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Low-Density Suburbs Are Not Free-Market Capitalism

Recently in the Wall Street Journal, transportation consultant Wendell Cox published an op-ed entitled: “California Declares War on Suburbia.” Cox argues that “planners” in California are attacking what he calls “the most popular housing choice,” the single-family detached home, and if they get their way, they will weaken California’s economy, drive up housing prices, and increase traffic congestion.

Actually, the homogenous prevalence of low-density single-family suburban housing is the outcome of the very government “planning” process that Cox decries, as economist Ed Glaeser has noted (see “Triumph of the City”).

Local zoning policies greatly distort housing markets across the country. A recent national survey of land regulations found that 84 percent of jurisdictions forbid the construction of housing units that are smaller than some standard set by the local zoning authority. The average jurisdiction with zoning power has a minimum lot size requirement of 0.4 acres, which is larger than most single-family homes. As a consequence, thousands of jurisdictions—mostly in the suburbs of big cities—effectively prohibit the construction of inexpensive or moderately dense housing, and many neighborhoods within big cities impose similar restrictions. As I’ve found in previous research (using data from a survey by Rolf Pendall and my colleague Robert Puentes), metropolitan areas with the most anti-density restrictions tend to see the largest increase in housing prices, controlling for other factors.

While California’s local governments are not as anti-density as their counterparts in the Northeast, its local governments do often rely on various growth management techniques that are likely to raise housing prices. In fact, local governments in California are particularly motivated to encourage large-lot-only housing because of the states cap on property tax rates (through Proposition 13). Research on urban growth boundaries, which are prevalent in California jurisdictions, finds that housing prices increase significantly faster in places that adopt these regulations.

What opponents of planning might characterize as a war on suburbia and the preferences of the public could just as easily be viewed as a responsible effort by local politicians to respond to high housing prices, automobile congestion, and pollution. Take the Association of Bay Area Governments, which is singled out for criticism by Cox for their effort to coordinate and prioritize the construction of moderately high-density housing near job and transportation hubs. Their goal is to encourage new housing construction to go up near where people work and cluster denser housing developments enough to sustain public transportation. This will tend to reduce congestion and pollution by facilitating walking, public transit, and shorter auto commutes. Of course, if there is a populous revolt against these politics, any of the member governments could refuse to comply, since the Association of Bay Area Governments has no land-use authority, as it clearly states on its website. Moreover, since the association isn’t itself a developer, the construction will only take place if private developers find it profitable.

It’s ironic that the most aggressive defenders of the regulatory enshrinement of the large-lot single-family home claim that any changes to this status-quo are an assault on markets and consumer preferences. In fact, anti-density zoning laws represent the triumph of heavy-handed government over private property rights, as the first major Supreme Court case on zoning demonstrated. These laws prevent private home owners from selling their property to the highest bidder and block housing developers from putting up their preferred housing structures--imposing massive costs on the metropolitan area in terms of traffic, pollution, housing costs, economic segregation (and education, as we will show in a forthcoming paper next week).

Cox is right to link land regulations in California to higher housing costs, but he is wrong to defend anti-density zoning and other forms of large-lot suburban protectionism. The proposed changes in the Bay Area take a step in the right direction by allowing higher density in their supply-constrained metropolitan areas. Indeed, more suburban governments should free up housing markets from their long-standing anti-density bias and adopt more market-based approaches to housing.