Tag: zoning

Fair Housing or Federal Agency Running Riot?

In case you missed it, Ben Carson has been labeled as being “at odds with fair housing.” During his senate confirmation hearing last week, Carson was required to defend his position on Affirmatively Furthering Fair Housing (AFFH), the Department of Housing and Urban Development’s (HUD’s) controversial 100-page-plus contemporary interpretation of the Fair Housing Act.

It may sound appalling that anyone anywhere would be against fair housing. Still, there are sane reasons to object to the rule. Carson suggested a couple of possibilities; for example, he worries about Washington, D.C. administrators demanding that local communities “go looking for a [racial] problem” when no evidence of such a problem exists a priori.

If you don’t like intemperate federal agencies running riot, there is another process-related objection that Carson missed: AFFH may insert the federal agency into policy areas not even remotely authorized by the legislation it purportedly interprets.

The table below provides a comparison of the original Fair Housing Act language and AFFH language, so that you can decide for yourself:

Fair Housing Act of 1968 (original legislation) Affirmatively Furthering Fair Housing of 2015 (HUD’s re-interpretation)
1)    Prohibits landlords from discriminating against minority tenants. 1)    Stated objective is to “replace segregated living patterns with truly integrated and balanced living patterns [within cities].” 
2)    Uses the word “segregated” or “segregation” a total of 0 times. 2)     Uses the word “segregated” or “segregation” a total of 126 times and urges“overcoming historic [geospatial] patterns of segregation.”
3)    The original FHA law uses the word “zoning” just 1 time, wherein it instructs the HUD Secretary to refer discriminatory local zoning or land use laws to the Attorney General so that he/she can file a lawsuit. 3)    The AFFH mentions “zoning” 53 times, wherein it suggests that communities change their zoning to improve racial integration (not a bad suggestion, but a departure from the original law).
4) The original FHA law uses the word “affirmatively” 2 times. Each time, it asks executive departments and agencies to administer their programs and activities in a way that affirmatively furthers “the purposes of this subchapter,” where the subchapter focuses on prohibiting a discriminatory relationship between landlord/seller and tenant/buyer. 4) The AFFH rule uses the word “affirmatively” 423 times, wherein it redefines the term to mean “replacing segregated living patterns with truly integrated and balanced living patterns” and “transforming racially and ethnically concentrated areas.”
5) The original FHA law uses the word “concentration,” referring to the concentration of poverty or concentration of minorities in cities, 0 times. 5) The AFFH rule uses the word “concentration” 56 times and urges “reducing racial or ethnic concentrations of poverty.”

HUD believes the rule merely implements the Fair Housing Act’s intent.  You can form your own view.

Micro-Housing, Meet Modern Zoning

Beginning in 2009, developers in Seattle became leaders in micro-housing. As the name suggests, micro-housing consists of tiny studio apartments or small rooms in dorm-like living quarters. These diminutive homes come in at around 150–220 sq. ft. each and usually aren’t accompanied by a lot of frills. Precisely because of their size and modesty, this option provides a cost-effective alternative to the conventional, expensive, downtown Seattle apartment model.

Unfortunately, in the years following its creation, micro-housing development has all but disappeared. It isn’t that Seattle prohibited micro-housing outright. Instead, micro-housing’s gradual demise was death by a thousand cuts, with a mushroom cloud of incremental zoning regulation finally doing it in for good. Design review requirements, floor space requirements, amenity requirements, and location prohibitions constitute just a few of the Seattle Planning Commission’s assorted weapons of choice.

As a result of the exacting new regulations placed on tiny homes, Seattle lost an estimated 800 units of low-cost housing per year. While this free market (and free to the taxpayer) solution faltered, Seattle poured millions into various housing initiatives that subsidize housing supply or housing demand, all on the taxpayer’s dole.

Sadly, Seattle’s story is anything but unusual. Over the past almost one hundred years, the unintended consequences of well-meaning zoning regulations have played out in counterproductive ways time and time again. Curiously, in government circles zoning’s myriad failures are met with calls for more regulations and more restrictions—no doubt with more unintended consequences—to patch over the failures of past regulations gone wrong.

In pursuit of the next great fix, cities try desperately to mend the damage that they’ve already done. Euphemistically-titled initiatives like “inclusionary zoning” (because who doesn’t want to be included?) force housing developers to produce low-cost apartments in luxury apartment buildings, thereby increasing the price of rent for everyone else. Meanwhile, “housing stabilization policies” (because who doesn’t want housing stabilized?) prohibit landlords from evicting tenants that don’t pay their rent, thereby increasing the difficulty low-income individuals face in getting approved for an apartment in the first place.

The thought seems to be that even though zoning regulations of the past have systematically jacked up housing prices, intentionally and unintentionally produced racial and class segregation, and simultaneously reduced economic opportunities and limited private property rights, what else could go wrong?

Perhaps government planners could also determine how to restrict children’s access to good schools or safe neighborhoods. Actually, zoning regulations already do that, too.

Given the recent failures of zoning policies, it seems prudent for government planners to begin exercising a bit of humility, rather than simply proposing the same old shtick with a contemporary twist.

After all, they say that the definition of insanity is doing the same thing over and over and expecting different results.

Zoning, Grandmas, and Affordable Housing

On its front page today, the Washington Post writes about legal and regulatory obstacles to building small second housing units on single-family lots, often for aging family members.

Second homes, often called “granny flats,” have become a new front in the conflict that pits the need for more housing in the country’s most expensive cities against the wishes of neighbors who want to preserve their communities. The same battles flare over large developments that might loom over single-family neighborhoods. But even this modest idea for new housing — let homeowners build it in their own back yards — has run into not-in-my-back-yard resistance….

Homes like the Coffees’, proponents argue, could help ease housing shortages that have made $2,000-a-month one-bedrooms look like a bargain in cities such as Los Angeles. They could yield new affordable housing at no cost to the public. They could add rentals and economic diversity to more neighborhoods. And they could expand housing options for a population in which baby boomers are aging and millennials are stuck at home.

Many neighbors, though, protest that a glut of back yard building would spoil the character of neighborhoods designed around the American ideal of one family on one lot surrounded by verdant lawn. …

“You have surging housing prices in the most prosperous cities in the country, and at the same time income inequality is growing, and there’s a cultural and demographic resurgence of urban living,” [Alan Durning, executive director of the Sightline Institute] said. Young people with less money, in particular, he adds, are “slamming into their parents and grandparents’ regulatory regimes of strict limits on construction of new housing.”

It’s not the first time I’d heard of the problem. In 1996 George Liebmann wrote in Regulation about how “Zoning makes it more difficult to keep aged parents close by and care for them.” He recommended that “Duplex homes and accessory apartments should be permitted in all new residential construction. Housing options such as these allow elderly persons to live near their adult children without intruding on their children’s privacy.” (“Modernization of Zoning,” pp. 71, 75). Note that he was talking not about separate structures but simply residential units attached to the main house. And even those were impeded by zoning regulations. I mentioned them briefly in my 1997 book Libertarianism: A Primer and my 2015 update, The Libertarian Mind (p. 309).

Local officials think their zoning rules are more important than keeping families together.  They fume that allowing such small structures for grandma would “turn our zoning ordinance upside down.” And what’s more important, saving money and keeping grandma near her family or strict adherence to zoning regulations? The Post article, featuring a conflict in Los Angeles, notes the problem of NIMBY or “not in my back yard” attitudes by neighbors. And in this case, as reporter Emily Badger notes, it’s actually in your back yard. Or technically, it’s a matter of “not in my neighbor’s back yard.”

Brink Lindsey wrote about how zoning limits affordable housing in his recent paper on regressive regulation, as did Edward Glaeser and Joseph Gyourko in Regulation.

Housing and Wealth Inequality

American Nightmare is in some ways the most profound of the three books I have written for Cato. It covers a wide range of issues, including a detailed explanation of the 2008 financial crisis. But the overarching theme is that urban planning and zoning are best viewed as a form of economic warfare by the upper and middle classes against the working and lower classes. While that might not have been the original intent, to judge by the smug attitudes of the beneficiaries of such planning and zoning, they are perfectly happy with the results.

The book, therefore, was really about inequality, an issue that of course has been made popular and controversial by Thomas Piketty’s book Capital in the Twenty-First Century. Piketty’s thesis is that income inequality is necessarily rising because the returns to capital wealth are greater than overall economic growth, thus giving people one more reason to hate capitalists.

Last month, a paper by an MIT graduate student in economics named Matthew Rognlie, examined Piketty’s thesis in detail. Rognlie found that, contrary to Piketty, the returns on most kinds of wealth and capital have not been greater than overall economic growth, and therefore haven’t been contributing to income inequality. The one exception, Rognlie found, was housing.

Ignoring the Law of Supply and Demand

A recent report from Fannie Mae finds that baby boomers are not leaving their comfortable suburban homes for lively inner-city communities with walkable streets. As a news article about the report observes, this challenges the “conventional wisdom that ‘empty nester’ baby boomers would eventually downsize from the homes where they raised families, flocking instead to apartments or condos.”

Rather than conventional wisdom, it would be more accurate to say that this notion was wishful thinking among urban planners who believe more Americans should be packed into high-density “compact cities” where they will get around by foot, bicycle, or transit rather than by automobile. In contrast, demographers have known that populations of virtually all age groups, whether millennials or empty nesters, are growing faster in the suburbs and exurbs than in the cities. After all, the baby boomers’ parents overwhelmingly preferred to “age in place” rather than move when their children left home; why should baby boomers be any different?

Despite this, regional planning agencies all over the country are writing plans that presume America will need no more single-family homes, especially on large lots, and instead will need lots of apartments, condos, or townhouses. Many of these plans effectively zone away the possibility of new single-family homes on large lots while they subsidize construction of high-density housing. For example, the San Francisco Metropolitan Transportation Commission’s Plan Bay Area mandates that 80 percent of all new housing be in high-density urban centers.

To justify these plans, the planning agencies often hire Arthur C. Nelson, the University of Utah urban planning professor who in 2006 predicted that the U.S. will soon have 22 million surplus single-family homes on large lots. Nelson wrote a 2011 report predicting that the Bay Area, which has one of the most acute housing shortages in America today, would have a surplus of nearly 572,000 single-family homes by 2040; Plan Bay Area relied heavily on this report to justify its strict land-use policies.

Mayor Bloomberg Doesn’t Understand Economics

Mayor Bloomberg says New York City’s lack of affordable housing is a sign of a vibrant economy, because it proves people want to live there. Despite his reputation in the business world, he obviously doesn’t understand the laws of supply and demand.

“Somebody said that there’s not enough housing,” Bloomberg said on a radio show. “That’s a good sign.” Housing is only scarce, he said, because “as fast as we build, more people want to live here.”

In fact, as I showed in chaper 10 of my book, American Nightmare, as well as in this blog post, high housing prices do not prove that lots of people really find an area desirable. Instead, they are more a sign of government barriers to housing. In a nutshell, downward sloping demand curves means a few people may be willing to pay a high price for any good, but that doesn’t mean the public in general finds that good to be particularly valuable.

As reported by Virginia Postrel on Bloomberg’s own news service a few months ago, America’s elites have built an economic wall around places like New York City and California in order to make these areas more exclusive. Rent control in the city combined with New Jersey’s and Connecticut’s smart-growth policies have turned New York from a fairly affordable place to live as recently as 40 years ago to one that is completely unaffordable today.

Yes, Bloomberg’s city may be building some housing. But it obviously isn’t building enough to meet demand. In 1969, median housing prices in the New York urban area (including northern New Jersey) were just 2.6 times median family incomes, and 3.3 times in 1979. By 2005, they were 8.4 times. Thanks to the recession more than new housing, they were down to 5.3 by 2012–still way too high. But in New York City alone median prices were still 8.7 times median family incomes.

Here’s the surprise: Median family incomes in New York City were just 15 percent greater than in the city of Houston in 2012. But home prices were 284 percent greater. That’s not a sign that people are demanding to live there; it’s a sign of acute shortages.

Houston frets when its median home prices approach $150,000 and price-to-income ratios come close to 2.2. With New York City median prices approaching $480,000 and median values nearly nine times median incomes, Mayor Bloomberg should do more than pat himself on the back; he should recognize that the city is suffering from a major housing crisis.

Zoning vs. Families

Back in 1996 George Liebmann wrote in Regulation about how “Zoning makes it more difficult to keep aged parents close by and care for them.” He recommended that “Duplex homes and accessory apartments should be permitted in all new residential construction. Housing options such as these allow elderly persons to live near their adult children without intruding on their children’s privacy.” (“Modernization of Zoning,” pp. 71, 75)

Now the Washington Post reports

The Rev. Kenneth Dupin, who leads a small Methodist church [in Salem, Virginia], has a vision: As America grows older, its aging adults could avoid a jarring move to the nursing home by living in small, specially equipped, temporary shelters close to relatives.So he invented the MEDcottage, a portable high-tech dwelling that could be trucked to a family’s back yard and used to shelter a loved one in need of special care.

Skeptics, however, have a different name for Dupin’s product: the granny pod.

Protective of zoning laws, some local officials warn that Dupin’s dwellings – which have been authorized by Virginia’s state government – will spring up in subdivisions all over the state, creating not-in-my-back-yard tensions with neighbors and perhaps being misused….

the nation’s elderly population is set to double in just 10 years as more and more baby boomers hit retirement age. Surveys by AARP and others also show that large majorities prefer to live in their own homes or with loved ones rather than in retirement communities.

But local officials think their zoning rules are more important than keeping families together.  They fume that allowing such small structures for grandma would “turn our zoning ordinance upside down.” And what’s more important, saving money and keeping grandma near her family or strict adherence to zoning regulations? Local officials think the choice is clear.

In this case, though, state officials disagreed. Virginia just passed a law “that supersedes local zoning laws in the state and allows families to install such a dwelling on their property” – but only “with a doctor’s order.” They couldn’t just allow families to choose a living arrangement that suits them. No, a doctor has to authorize it.

It’s sort of like medical marijuana – a slight increase in freedom, but also an increase in the medicalization of normal individual decisions.