Planning an Affordable City

America faces a housing affordability crisis in its most economically dynamic cities, including metropolises like New York City, San Francisco, Los Angeles, and Boston where prices are rising faster than construction costs. Over the past three decades, the price of housing and office space in many of the biggest and richest cities in America has increased wildly, a result of both increasing demand and substantial zoning and other restrictions on new construction. Such cities increasingly look like collections of exclusive suburbs, with neighborhoods filled with homeowners stopping the construction of needed commercial and residential development.The result is that working- and middle-class citizens cannot afford to live where their labor would be most productive, instead settling for cities where housing is cheaper but human capital spillovers are lower and jobs are less plentiful and less remunerative. Moreover, accumulating evidence demonstrates that these zoning restrictions do not produce benefits that offset their burdens on prospective buyers and renters. Big-city land-use constraints have also had a serious negative effect on the efficiency of regional property markets and even on national economic growth.
The solution to this housing crisis is economically simple but politically difficult. As a matter of economic rationality, local governments should deregulate their housing markets to allow an increased housing supply to meet a rising demand for housing. As a political matter, however, incumbent residents who already own housing vociferously and effectively protest against the reduction of zoning restrictions.

Roderick Hills and David Schleicher

Iowa Law Journal

November 2015

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