Report: Rising home prices caused by excessive zoning and other forms of government regulation
By Kelly Thomas | August 12, 2016, 6:28 EDT
WASHINGTON, D.C. – Governmental urban planning measures are the cause of rising home prices around the nation, according to a report released this week by the Washington, D.C.-based Independent Women’s Forum (IWF), a non-partisan research institute dedicated to supporting women who believe in the principles of economic freedom, individual responsibility and limited government.
According to the report, which was authored by IWF Senior Fellow Angela Logomasini, housing costs are high in the U.S. because of myriad of zoning regulations that increase building expenses and because of rent control and other government polices regulations that discourage investment in new housing.
The report contextualizes its research against the nationwide rise in living costs, which continue to affect the most socio-economically challenged, despite a number of “smart-growth” policies enacted by government.
The report takes aim at local zoning ordinances, which ostensibly give local governments power to separate residential and industrial areas, but which, in practice, are often used to create large lot sizes and limit the number of units per home, ensuring that only those above a certain income level can afford the move to the suburbs. Suburban zoning policy has increased demand for homes in the city, but urban growth boundaries limit supply and drive prices further upwards.
In 2015, Demographia International Housing Affordability Survey revealed that cities having “severely unaffordable housing” also had a combination of restrictive zoning as well as urban containment. That study determined that such regulations drove prices up by a margin of $30,000 in St. Paul Minnesota and by a margin of $220,000 in cities such as San Diego, California.
Although “rent control” and “rent stabilization” policies seek to improve the availability of affordable housing, such policies, in fact, discourage property owners from renting out their property, because doing so is less profitable. In this way zoning laws exacerbate, rather than remedy urban inequality.
According to another report by the Boston Foundation released in 2015, size and housing density limits discourage new construction in some areas of Boston, while at the same time, the cost of building housing driven up by extensive regulations on rentals.
The cost of developing affordable housing “has become prohibitive in Massachusetts,” the report says.
Too much regulation “hurts poor and middle class people who can’t find a house in Boston,” said William Fischel, a professor of economics at Dartmouth College.
“It makes communities overly elite, which is kind of unhealthy for the community and the area as a whole.”
To remedy the problem, the IWF report calls for a reduction in government regulations and urges policymakers to allow developers and contractors to meet the market demands for housing without government interference.