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United States Government

US Cities Try Changing Their Zoning Rules to Allow More Housing (npr.org) 191

Tech workers are accused of driving up rents in America's major cities — but in fact, the problem may be everywhere. Half of America's renters "are paying more than a third of their salary in housing costs," reports NPR's Weekend Edition, "and for those looking to buy, scant few homes on the market are affordable for a typical household.

"To ramp up supply, cities are taking a fresh look at their zoning rules and the regulations that spell out what can be built where and what can't." And many are finding that their old rules are too rigid, making it too hard and too expensive to build many new homes. So these cities, as well as some states, are undertaking a process called zoning reform. They're crafting new rules that do things like allow multifamily homes in more neighborhoods, encourage more density near transit and streamline permitting processes for those trying to build... Minneapolis was ahead of the pack as it made a series of changes to its zoning rules in recent years: allowing more density downtown and along transit corridors, getting rid of parking requirements, permitting construction of accessory dwelling units, which are secondary dwellings on the same lot. And one change in particular made national news: The city ended single-family zoning, allowing two- and three-unit homes to be built in every neighborhood.

Researchers at The Pew Charitable Trusts examined the effects of the changes between 2017 and 2022, as many of the city's most significant zoning reforms came into effect. They found what they call a "blueprint for housing affordability." "We saw Minneapolis add 12% to its housing stock in just that five-year period, far more than other cities," Alex Horowitz, director of housing policy initiatives at Pew, told NPR... "The zoning reforms made apartments feasible. They made them less expensive to build. And they were saying yes when builders submitted applications to build apartment buildings. So they got a lot of new housing in a short period of time," says Horowitz. That supply increase appears to have helped keep rents down too. Rents in Minneapolis rose just 1% during this time, while they increased 14% in the rest of Minnesota.

Horowitz says cities such as Minneapolis, Houston and Tysons, Va., have built a lot of housing in the last few years and, accordingly, have seen rents stabilize while wages continue to rise, in contrast with much of the country... Now, these sorts of changes are happening in cities and towns around the country. Researchers at the University of California, Berkeley built a zoning reform tracker and identified zoning reform efforts in more than 100 municipal jurisdictions in the U.S. in recent years.

Other cities reforming their codes include Milwaukee, Columbus, New York City, Walla Walla, and South Bend, Indiana, according to the article — which also includes this quote from Nolan Gray, the urban planner who wrote the book Arbitrary Lines: How Zoning Broke the American City and How to Fix It.

"Most American cities and most American states have rules on the books that make it really, really hard to build more infill housing. So if you want a California-style housing crisis, don't do anything. But if you want to avoid the fate of states like California, learn some of the lessons of what we've been doing over the last few years and allow for more of that infill, mixed-income housing."

Although interestingly, the article points out that California in recent years has been pushing zoning reform at the state level, "passing lots of legislation to address the state's housing crisis, including a law that requires cities and counties to permit accessory dwelling units. Now, construction of ADUs is booming, with more than 28,000 of the units permitted in California in 2022."
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US Cities Try Changing Their Zoning Rules to Allow More Housing

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  • Ya know (Score:5, Insightful)

    by quonset ( 4839537 ) on Sunday February 18, 2024 @07:46AM (#64248876)

    If corporations weren't allowed to buy up housing stock and keep it off the market, a large portion of this problem would go away.

    Not to mention if there were fewer people this also wouldn't be a problem.

    • Re:Ya know (Score:5, Interesting)

      by silentbozo ( 542534 ) on Sunday February 18, 2024 @08:08AM (#64248896) Journal

      Asset acquisition is a side effect of ultra-low interest rates. People borrow money cheaply, use it to buy assets, and then borrow against the assets as they appreciate to buy more assets.

      https://fortune.com/2023/05/05... [fortune.com]

      "...But it isn't just about home prices: Interest rates on âoefloatingâ loans offered to firms like Yieldstreet are still in the 7% to 8% range, Joshi says. Those high interest rates, coupled with frothy home prices, mean that buying new single-family rentals doesnâ(TM)t make a lot of sense right now for some institutional investors.

      Joshi says Yieldstreet is waiting for either house prices to take another leg down or interest rates to come back down. Or both.

      âoeIf short-term [interest] rates came down around 4%, and if home prices were about 15% lower than the peak last year, that is a valuation that supports the equity return that investors need to make,â Joshi tells Fortune...."

      I mean, you could specifically come out and say, it is against the best interests of public policy for hedge funds to purchase starter homes, and build in penalties/subsidies to help re-balance the distribution of homes. However, you'd probably get push back from existing homeowners who want to sell for a higher price, if such policies dampened investor demand, and thus real estate appreciation. You'd also probably get push back from states and local governments who want the higher property assessments so they can collect more in property taxes...

      I mean, seriously, there's a reason that real estate traditionally turned a blind eye to dirty money and the use of real estate for money laundering. If the criminals stop buying real estate... the prices don't rise as fast, and realtors/brokers stop getting fat commission checks.

      https://www.reuters.com/world/... [reuters.com]

      "If finalized, the new rule would replace a patchwork system that anti-corruption advocates have said has allowed bad actors to hide the proceeds of illicit activity by buying homes through legal entities or trusts, without financing.
      Last year, Treasury Secretary Janet Yellen said that criminals for decades have anonymously hidden such ill-gotten gains in real estate, estimating $2.3 billion was laundered through U.S. real estate between 2015 and 2020.
      Financial institutions have long been expected to flag suspicious activity to regulators, but cash real estate transactions generally have not been subject to such rules. The new requirements would demand real estate professionals involved in such transactions collect and report data to FinCEN about the property being sold, the seller and the beneficial owner of any legal entity receiving the property."

      • Interesting links, but...

        The first link [fortune.com] you give says that institutional buying of homes is stopping: "It's all over now. Institutional homebuyers are pulling back-- fast."

        The second link [reuters.com] you give says criminals laundered "$2.3 billion in U.S. real estate from 2015 to 2020." That's 400 million dollars a year. Real estate spending is 3 trillion [corelogic.com] dollars a year. The amount spent by criminals is too small to have any effect on real estate prices.

        • Correct. Institutional buyers use leverage. If rates are high, they can't use the cheap money conveyor belt to leverage up.

          I suspect that criminals (like institutional buyers) buy where the return is higher. Instead of spreading their money out across the US, they're going to purchase in areas of high demand to make sure their "investment" doesn't go down. While I cannot give specific examples in the US real estate market, a similar market across the border in Vancouver gives one indication:

          https://news [gov.bc.ca]

    • In some cities here, they put a tax on empty flats. Don't want to rent? Fine but you've got to compensate them for the loss of local tax revenue from whoever would be living there otherwise.
      • We already have that.

        It's called property tax. The rate is based on the original purchase cost plus increases over time, regardless of occupancy.

        • Re:Ya know (Score:4, Insightful)

          by stabiesoft ( 733417 ) on Sunday February 18, 2024 @11:42AM (#64249150) Homepage
          Actually no. Rental property tax is based on asset value, and if occupancy is down, the value goes down. A friend has a couple buildings. the other thing about prop tax is the big guys (like the hedge funds) have lawyers that can outgun the appraisal board lawyers, so they can and often do get reductions in valuations that I as a mere homeowner and tax payer can dream about. I've often said as a homeowner the rule should be simple. If I think the valuation is too high, I should be able to tell the appraisal board, buy it. I can't. And lately I would have happily taken a check for their claimed value. I never would be able to get what they claim it is worth. Conversely, if the appraisal board loses in court with the hedge fund legal sharks, they should be able to say, nope, we found a buyer that will plunk over 100M for that building even though you say it is worth 50. Here is your 50, we bought it for what you say it is worth.
          • An LVT would fix that
      • What a horrible idea.

        Will they start charging taxes on cars that aren't used for unpaid gasoline taxes for miles not driven in a year?

        A vacant dwelling still generates property tax revenue, that's the only tax burden a homeowner/landlord owes on a housing unit.

        Curious if they will extend this collection scheme to collect extra funds from low income housing, since they don't pay sufficient local income and sales taxes compared to wealthier tenants?

        Just such a horrible idea.

        It's very expensive to carry a vaca

        • Have you got any more non-arguments, straw-men, & slippery slopes?

          It perfectly normal for govts to introduce financial incentives to alleviate crises.

          Additionally, leaving dwellings empty leaves them vulnerable to squatters, illegal renting, etc., which is an additional cost for legal enforcement. You want the courts to process your claim of illegal occupancy & for the police to supervise their eviction? Sure, pay the f**king taxes.
      • That penalizes someone for replacing a house with a 10-unit apartment building and then only renting out 8 units, when they've done far more to relieve the housing crisis than the neighbor with just 1 housing unit on the same size plot of land.

        So a better idea is to tax just the land [wikipedia.org], to encourage people to use it more efficiently, instead of taxing by the number of floors.

    • The issue, as pointed out by the article, is *over* regulating the housing market. Adding more regulations doesn't make things more affordable, it makes them more expensive.

    • If corporations weren't allowed to buy up housing stock and keep it off the market, a large portion of this problem would go away.

      Vacancy rates are near historic lows [managecasa.com].

    • If corporations weren't allowed to buy up housing stock and keep it off the market, a large portion of this problem would go away.

      Would be interested in seeing numbers here. What fraction of housing stock is "bought up and kept off the market" by corporations?

    • If corporations weren't allowed to buy up housing stock and keep it off the market, a large portion of this problem would go away.

      No. A small portion of the problem would go away. To be clear it still is a problem, but the amount that corporate ownership of realestate is distorting the market is a small fraction of the problem. Sure you'll hear big statistics like there being more housing units owned by corporations than are currently listed on the market, but that ignores that this ownership has always existed - largely driven by construction of large apartment complexes. But what has contributed to the housing problem in the past fe

  • Not lack of real estate supply. Letting the same handful of developers build more units won't do shit. Cities need to create antitrust rules about ownership.
    • Who are these developers? How many housing units are they holding off market?

      • It's different in different regions. They're not holding units off the market (as far as I know), they just control an in ordinate proportion of them in concentrated areas, allowing them to distort prices (rent) in their favor.
        • They are also using 3rd parties to coordinate rent increases essentially acting as a monopoly. https://oag.dc.gov/release/tak... [dc.gov] People gotta have a place to stay and if all the places coordinate increases, you will get them. Especially in sprawling urban areas like DC.
          • Indeed, and the distortion is plainly visible in the otherwise paradoxical coincidence of homelessness and unaffordability on the low end coupled with vacancy and absentee occupation on the high end. Demand and supply are being forcibly kept apart.
    • by rgmoore ( 133276 )

      There absolutely is a supply shortage. You can estimate the housing demand by dividing the population by the average family size and compare that to the actual housing supply. Here in California, the supply is short of demand by 2-3 million homes. We need a massive amount of home building to get back in balance. It simply isn't possible to meet demand within our existing metropolitan areas without completely revamping our zoning system.

      New cities aren't a real solution because they would be so far awa

      • Moreover, that 2-3 million unit shortage is over 10% of total units. ADUs can optimistically provide 30-50% of that (by screwing up on-street parking), but after that is where you have huge impacts. Even cities that had huge transit-oriented development pushes over the past 10-15 years have only been able to increase housing stock by ~5%. Many of the new units are corporate-controlled apartments and they maximize rents to target 7% vacancy levels. You can't add enough land area to make single family homes w

      • There absolutely is not constrained supply. In fact, there are considerable vacancy rates because (a) rents are artificially inflated by monopolism and price-fixing, and (b) ownership of multiple luxury dwellings (both houses and attached units) where the owner spends little time in any given place. You are correct about people being crammed into smaller and smaller spaces, but that fact coupled with the otherwise paradoxically high vacancy rates is a textbook result of collusion among property owners.
    • Not lack of real estate supply. Letting the same handful of developers build more units won't do shit. Cities need to create antitrust rules about ownership.

      Please. Rent is high due to inflation making everything high. We’re spending plenty on food and insurance too. Rezoning or antitrust debates isn’t going to do shit until you address the damn price of homes. If we think rent prices are crippling, that 20% down payment is on a product with 250% markup at 7% interest, is considered impossible. And still is for too many. Building out more overpriced homes just because we rezone dirt, doesn’t fix shit.

      • Inflation is exacerbated by monopolism and price-fixing cartels. One thing is a symptom and the other a direct cause.
  • by Lavandera ( 7308312 ) on Sunday February 18, 2024 @08:24AM (#64248912)

    Turning commercial zone into housing zone - yes...

    Turning single-family zone into 'do whatever you like' zone - no...

    • Isn't " 'Do whatever you like' zone" a straw house... um I mean a strawman?
      • If you listen to the people who want to end single family zones, their idea is high density housing for the poor. Usually in area with insufficient streets, parking, nearby shopping, schools, etc for a dramatic increase in local population.

        That's how you get ghettos. Who wants to live in an area with crowded schools, no parking, jammed streets and insufficient shopping? Only people who can't afford better. Section 8.

        • Usually in area with insufficient streets, parking, nearby shopping, schools, etc for a dramatic increase in local population.

          And why are those things insufficient? Did you also guess zoning and things like single family only zoning and minimum parking requirements that ensure a lack of shopping and infrastructure in areas where people demand to live.

          We have two very clear cut examples just in the US alone, both with different methods of results:

          Chicago has overbuilt housing and continues to even add more and rents are pretty stable and affordable for a major city there. Having mroe housing supply works.

          Houston is far more spread

          • Its also about demand. Both cities cited are not doing great. O&G has been cutting headcount. Housing has been expanding in central texas, but demand is outstripping it, causing prices to go up dramatically there.
            • If the large employers are cutting headcounts what is driving all the demand? And if the supply is being taken up by the demand who are the people taking the housing getting their money?

              • Huh, Houston is not central TX. Different markets. Central prices are going up, Houston is going down. Central has had numerous large employers come in. O&G has been letting go of people.
    • Single family zoning are stupid. The alternative isn't a free for all.

      I'm good you an example from London. I'll pick the house that Boris Johnson was assumed to be moving into in the news a year ago. I'm picking it because it was in the news and is amazingly illustrative.

      It's a bigass detached house. Here in fact:

      https://maps.app.goo.gl/arVQH8... [app.goo.gl]

      Go a few doors up v and you reach a low rise block of flats, followed by some light industrial units under the rail arches and a sports club. Then you pass an array

  • Le Corbusier (Score:3, Interesting)

    by VeryFluffyBunny ( 5037285 ) on Sunday February 18, 2024 @09:02AM (#64248942)
    I'm not sure but I think it was the Swiss-French architect Le Corbusier who came up with the European building model where we put shops, supermarkets, restaurants, bars, etc., on the ground floor of buildings, then offices & apartments on the floors above. It's high density housing so everything's much closer together. This means that you live very close, i.e. walking distance, to most of the places you want/need to go in daily life. You can go about your day without ever needing to get into a car. & nowadays, the vast majority of parking is underground. That leaves open squares, tree lined avenues, pavement cafés, small parks, etc., outside your front door.

    Most people from north America don't really "get it" until they've experienced it first-hand & then they often sound like newly converted evangelists for this urban planning model. Most of those who haven't experienced it first-hand are often derogatory & come off sounding hostile & anti-social towards it.

    All over Europe, tens of millions of people enjoy living in high-density, "Le corbusier" style housing & urban areas.
    • Re:Le Corbusier (Score:5, Insightful)

      by Talon0ne ( 10115958 ) on Sunday February 18, 2024 @09:17AM (#64248968)

      When I visit family in Europe that is one of the things I find 'kind of neat, but wouldn't want to live there'. With too much noise and the inability to escape it. Everyone is on top of everyone else. Even they know the nice places are the 'Villas'. Though just walking a few minutes to get a gyro was pretty awesome. The beeping, motorcycle engines, and the guy selling watermelon from the back of his truck with a megaphone were turn offs though. Not being able to sleep until 4AM because parties, etc... Humans aren't supposed to live like ants.

      • Re:Le Corbusier (Score:4, Interesting)

        by serviscope_minor ( 664417 ) on Sunday February 18, 2024 @12:00PM (#64249182) Journal

        You visited the whole of every European city?

        Of course not, hyperbole there, but you visit tourist destinations right in the middle, not areas which are good to live but not to visit. Suburban London is not like central London with bustling loud nightlife at all hours. And yet I live 5 minutes walk to the closest shops, restaurants and of course pub. 8 minutes groom one train station, 15 minutes to the next (at a different area of shops and pubs), parks at both areas, etc etc etc.

        It's absolutely dead quiet at night.

      • With too much noise and the inability to escape it.

        Noise is a subject of city planning. It's not equal in all placed in Europe. One of the things I've noticed is that where I live now, in relatively high density apartments in Europe the place is *quieter* than the suburbs of Australia, and a *FUCKTON quieter* than all American cities I've ever visited.

        Some countries / local municipalities consider volume in their city planning. But Europe is not a singular monoculture. Quite the opposite. There are backwards places, and there are great places, and you defin

        • He also appears to have confused the noisy, bustling city centre tourist area with general life.

          I live in London in an old house with bugger all sound isolation (it has single glazing at the front, and I've had ice on the inside on really cold nights), but like most people I live in a more residential area (still with shops, trains etc nearby, I'm not a barbarian) and there's no problem with noise.

      • 'but wouldn't want to live there'

        So... don't? The thing about allowing dense areas to exist is that most people by definition will be in the dense areas and not bothering you in your non-dense area, and your non-dense area won't have to be that far away so you can quickly get into the city and get back out should the need or desire arise.

    • There are places like that in the US, mostly in older cities. Boston/Brookline is like that, as is Center City Philadelphia and much of NYC.

      I've lived in those places. It *is* nice to walk downstairs and down the street to get your groceries, and hop on the trolley to get to work and back (or just walk if it's good weather).

      Where it stops being nice is the crowding, the street noise, the occasional drunks and hobos making a racket in the middle of the night, the pain in the ass of getting out of the city. A

      • ...and nobody's forcing you to. Clearly, tens of millions of Europeans want to live in these homes. Where I am now, it seems to be the only type of housing construction going on. I think only the more remote villages are building villas but more commonly terraced housing.
    • I have had family made immediately homeless by an earthquake in multi-family block housing with soft-story parking. Your fantasy land is my deathtrap.
  • by Tony Isaac ( 1301187 ) on Sunday February 18, 2024 @09:04AM (#64248944) Homepage

    Houston is the largest city in the US that does not have zoning laws, making it an illustration of what happens with less zoning.. The city looks and feels just like other large cities that do have zoning laws. Importantly, home prices have remained much lower than highly-regulated cities. It's still possible in Houston to buy a nice 5-bedroom house in a good neighborhood, for $400K. Good luck finding that kind of price in San Francisco! And more importantly, if you want to buy a house in Houston, you actually can do so.

  • That it’ll go nowhere.

    This is one of those ideas that should be great for both political sides. Republicans, at least traditional ones, tend to like pro-business, pro-growth, and zoning reform can really help that. Democrats want to help poor people, and more affordable housing can check both those boxes.

    But we’re in a situation where neither party will give the other a win. The current southern border situation is a perfect example. Biden offered to LOCK THE BORDER DOWN AND SCREW THE D
  • This is a good idea, and is being implemented in many Canadian cities too; the Federal government has basically told cities "relax zoning or we withhold funds from you" which is about the only way to do it to avoid NIMBYism.

    However, it'll take a decade or two or maybe more for the zoning changes to have a real effect. But I hope there's a positive feedback loop where higher density makes efficient and frequent public transit more viable. Maybe eventually most Canadian cities will stop being car-dependen

  • How about we build all of these affordable apartments, and call them "The projects"

    Worked out perfectly the last time we tried it. /s

  • The left still wants to have the comfortable feeling that it is some other evil group causing the problem and their problems will all be solved if we just stop the collusion of landlords, institutional investors and selfish rich people who have multiple homes. There is no collusion among this secret society of landlords. Anyone with a few hundred thousand in savings, i.e. most upper middle class people over 55, can become a landlord. The lack of competition among landlords is due to lack of profit. If in
  • ...rents in Minneapolis could have also been suppressed by a glut of demand as reasonable people (relatively) fled a deeply-woke metropolis that leaned hard into the "defund the police" movement after George Floyd (while spending ten$ of thou$and$ on private armed security for those city councillors clamoring for it the loudest....)?

    It's not plummeting like Detroit or Chicago, but that fate looms on the medium term horizon, for the exact same reasons.

  • Lol at all the typical commie commenters that don't even understand the basics of supply and demand.
  • As soon as those who have a lot of properties and a lot of money start paying off, er, contributing to the politicians in charge this will die a quick death.

    I'm convinced professional politicians are the leeches of society and should be treated as such.

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