Cities Under Pressure: Local Growth Controls and Residential Development Policy

One of the most frustrating and contentious issues in California in recent years has been the shortage of housing. Even as 10 million people have been added to the state’s population over the last two decades, housing production has fallen short of demand, particularly during the recent period of economic growth. This shortfall has resulted in wildly escalated housing prices in many urban centers and heated markets in urban ring communities as far as 100 miles from employment centers. Many carefully crafted arguments have sought to explain this mismatch between supply and demand. They range from the inability of any state to absorb such huge numbers of new residents to the view that planners, conservationists, and community activists have made it devilishly difficult to build any new housing. Some researchers have also argued that state tax policies make residential growth economically unattractive for revenue-starved suburban communities.
Yet another line of argument has focused on local growth controls, which are frequently placed near the top of the list of reasons for the shortage of affordable housing in California. According to this argument, a lack of enthusiasm for housing in California cities—and in some cases, outright hostility to multifamily or “affordable” developments—goes a long way toward explaining the state’s lagging housing production. Paul Lewis and Max Neiman address this argument head-on by studying which communities enact growth restrictions and why. They find that relatively few cities across the state have passed strict controls on housing development and that cities’ motives in managing residential growth do not appear to reflect simple elitism or civic selfishness. The authors conclude that growth controls may constrain some homebuilding but that broader market forces and state policies probably do more to explain California’s housing costs and slow rate of production.

Paul G. Lewis and Max Neiman

Public Policy Institute of California

2002

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