The Politics and Economics of Metropolitan Sprawl

Abstract

This is chapter 8 from my forthcoming book, "Zoning Rules! The Economics of Land Use Regulation," which will be published by the Lincoln Institute of Land Policy in 2015. This chapter addresses the metropolitan problems caused by local zoning, particularly its contribution to excessive suburbanization and regional housing costs. The chapter starts with a stylized political-economic characterization of government in metropolitan areas and explains how the local politics of zoning differ among big central cities, small suburbs, and rural townships and counties. This simple model offers a foundation for explaining exclusionary zoning, metropolitan sprawl, and regional income sorting. The chapter next considers some variations on this model, which are epitomized by the growth boundaries of Portland, Oregon, and the rejection of comprehensive zoning by Houston, Texas. Both have some merit in combatting the problems of local zoning, but both have some drawbacks that undermine either as a paradigm.

Finally, the chapter asks why housing costs and the stringency of land use regulations varies so much by region of the United States. I argue that restrictiveness is largely the product of the demand for housing itself. High productivity regions attract affluent people who want more land use restrictions to protect their home values. Local homeowners control the political process in the high-demand Northeast by virtue of their control of small local governments, where homeowners prevail easily over developers. In the high-demand West Coast, homevoters prevail because of the availability of the voter initiative, which trumps the otherwise prodevelopment politics of counties and larger cities. Evidence for this was the migration to the sunbelt as a result of the 1970s energy crisis. Housing supply remained elastic and home prices stayed low because most states in the South lack both responsive local governments and the voter initiative that would otherwise have facilitated more regulation.

Keywords: zoning, sprawl, land use regulation, Portland, Houston, homevoters, housing prices, smart growth

JEL Classification: R52, R14, K11, H1