (worth about $160,000 in 2022 dollars). Today, those same small Eichler homes go for $2.6 million—ten times the median home price in the U.S.—despite stagnant population growth in the area.

The story of why those prices exploded and how that frustrates potential homebuyers in California—and many other parts of the country—is, Ellickson argues convincingly, the story of housing supply suppressed by restrictive zoning. Following in the footsteps of scholars who have written about zoning’s effects (including Bernard H. Siegan on zoning-less Houston and Bernard J. Frieden on the zoning-constrained Bay Area), Ellickson dives deeply into three diverse regions—Silicon Valley, the leafy suburbs of Connecticut, and Austin, Texas—to demonstrate how extraordinarily restrictive local zoning can be. Using the relatively lax and affordable Austin area as a counter-example, he shows how what he terms “the zoning straitjacket” can make a big difference for the 15,000 American municipalities that have adopted zoning codes since the Supreme Court upheld their constitutionality in 1926.

A professor of urban and property law at Yale Law School, Ellickson gets quickly to the heart of the matter: “Local zoning measures may be the most consequential regulatory program in the United States. Local barriers to housing production elevate housing costs and distort household migration decisions. Nonetheless, members of the mass media tend to regard anything that happens at a city hall as unworthy of attention.” He characterizes zoning’s reach into private life as “Leviathan gone Local.”

In case after case, he illustrates how typical zoning standards drive up home costs. These include minimum sizes for both the size of a lot and of a house, as well as the widespread requirements for detached single-family homes or even sharp limitations on where townhouses or duplexes may be built. In much of Greenwich, Connecticut, for example, a new home requires a lot size of four acres. Three Silicon Valley towns (Los Altos Hills, Woodside, and Portola Valley) have a combined area of 30 square miles, of which only two acres (0.01 percent) are zoned for multi-family homes. It’s no surprise that in nearby Atherton, which requires one-acre minimum lots, the median home value is $6.5 million. Palo Alto, California, finds another way to restrict construction—by limiting the height of potential apartment buildings downtown. Five of the Connecticut towns that Ellickson analyzes not only mandate large lot sizes but also restrict 99 percent of the land to single-family detached homes. And once a neighborhood is zoned that way, it almost never changes—thus, the “frozen” part of his title.

For Ellickson, zoning restrictions reflect a great deal more than just house prices. Large homes on widely separated lots mean that neighborhood environments are less likely—and that those who prefer such communities have fewer options. He waxes nostalgic for the “trick-or-treat” paradises that neighborhoods with small homes on small lots, with sidewalks, once created.

Less-restrictive zoning regimes make a big difference, Ellickson argues—allowing the now-booming Austin, for example, to accommodate a wave of house-price refugees from California. Undeveloped land zoned for multifamily housing is ten times more common in the Austin area than in the Connecticut and California areas he also examines. No surprise, then, that the median home price in metropolitan Austin is $340,000, compared with $1.1 million in San Jose.

Ellickson goes beyond zoning in his discussion of housing costs, exploring underappreciated concerns like whether to provide municipally funded sewage systems. The absence of such systems forces developers to provide them—and then to pass on the costs, built into the home price. Alternatively, homebuyers must pay for private septic systems, another cost-driver. Tax policy matters greatly, too. Texas communities rely on a property tax rather than on income tax, giving communities an incentive to welcome more development. Local home rule is a stronger tradition in New England than elsewhere; with it comes hyperlocal zoning that leads to large lot size requirements, for instance. That such matters can be linked to the income of potential newcomers and, ultimately, even to the racial makeup of a community, is a reminder that local politics and governmental structure can have a profound impact.

The question naturally prompted by Ellickson’s account is how to relax the zoning regimen and unfreeze our communities. The answer is less about data than about politics. Given the litany of regulatory overreach he documents, Ellickson sees local control of land use as the enemy—and he would take steps to limit it. “I contend that a state should preempt many of the land use choices that its local governments are now free to make.”

This is not a pie-in-the sky idea. California has recently enacted statewide legislation to make it easier for homeowners to build “accessory dwelling units” (aka “granny flats”) on heretofore single-family lots. This is of a piece with Ellickson’s point that the housing market should be free to provide households with a range of potential living arrangements and community types. But as a political matter, any state governor who moves to strip localities of their zoning powers would face a significant backlash.

As I’ve argued, just as zoning was adopted town-by-town in the 1920s, zoning might be more easily relaxed town-by-town, through persuasion. Many affluent communities find that they lack “workforce” housing for their municipal workers, as well as starter homes for their children. The demand for this “missing middle” housing is going unmet—and, as in the 1950s, we should look to developers to propose relatively modest homes and convince local planning boards to approve them.

Other approaches—such as “anti-snob” and “mixed-income” state laws in Massachusetts and Connecticut, designed to relax zoning if developers agree to include low-income units—are likely to spur middle-class pushback. Developers, notes Ellickson, worry, too, that the presence of such units will deter the market-rate buyers such developments need. That is not to say that there is no role for state governments, which might offer financial aid to mitigate increased local costs (such as for schools) in communities that choose to permit what Ellickson calls “densification.” For those contemplating that kind of reform, the book helpfully provides a means of quantifying just how exclusionary local zoning rules are—and a way to measure the impact of specific changes.

Ellickson also has a soft spot for housing vouchers for the poor—mainly because they’re less costly than “bricks-and-mortar” low-income developments. But it would be far better to provide modest homes on small lots to which the upwardly poor can aspire than to steer them into the dependency of subsidized rentals.

There’s much to ponder, then, about Ellickson’s proposed solutions to the zoning mess. But he has written a classic volume on American housing, exposing in grim and convincing detail the collateral damage of what was once seen as reform.

Photo: photovs/iStock

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