In Defense of Housing Regulation

In Defense of Housing Regulation

A recent MoMA exhibition presented architectural solutions to the housing crisis. Zago Architecture created this model of affordable infill housing in Rialto, Calif. Credit: Zago Architecture

It’s hard for a person who actually believes that government can and should try to solve problems to have a serious discussion with a person who sees government itself as the central problem in society. Nonetheless, embracing this challenge, I attended the recent panel discussion hosted by Next American City and featuring libertarian author and Cato Institute Senior Fellow Randal O’Toole.

O’Toole is the author of a book titled American Nightmare: How Government Undermines the Dream of Homeownership. The thrust of his argument is that housing costs are high because of urban growth boundaries, zoning and general land use planning. Although Mr. O’Toole takes all government regulation to task, he has a special affection for the work of local governments in crushing the American Dream of homeownership. For him, the blame for housing costs in excess of twice area median income rests with city planners and local policymakers.

The simple answer to the problem of increasing demand for single-family detached housing is, according to O’Toole, to eliminate all regulations and build anything anywhere one may wish. According to him, the real estate development market has the expertise and the economic incentives to decide what should be and needs to be built.

This unabashed faith in the market is certainly a questionable assertion. If any lesson was learned from the rash of speculative overbuilding in Sun Belt states that helped to fuel the home mortgage foreclosure crisis — the topic of a recent Forefront article article — it is that the market can be wrong about price, demand and location. The market left to its own devices will not always yield a good result. Moreover, I believe that libertarian solutions, such as those advanced by O’Toole, are extreme in that they leave no room for compromise and dialogue about a shared community vision which, after all, is what local governments strive to do, namely balance competing interests through a transparent and accountable process.

In fairness, I will be the first to admit that local rules mandating, for example, the square footage of a garage, are an indefensible restriction on both the type of housing that is available and the kind of resident who can afford such housing. However, a strong case can be made for regulations that protect some historic or artistic structures, or which prevent development of land too close to an important source of drinking water or a landfill.

Consumer preference is supposed to be the factor that drives the housing market. That preference is said to favor single-family detached homes with a plot of land that could respectably be called a yard. But this genuflection at the altar of the single-family home is nothing more than a myopic reading of a far more subtle and sophisticated apportionment of preferences by home dwellers.

Credit: NAR

To confirm this one need only unpack the data contained in the 2011 Community Preference Survey from the National Association of Realtors. What respondents said was that they did not necessarily want a large house. Only 44 percent rated that community characteristic as very important or somewhat important. Rather what they wanted was a sense of privacy, with 87 percent rating this characteristic as very important or somewhat important. Privacy can be achieved in a host of ways that do not require a one-acre lot.

The same group of respondents expressed a desire for walkability; 77 percent rating this characteristic very important or somewhat important. And in a demonstration that tastes and preferences are evolving over time, 51 percent of respondents expressed the view that public transportation was important to their community as compared to 46 percent in 2004.

What this sounds like is a rather nuanced view of modern living that reflects a willingness to find balance and make trade-offs to achieve the largest number of competing high-value options. What people prefer, it seems to me, is access to a range of housing options to fit the variety of housing needs that they may experience over a lifetime. These are precisely the kind of needs and choices that local governments were invented to provide.

James Brooks is the program director for research and innovation at the National League of Cities.

Tags: economic developmentwashington, d.c.real estatewalkabilityfamily-friendly citiesmuseums

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