Faced with Housing Shortages, Policymakers Test New Reforms To Increase Production

August 2nd 2023 | Ben Hitchcock

State and local policymakers around the country are working to address America’s severe housing shortage, by considering, and implementing, a wide range of policies in the hopes of increasing housing supply. A new series of seven papers published by the NYU Furman Center, with funding from the Pew Charitable Trusts, shows how specific land use reforms have affected outcomes on the ground, especially in residential areas. 

The need to address the regulatory barriers that restrict new housing has become a rare point of bipartisan agreement as the housing shortage has gotten more acute. While restrictive zoning is not the only reason housing costs are high in the United States, it does play a major role in limiting housing development, especially in parts of the country with high paying jobs in fast-growing industries. In response, Democrats in California and Massachusetts, Republicans in Utah and Montana, and city governments across the country have enacted legislation designed to address the barriers that restrict new housing development. These policies range from substantive revisions to zoning codes to procedural reforms to the land use approval process.

“This is a moment of ferment—and experimentation—in land use policy,” writes Noah M. Kazis, former Legal Fellow at the Furman Center and Assistant Professor of Law at the University of Michigan Law School, in the series introduction to “Learning from Land Use Reforms.” “There are no silver bullets here – as there so rarely are.”

Rather than offering a one-size-fits-all solution to the nation’s housing shortage, this series of papers reviews and evaluates the outcomes of an array of policy options for promoting housing production, in locations ranging from a quiet suburb in New York to state-wide policies in California. By examining areas across the country with varying local characteristics, the papers offer insights into how a range of policy options have played out in the real world.

“There is much more to learn about what interventions work—and especially how to pair the right reforms with particular places,” writes Kazis. “At a high level, the need for zoning reform remains clear. The hard questions remain: how to select from an ever-growing menu of reform options? How to tailor those strategies to local conditions: how to mix-and-match, and how to innovate further?”

Here’s a snapshot of zoning reforms across the country: 

California's "Fair Share" Program    Procedural Reforms in the Golden State    Accessory Dwelling Units Regulatory Fixes    Land Use Changes in Houston    Zoning Reform in New York    Upzoning With Strings Attached in Seattle    Housing Growth in Washington, D.C. 

Reforms to “Fair Share” Planning Put California Housing Production On Target 

In the past, certain cities and towns in the Golden State have struggled to produce enough new units to meet the state’s needs. But in recent years, California’s state government has stepped in to accelerate housing production by reforming zoning regulations, removing some of the red tape that has slowed production, and cracking down on localities that have historically resisted densifying. 

Planning for new housing has been hindered by the shortcomings of California’s “fair share” program, which was intended to ensure that each municipality contributed enough housing to meet the state’s needs. But the “fair share” program, known as the Regional Housing Needs Assessment (RHNA), “was almost entirely ineffective,” according to authors Paavo Monkkonen, Michael Manville, Michael Lens, Aaron Barrall, and Olivia Arena, of the University of California, Los Angeles in their paper “California’s Strengthened Housing Element Law: Early Evidence on Higher Housing Targets and Rezoning?”  

In their research, Monkkonen and his colleagues evaluated California’s 2017 and 2018 reforms to address issues in the state’s “fair share” system. The first reform they looked at led to increased housing production targets for regions across the state. The second gave California’s regional councils of governments more stringent instructions about where those new production targets should be allocated. A third reform they examined required localities to show more evidence that the sites they set aside for affordable housing were actually feasible candidates for redevelopment. And lastly, they examined a law that required jurisdictions to set aside ample land for denser housing in their rezoning plans, so that if some of the rezoned land was filled by market-rate units, there would still be enough space to meet the affordable housing target. 

Researchers found preliminary evidence that these laws had their intended effect.

“Cities were more likely to change their local zoning in 2021 compared with 2014 – and to do so more dramatically,” they wrote. Ninety-three of more than 209 southern California cities that have compliant housing elements committed to more than 500,000 units of rezonings, compared with fewer than 50,000 in the whole state in 2014. What’s more, those rezoning pledges happened in cities with relatively high housing values. 

For example, in the 2014 planning cycle, the statewide target for housing growth was one million units. But after the reforms were passed, the next planning cycle in 2021 saw the total jump to 2.5 million units. Those targets were spread more equitably among different communities, too.  

With new reforms in place, Beverly Hills received a housing target of 3,104 for the 2021 to 2029 planning period, compared to nearby Coachella’s 7,886. By comparison, in 2014, Beverly Hills was previously asked to produce three units of housing, while nearby Coachella, a lower-income area, was asked to produce 6,771 new units. 

The increased targets led to changes in behavior from local governments, too.

Cities that saw large jumps in their housing targets were more likely to commit to more rezoning, the authors found. Even under the new system, heavily white, wealthy cities that got lower targets than other cities responded to those targets just like everyone else—by committing to more density, providing authors further evidence that legislative reforms spurred action and accountability in how California cities plan for housing. 

“Higher targets, combined with increased state scrutiny of how cities plan to meet them and new consequences for failing to do so, have changed housing planning in the nation’s largest and least affordable state,” the authors write. 

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Streamlined Review Process Triggers Development Where Zoning is Less Restrictive  

In another paper, “How Can Procedural Reform Support Fair Share Housing Production?,” Moira O’Neill of UC Berkeley and the University of Virginia and Ivy Wang of  the Institute of Urban and Regional Development at UC Berkeley examined another 2017 California reform aimed at making the approval process for some affordable housing developments less burdensome.  The law, Senate Bill 35, removed one phase of local discretionary review for urban multifamily housing developments that met specific affordability thresholds and site criteria. It also loosened environmental review requirements for local planning departments. 

In California, the local discretionary review of new projects also includes moving through the public input process and environmental impact review laid out in the California Environmental Quality Act, or CEQA. The law, enacted in 1970, was intended to prevent environmental damage. Critics, however, have argued that this environmental review process adds time, expense, and uncertainty to project construction, resulting in less housing being built. 

“Discretionary processes may enable local governments and homeowners to effectively block projects by creating costly delay and uncertainty,” the authors write. “Lawmakers hoped that making affordable housing development faster and more predictable would allow for more housing to be built in more communities, at a lower cost.”  

O’Neill and Wang’s research suggests that streamlining these review processes has been effective at accelerating affordable housing approvals in some cities. In Los Angeles, for example, 18 affordable housing developments that qualified for SB 35 were approved in a median time of three months after the law passed. By comparison, before SB 35, it took a median of seven months for the city to approve 11 comparable developments. 

A similar effect was observed in San Francisco, where nine developments were approved in an average of four months after the law took effect, compared to one qualifying development from before the law’s passage that took a year to be approved. The same results were observed in Berkeley, although the sample size was even smaller, according to researchers. However, in Oakland and Los Angeles County, the data was less conclusive, because of the way those cities interpreted the law, they found. 

“Reforms which affect only procedure are, inherently, insufficient to promote housing production in all places,” the authors write. “However, where the base zoning purportedly permits development—whether by local initiative or due to separate state-level interventions— procedural reforms can play a critical role.” 

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ADU Permitting Booms Under Reduced Regulatory Burdens  

Another recent California state law reform has borne out concrete results, according to “Evaluating California’s Accessory Dwelling Unit Reforms: Preliminary Evidence and Lessons for State Governments,” written by Nicholas J. Marantz, UC Irvine, Christopher S. Elmendorf, UC Davis, and Youjin B. Kim, UC Irvine. 

Since 2016, the state has taken steps to facilitate the creation of accessory dwelling units, small apartments in garages or basements or backyards, by reducing regulations of the size and shape of the units and limiting local governments’ ability to require the units to come with  a parking spot, among other changes. The effects of the regulation are already visible: ADUs comprised about 13 percent of permits in the Bay Area and around 19 percent of permits in the Southern California study area between 2018 to 2021, according to the authors.

Researchers found that ADUs are typically permitted in areas with more accessibility to jobs, on lots with acreage sizes comparable to other parcels, and in lower-middle income tracts. They then compared ADU permitting across cities to test if some municipalities are more likely to approve ADUs than others. They found that areas with high concentrations of homeowners associations were less likely to approve ADUs. 

The authors argue that California’s Department of Housing and Community Development should pay closer attention to data collection and enforcement of the regulation to make sure municipalities are following  state law. 

“By prioritizing their review of local ordinances, these agencies can target technical assistance where it is most needed and, if necessary, focus enforcement actions where they may be most effective,” the authors write. 

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Land Use Reform Unlocks Missing Middle Housing in Houston 

Elsewhere, a hyperlocal approach has laid groundwork for single-family homes near the urban core to become marginally denser. In 1998 and 2013, Houston changed its land use laws by reducing permissible lot sizes across the city, in turn, opening up areas dominated by large single-family houses to denser development. 

Today, the city hosts more narrow, multi-story townhouses, which provide homeownership opportunities in tight spaces, according to the paper “Here Come the Tall, Skinny Townhouses: Assessing Single-Family to Townhouse Redevelopment, 2007-2020,” by Jake Wegmann, Aabiya Noman Baqai, and Josh Conrad of the University of Texas at Austin.

The researchers zoom in on an important subset of these townhouses: those that were built on lots that were initially zoned for larger single-family houses, but then divided up. Their analysis offers lessons for other cities searching for gentle ways to squeeze more housing into their urban cores. 

For starters, about one-fifth of townhouses built in Houston were constructed on formerly single-family lots. These townhouse redevelopments tended to occur on larger lots in the urban core and lots once occupied by small, old houses, the authors found, suggesting that the quality of the new townhouses was higher than the houses they replaced. 

The new townhouses were also relatively reasonably priced. The median townhouse on a formerly single-family lot in 2020 had an assessed value of $340,000. By contrast, the median citywide assessed value of single-family houses built 2007 or later on unsubdivided parcels was $545,000. 

Importantly, these redevelopments also predominantly took place in neighborhoods that had higher than average house values prior to 2007, suggesting that such redevelopment isn’t driven by gentrification, as some critics of the rezoning policies feared. 

These reforms might have been more politically palatable than large-scale zoning overhauls for a number of reasons. First, the city of Houston used a “gentle density” approach to their housing production strategy, in which new units were  integrated into the community through small increases in density within the existing fabric of a neighborhood, rather than the construction of new apartment towers. What’s more, Houston’s upzoning program had a “block vote” system, which gave nearby homeowners the ability to approve or deny redevelopments. 

“Townhouse redevelopment on single family parcels offers considerable benefits,” the authors conclude, “such as intensified usage of urban land, an increased tax base, and the production of new-build, well-located, family-sized housing units that in the median case are much cheaper than large lot single-family equivalents.”  

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Zoning Changes Transformed Ramapo’s Jewish Enclave From Suburb to Mini-City 

The city of Ramapo, a leafy outer suburb of New York City, offers another example of the long-term effects of zoning reform, in a paper by Joseph Weil Huennekens, Columbia GSAPP, called “Learning from Land Use Reforms: The Case of Ramapo, New York,” 

During the 1970s and 1980s, natural population growth and continuous migration from Brooklyn to Ramapo by the ultra-Orthodox Jewish community caused the city’s population to balloon. Religious requirements constrained many of these new arrivals' housing options, as the Orthodox community members needed to live near their synagogue to walk to services on the Sabbath. This need for greater density caused the Orthodox community to begin illegally converting single-family homes into dwellings for more people, a practice which in turn drew complaints from non-Orthodox neighbors. Eventually, the local government altered the town’s zoning laws, legalizing greater density in one part of the city. 

In the 35 years since the initial change, Ramapo has progressively loosened zoning restrictions in the town’s Monsey neighborhood. First, Ramapo allowed owners of one- or two-family dwellings to convert their buildings into three-unit residences. Then, in 1992, the city permitted new construction of three-family homes. Less than a decade later, in 2004, single accessory dwelling units were approved in owner-occupied homes, and in 2007, that was bumped up to three units. In what was once a single-family neighborhood, developers could now build six-unit buildings and sell them as condominiums. 

As these changes were instituted, the neighborhood transformed into a quasi-urban enclave in an otherwise suburban area. Today, Ramapo’s Monsey neighborhood has a population density closer to New York City than to the rest of suburban Rockland County. 

Ramapo is unusual because its large Orthodox voting bloc was more enthusiastic about housing growth than most suburbanites. But Huennekens’ research also makes the point that increased density must be accompanied by increased investment in infrastructure. In Ramapo, the rise in housing density coincided with key sewer and water system failures. Pinpointing the exact cause of these problems is difficult, but the story underscores that even in a place where local residents desire a denser environment, there are still barriers to development that must be acknowledged and addressed.

“Ramapo’s zoning reforms show that, with the right institutional framework and housing market, single-family tract housing developments can be upgraded to become much denser neighborhoods,” Huennekens writes, adding, “the town’s experience also demonstrates the importance of infrastructural investment to serve new housing supply, especially when added in suburban areas.”

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With Too Many Strings Attached, Upzoning Stifles Seattle’s Housing Production 

In Seattle, recent reforms offer a cautionary tale about the risks of enacting a well-intentioned but aggressive policy that requires affordable housing development. The city’s Mandatory Housing Affordability program (MHA), which relaxed zoning regulations in certain neighborhoods, hasn’t led to the kind of housing growth that policymakers hoped. 

Instituted in 2017 and 2019, Seattle’s MHA program relaxed zoning regulations to allow for dense new development while also incentivizing affordable housing construction in 33 of Seattle’s neighborhoods. The plan allowed developers to construct larger buildings, but also required developers to rent out a designated portion of each project at below-market rates or pay into a citywide affordable housing fund. 

What Jacob Krimmel of the Federal Reserve Board and Betty Wang of the University of Hong Kong found in their paper “Upzoning with Strings Attached: Evidence from Seattle’s Affordable Housing Mandate” is that after the law’s passage, the rate of new construction actually declined in the upzoned, affordability-mandated census blocks. The authors found strong evidence of developers strategically siting projects away from MHA-zoned plots and instead choosing to build in nearby blocks and parcels not subject to the program's affordability requirements. Developers could now construct bigger buildings with some affordable units, but they chose to build smaller buildings across the street instead. 

As one of the first large cities to adopt this “upzoning with strings attached” model, Seattle’s MHA provides an interesting example for other cities considering density reforms to alleviate affordability issues. In the future, cities looking to create affordable housing through this model will need to ensure that, even after affordability requirements, new housing projects still pencil out for developers, the authors argue. A well-calibrated mixture of regulations and incentives will make or break this type of policy.

“Whether (and when) such a policy would spur or stifle housing development, especially affordable housing development, remains an empirical question,” Krimmel and Wang write. “What is the “right mix” of sticks (requiring affordability contribution) and carrots (allowing more development capacity and density) for developers?” 

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New Housing Development in Washington, D.C. Booms in Underused Industrial, Commercial Areas 

Lastly, rather than looking at a specific regulatory change, Leah Brooks of George Washington University and Jenny Schuetz of Brookings Metro analyzed neighborhoods in Washington, D.C., where housing grew at the highest rate in their paper, “Does Housing Growth in Washington, D.C. Reflect Land Use Policy Changes?”  

From 2000 to 2020, the nation’s capital  increased its housing stock by 15 percent, in large part because the market added housing in industrial and commercial areas, according to the authors. In their analysis, Brooks and Schuetz examined whether those areas that added the most housing stock were rezoned in the same timeframe. They discovered, perhaps surprisingly, that nine of the 10 neighborhoods in the city that grew the most each had less than seven percent of their land rezoned from 2000 to 2020. 

Instead, neighborhoods with the highest rates of new housing development were underused industrial and commercial areas that became more residential during this period. They also found that areas with the most growth tended to have the lowest amounts of land zoned for single-family homes. For example, the District’s West End neighborhood added new housing by converting a handful of large commercial and industrial properties into residential units. The neighborhood had 1,218 housing units in 2000, and then 2,283 in 2020. 

Navy Yard, meanwhile, grew because the city made a concerted effort to collaborate with developers and to concentrate amenities in the area, including a new baseball stadium. Thanks to this planning, and a small set of targeted zoning adjustments, Navy Yard, which had 952 units of housing in 2000, grew to 4,858 units in 2020.  

Unlike other cities that are faced with politically unpalatable large-scale zoning reforms, the District built substantial amounts of new housing in recent decades, almost entirely through infill development converted from other uses. But the results in D.C. offer several insights into how policies may constrain or support greater housing production, they write. 

Firstly, growth is more likely to occur in neighborhoods that are mostly non-residential or mixed residential-commercial – having fewer neighbors to complain makes it easier for developers to build. This pattern may also reflect economies of scale in construction, especially with infill development, that drive growth of large buildings in a few areas. And second, rezoning even small amounts of land can potentially yield large increases in housing supply. 

“The District’s experience suggests that, in many cities, targeted land use interventions can accommodate substantial amounts of new housing,” they write. 

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Ben Hitchcock is a second-year MPA student at NYU Wagner. He is interested in the connection between urban policy and climate, as well as the role the media and communications play in urban policy-making. Before starting at NYU, he was the editor of C-VILLE Weekly, the local newspaper in his hometown of Charlottesville, Virginia. His writing about land use and housing has been published in The Washington PostCity Limits, and more. He is currently the editor of Wagner’s student-run policy journal, The Wagner Review. He graduated from the University of Virginia in 2019. 

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