The Link Between Local Zoning Policy and Housing Affordability in America’s Cities

Throughout American history, cities have experienced rapid population growth during periods when they offered exceptionally well-paying jobs. But population growth in high-wage cities is only possible when people can find housing within a reasonable commuting distance. Unlike in the past, policymakers in some regions have implemented land use regulations that block new housing development, creating “Closed Access” cities. These are highly regulated cities that are not experiencing rapid population growth despite offering some of the highest wages and best career opportunities in the country.

When housing demand increases in Closed Access cities, prices rise sharply. The burden of Closed Access rules falls disproportionately on low-income people, both because those people spend a greater percentage of their income on housing than high-income people do and because they are more often renters, paying more without enjoying an increase in home equity. The lackluster growth and high prices of Closed Access cities are caused by land use regulations that limit property owners’ rights to build new housing.

To restore the longstanding American traditions of national mobility and inclusive growth, policymakers from town halls to Capitol Hill must work to open up access to all of America’s cities.

Keywords: housing, mortgage finance, housing policy, housing supply, housing demand, housing markets, urban planning, urban development

JEL Classification: R20, R31

Suggested Citation: Suggested Citation

Erdmann, Kevin and Furth, Salim and Hamilton, Emily, The Link Between Local Zoning Policy and Housing Affordability in America’s Cities (March 2019). Mercatus Policy Brief, Available at SSRN: https://ssrn.com/abstract=3569981 or http://dx.doi.org/10.2139/ssrn.3569981