This Week in Land-Use, August 15th

This Week in Land-Use, August 15th

News and Commentary

Mercatus visiting fellow Kevin Erdmann argues that zoning restrictions and low property taxes are a toxic combination.  Limiting the supply of housing confers windfall gains onto property owners, so there’s a very straightforward case for taxing those rents.  Furthermore, the urbanites of future generations will only be richer and more numerous, while bidding on a relatively-fixed number of units.  Thus, since zoning restrictions became significant in the early 2000s, markets have only expected rents to rise.  Those expectations of rent inflation are driving up today’s ratio of property values to rents, compounding the case for taxing those property values.  Lastly, low property taxes will on the margin increase owners’ incentives to lobby for those otherwise harmful restrictions that profit them.

Kanye West’s dome-based scheme to usher humanity into a post-class future is being hamstrung by zoning laws.  Inspectors discovered that his Star Wars-inspired constructions have concrete foundations and reclassified his art project as a permanent building, thus requiring some paperwork.  For better or worse, world-historical geniuses are not yet exempt from land-use restrictions. Perhaps YIMBY should stand for Yeezus in my Backyard.


New Research

This month, the National Bureau of Economic Research published a trio of interesting articles on housing.  First, there is a long-established correlation between eviction and negative life outcomes.  The authors of this study try to establish a causal relationship by comparing cohorts of similar tenants who were randomly assigned more or less lenient judges.  While eviction confers long-term harms, they find that the unique contribution of eviction is a relatively minor part of the financial strain these tenants face.  Second, this article traces a link between inequality and income-segregation.  Rich residents price the poor ones out of a neighborhood, and the ensuing school segregation only reinforces thoose societal inequities.  The authors estimate that this feedback effect is responsible for around a quarter of the past decades’ growing inequality.  Third, in a similar vein, this study argues that growing inequality creates demand for high amenity neighborhoods in cities’ downtowns.  Rather than conferring spillover benefits to low-income residents, these amenities raise rents to levels unaffordable to many.


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By |2019-08-15T13:48:59-07:00August 15th, 2019|Blog, Land Use Regulation|