Getting to Affordable Housing
A reader asks for my thoughts on DC’s new inclusionary zoning rules which basically require developers to provide a certain proportion of the units in new developments at sub-market rates. On the policy itself, I’ve heard of examples of strict inclusionary zoning rules that work well (Brookline, MA I believe is one such example) but I’m a bit skeptical that the DC government is actually up to the task of outlining and enforcing this kind of complicated regulatory scheme in a way that’s workable and beneficial.
But one way or another, this sort of regulatory mandate really doesn’t seem to be the best possible way to achieve the goal of making housing more affordable. Suppose that instead we:
— Reduced or eliminated rules mandating the construction of parking as part of new developments.
— Permitted the construction of taller structures.
— Relaxed maximum lot occupancy rules.
— Permitted the construction of smaller apartments.
That, it seems to me, would increase the supply of housing units in the city. That ought to, ceteris paribus, reduce the market price of housing thus rendering housing more affordable. It would also generate additional tax revenue and some of the revenue could be spent on subsidies for struggling families to help them afford housing. Last, it would increase the proportion of the metro area’s residents who live in the District of Columbia as opposed to the suburbs, which would be good for the environment. Adding an additional inclusionary zoning regulation on top of existing supply constraints, by contrast, seems likely to further constrain supply. Amidst a real construction boom, it’s true, these rules would result in the creation of new affordable units. But absent such a boom it simply discourages new development, meaning the city will have more vacant lots, more surface parking lots, more abandoned structures, and fewer housing units than it otherwise might.
31 Responses to “Getting to Affordable Housing”
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August 14th, 2009 at 3:17 pm
Eliminate single-family zoning.
But, ultimately, the affordable housing problem is a suburban problem. Exclusionary zoning in the suburbs artificially increases the cost of each housing unit, while limiting the supply, throughout the region.
August 14th, 2009 at 3:33 pm
Indeed, with respect to the enforceability of these rules, a friend of mine though some loopholes in military compensation structure was able to buy an affordable unit in the City Vista.
August 14th, 2009 at 3:36 pm
@joe: Aside from blatant de jure discrimination, of course, shouldn’t a local community be allowed to influence its character through zoning restrictions? Should a horse ranching community on the outskirts of, say, San Diego be forced to essentially upzone their whole town to allow for apartment high-rises?
I’m not pretending that homeowners aren’t self-interested monopolists who have every motivation to vote down easements of zoning restrictions. But I think to categorically say that all such restrictions ought to be lifted everywhere is a non-starter.
I agree with Matt, though, that in a city such as DC, stimulating the supply of all housing will ultimately yield more affordable housing in the end then an inclusionary housing ordinance.
August 14th, 2009 at 3:40 pm
I live in Brighton (a Boston neighborhood adjacent to Brookline, MA) and the problem of high residential rental rates is well-known to me. I suggest that the changes MY proposes require not only changes in municipal rules, but also changes in the attitudes of local homeowners. It’s all very well to say that taller structures should be allowed, for example, but even if they are formally allowed, homeowner opposition will probably kill a construction proposal for such structures.
It’s like the current situation with healthcare: a clear majority of the people are satisfied with what they have now and don’t want changes.
August 14th, 2009 at 3:58 pm
The problem with setting aside housing units for lower-income people is that you end up with an area where only the wealthy and poor can afford to live.
August 14th, 2009 at 4:27 pm
Matt is absolutely right about the right way to go about increasing housing affordability. But if I were to choose one restriction on the construction of new housing, it would be for the inclusion of units with more than two bedrooms in multi-family housing developments. There is a lot of overcrowding in some parts of L.A., and a lot of that can be traced to the vast majority of rental housing being studio, 1-bedroom, or 2-bedroom. Families ought to have 3-bedroom or even 4-bedroom apartments available to rent.
August 14th, 2009 at 4:36 pm
The problem with setting aside housing units for lower-income people is that you end up with an area where only the wealthy and poor can afford to live.
This is not actually true. The way that such mixed-income developments typically work is that there is a sliding scale of subsidies, including for households at 80% of median and 50% of median. 80% of median is, definitionally, pretty much middle class.
Now it may be that DC’s proposed set-asides for affordable housing won’t work out that way – that it will continue the practice that Matt described a couple weeks ago in which, say, 3 units of a ritzy condo are set aside for the poor but every other unit is in the mid-six figures – but it’s by no means inherent to developments with low income set-asides. See, for example, Crawford Square in Pittsburgh (Matt could walk there in 10 minutes from the Convention Center).
August 14th, 2009 at 4:53 pm
As for Matt’s general strategy, I think it ignores the actual economics of housing development. It is hugely profitable for developers to build high-end housing. Insofar as there’s demand for it, every new condo and apartment building (in the city, where higher land and infrastructure costs make the cheap townhouses you see out by the Beltway cost-ineffective) will be targeted to that market.
The libertarian premise is that, as more high end housing is built, the wealthy will leave behind their current housing, and the middle class will move into it, leaving the current middle class housing for the poor.
The problem with this premise is that there are far more poor than middle class, and far, far more middle class than wealthy. Look at it this way: $12M can build 20 nice-but-not-spectacular condos for the upper middle class, or it can build 50 decent condos for the middle-to-lower-middle class. But margins are higher on the first development, the units are easier to sell (because fewer), and you need a lot less parking (not nec. from zoning, but from marketing POV), and it’s more or less the same size building. So you’re going to see a lot more of the former building than the latter, meaning that, if all of Matt’s wishes came true, the housing crunch would be solved 20 units at a time, not 50.
I’m not saying that his proposals would be ineffectual; I”m saying that the changes are much more marginal than he imagines. Also, IIRC, there are plenty of underpopulated areas of DC, n’est ce pas? I know why they’re underpopulated, but as long as vast swathes of the District are full of empty housing, it’s a bit hard for me to believe the problems of housing in the District consist of the marginal 5 stories Matt wishes developers could put atop their high-end condos.
[BTW, that same $12M builds 45 crappy townhouses out by the highway interchange, and they're 50% bigger than the 50 units that $12M could build. Again, an easier sell for the developer]
August 14th, 2009 at 4:58 pm
there are far more poor than middle class
How are you defining your terms?
August 14th, 2009 at 5:05 pm
Most effective inclusionary zoning programs include incentives like those Matt refers to – zoning incentives regarding parking, height, F.A.R., off-site development, etc.
See DC’s website
The market (developers, in this case) will never be efficient enough to solve this problem alone. Once they’ve built all their luxury condos they’ll return to building sprawl in teh burbs.
August 14th, 2009 at 5:11 pm
Matt hasn’t a clue what he’s talking about. JRoth is right.
August 14th, 2009 at 5:12 pm
KobayashiMaru,
In my opinion, yes to the first question, and no to the second.
However, what they should not be allowed to do is declare that there will no, or even almost no, two-family homes, townhouses, apartment houses, or apartments/condos on upper stories above storefronts.
You talk about a horse-ranching community wanting to protect its character. What could possibly be more appropriate for such a community’s character than a Main Street straight out of a western?
August 14th, 2009 at 5:15 pm
I live in a city where affordable housing mandates similar to brookline’s have been working extremely well. The value of the rules dc has just implemented isn’t just that it increases the amount of affordable, but that it spreads affordable housing out across the city, lessening residential segregation and creating more diverse communities. Matt’s proposals will only serve to create new ghettoes to replace the old ones that affluent people are busy gentrifying.
August 14th, 2009 at 5:35 pm
How are you defining your terms?
Loosely.
A bit more seriously, median is $46k, but, in terms of housing, I’d call “poor” under $40k, because you’re talking about people who basically can’t afford any house (except shoddy ones in bad neighborhoods or North Dakota) or desirable apartment. There are ~48M US households under $40k, ~36M under $30k. Between $40k and $100k, 43M. So “many more” poor may not be fair, but my point remains that there are at least as many Americans who are in dire housing as there are Americans who might like to move up but are supply-constrained.
August 14th, 2009 at 5:40 pm
Joe is right, in that the problem is in mono-zoned municipalities, which may as well have housing covenants.
One solution from the 70s was to combine munis into planning districts that included multiple zoning areas, so that your single-family-only muni is grouped with its denser neighbors for certain purposes without forcing an apartment building into the middle of cul-de-sac suburbia. But I’m not sure how effective these districts have been, and I don’t know how much it really benefits the denser places.
August 14th, 2009 at 6:00 pm
The problem of affordable housing provision at the municipal level is one that we planners understand very well: the Mexican standoff.
Every municipality has an interest in there being sufficient affordable housing in the region. Every municipality also has an interest in providing none of that affordable housing itself, but shoving it off onto its neighbors. Its really no different from each property owner in a subdivision having an interest in there being enough wetlands to prevent flooding, but also in filling his entire property and having the wetlands exist on everyone else’s land.
The answer, in both cases, is enforced collective action. Regional agencies made up of municipalities should assign each town and city a number of affordable units (both a number of subsidized units, but also a number of naturally-more-affordable units like apartments and small-lot SFHs) it has to provide over the next few years, and then leave it up to each municipality to do so in a manner consistent with its character and vision for the future.
August 14th, 2009 at 6:26 pm
joe from Lowell raises a good real world issue blocking these reforms. A great example is Santa Ana in Orange County, CA which has a greater proportion of underprivileged than its neighbors and will not see that trend change much as its neighbors are happy to see someone else take care of the collective problem.
Enforced collective action is the way to go through regional development authorities that have teeth and can eliminate gray areas between municipalities (another real world issue). Blueprint Denver is a good example.
Once the regional plan is in place, the solutions to the issue of affordable housing should be made on a case by case basis determined by what the region needs, what the community desires, and what developers (and their investors) will buy into.
August 14th, 2009 at 6:35 pm
Much of this “enforced collection action,” btw, will consist of the REMOVAL of laws.
Just to head of the cries of “socialism.”
For some reason, libertarians never seem interested in addressing the distortions of the housing market caused by suburban exclusionary sprawl zoning. For example, Reason Online has never run a single story or post about single-family-only zoning, minimum lot sizes, parking requirements, or the like. They do, however, frequently run denunciations of smart growthers who complain about those things.
I think it’s because the consider suburban sprawl to be the form of development that best encourages the atomized, misanthropic, individualistic, anti-community lifestyle they favor, so it becomes easy for them to find higher priorities.
As evidence, I point to the fact that the novel vacation community Howard Roarke designs in “The Fountainhead” is almost identical to a cookie-cutter post-war subdivision; and to Arthur Levitt’s argument that building single-family homes on largish lots in the suburbs is an effective way to discourage leftist politics, because it denies working-class people the shared space and opportunity for interaction one finds in apartment houses and old neighborhoods.
August 14th, 2009 at 7:08 pm
For some reason, libertarians never seem interested in addressing the distortions of the housing market caused by suburban exclusionary sprawl zoning.
That’s not true the pioneer institute has put out reports criticizing zoning. Richard Epstein favors a legal concept called regulatory takings that would make it much more difficult to enact zoning ordinances.
For example, Reason Online has never run a single story or post about single-family-only zoning, minimum lot sizes, parking requirements, or the like.
Again not true
here’s one
and another
and another
and another
I’m sure there more if you want them
August 14th, 2009 at 8:34 pm
No, Dan, you are wrong.
Ed Glaeser of the Pioneer Institute has written some good stuff, that’s true. Epstein’s work, on the other hand, says nothing about the issues I raised, even as it criticizes other aspects of zoning and land use regulation – but that’s not terribly surprising, because Epstein doesn’t give a crap about those issues, but rather, with the “property rights” of landowners.
As for the Reason links, you should really read things before you link to them. Not a single one of those links raises an objection to “sprawl zoning, single-family-only zning, minimum lot sizes, parking requirements, and the like,” or considers “the distortions of the housing market caused by suburban exclusionary sprawl zoning.”
Those are all stories about zoning, but not a single one of them deals with the most significant, most intrusive aspect of zoning, which I described above. They manage to find other things about zoning to complain about, but there is not a single word in any of the pieces you linked to dealing with the issues I raised. You simply looked up the subject of “zoning” and linked to every piece that contained the word, without bothering to read them and find out what their subject was.
But thank you for proving my point. As anyone who reads those columns can see, Reason writes about zoning sometimes – but they do so without ever mentioning the issues I raised, or the aspects of zoning that contribute to the problems I raised, even though both of those issues should be right in their wheelhouse. Their silence about the most important and influential aspect of zoning on housing availability, even in the midst of their vocal denunciation of other, much-less-significant aspects of zoning, is deafening.
August 14th, 2009 at 9:14 pm
Ed Glaeser of the Pioneer Institute has written some good stuff, that’s true.
And the Pioneer Institute is libertarian (or at least free market since don’t believe they focus on other issues the libertarians are concerned about) think tank.
Epstein’s work, on the other hand, says nothing about the issues I raised, even as it criticizes other aspects of zoning and land use regulation – but that’s not terribly surprising, because Epstein doesn’t give a crap about those issues, but rather, with the “property rights” of landowners.
You’re right he doesn’t single out single family zoning but the regulatory takings doctrine he favors would make vastly more difficult for communities to enact. This is a difference in values between progressives and libertarians; progressives may either support or oppose zoning depending on if they like the results while libertarians will oppose them regardless.
As for the Reason links, you should really read things before you link to them. Not a single one of those links raises an objection to “sprawl zoning, single-family-only zning, minimum lot sizes, parking requirements, and the like,” or considers “the distortions of the housing market caused by suburban exclusionary sprawl zoning.”
The first and third columns were critical of the zoning ordinances in suburban areas. Again you seem to expect libertarians to offer a progressive criticism of zone rather than a libertarian one; libertarians will oppose zoning in general while progressives will oppose zoning on a case by case basis.
August 14th, 2009 at 10:03 pm
As I have suggested here before, I think joe is exactly right that the key is to move regulatory authority up to a higher level where NIMBYism will not create so many problems when it comes to affordable housing.
I will also note once again that I think Matt has failed to make his case that DC’s height restriction is really a net problem.
August 15th, 2009 at 12:15 am
Uh, yes, I acknowledged that.
Shorter version of above: yes, joe, you’re right. Epstein doesn’t discuss the issues you raised, as you said. I shouldn’t have used him as an example.
Yes, they are. They are not, however, critical of the zoning ordinances in suburban areas for having the effects I raised – for imposing the large-lot, auto-oriented, single-family-only vision of development that is the most significant issue with zoning, and which has the greatest effect on the issues, like affordability, that they purport to care about, and which this thread is about. For instance, you will find environmentalist policies, such as setting aside parcels or forbidding development in wetlands, singled out in those pieces, but not the much-more significant problem of sprawl zoning.
And here you give the game away. You acknowledge that criticism of sprawl zoning – of imposing the lot sizes, the setbacks, the parking requirements, and the ban on cheaper housing types – is not a libertarian critique. It should be a libertarian critique. It goes directly to the principles they claim to hold dear – the imposition of regulations on landowners, the distortion of markets limiting supply and imposing cost-raising standards that result in cheaper alternatives being driven out of the market – but it is not. As I’ve been saying.
Again, you need to read the pieces you link to before assuming they make your case. Those columns are chock-full of “opposing zoning on a case by case basis,” which appears to be your term for articulating a criticism of zoning laws based on their effect. They criticize certain zoning regulations for having certain undesirable effects in several of the articles you linked to – but they are noticeably silent about offering criticism for these specific laws having these specific effects, despite the fact that those sorts of laws are much more widespread than others the Reason writers have chosen to single out, and have much more significant effects.
August 15th, 2009 at 11:07 am
I don’t see why inclusionary set-asides and zoning reform (Matt really should include the non-related or multi-family ban on his list) are mutually exclusive, when they are in fact complementary – inclusionary set-asides place a requirement on developers to develop affordable housing (they make more than enough profit on the high end stuff to afford this), and then the zoning reform make it more feasible to do this.
Ultimately, you want to lean on all the levers. Which, I’ve argued, also means public construction of housing (not the same thing as construction of public housing).
BTW – if set-asides can work well here in Santa Barbara, there’s no reason why they can’t in D.C.
August 16th, 2009 at 3:12 am
BTW – if set-asides can work well here in Santa Barbara,
I went to a lecture once on some affordable, non-car-oriented housing in Santa Barbara, so I know that it is possible to build low-income housing there, but how much low-income housing is actually available? Don’t most of the blue-collar workers in the city still commute in daily from Ventura or Oxnard?
August 16th, 2009 at 2:28 pm
[...] think this a good post on the issue of affordable housing, and inclusionary zoning in particular. There are a [...]
August 16th, 2009 at 8:26 pm
Dan & Joe -
While libertarians come in different flavors (including a school of pro-transit libertarians e.g. Mike Lewin), the dominant school is not merely silent on single-family zoning but actively defends it. There is even a manifesto, called the Lone Mountain Compact.
This position in this manifesto is the exact opposite of Joe’s (and many liberals’) call for more regional zoning. It favors interference by landowners’ rights by small wealthy municipalities, and even more so by private homeowner associations, and rejects it only when it is carried out on behalf of a wider community.
As I’ve observed elsewhere, this is a clear example of (most) libertarians’ inclination to set aside their theoretical principles when they fail to conflict with the interests of the wealthy.
August 17th, 2009 at 10:29 am
Inclusionary zoning has had some great success in San Francisco. Since 2004, San Francisco has produced 1,045 units of affordable housing since 2004–all without any city subsidy.
That being said, inclusionary zoning is not an all-inclusive affordable housing strategy. It is more like a tool to create economically integrated neighborhoods and to allow lower-income residents to reap some of the rewards of new development. One commenter correctly noted that most new construction is for the luxury market. Without inclusionary zoning, low and moderate income families are pushed out of certain neighborhoods.
That being said, Matt’s arguments for increased density are good ideas. But inclusionary zoning will help ensure that a certain percentage of the new units that are developed because of the new rules will be affordable.
August 17th, 2009 at 1:25 pm
I’m curious about the suggestion to permit construction of smaller apartments. Is there a size requirement for new units?
August 19th, 2009 at 9:29 am
I don’t think the arguments about exclusionary municipal zoning in the suburbs are relevant for the DC area. In DC all planning is conducted at the county and city level. The number of incorporated towns in the Maryland and Virginia suburbs is quite limited. All of the major jurisdictions, such as DC, Montgomery, Arlington, Fairfax and Prince George’s county include high density areas.
In fact, the some of cheapest housing in the DC Metro area is found in close-in suburban high-rises and farther out garden apartments. Matt does a good job of listing some of the factors that keep housing expensive in the city. But in addition to those factors and the price of land, DC’s onerous permitting and historic preservation processes drive up costs.
August 20th, 2009 at 4:29 pm
All of the suburban counties surrounding/close to DC (except Prince George’s County in Maryland) already have inclusionary zoning. Montgomery County, MD was one of the first jurisdictions in the US to implement inclusionary zoning in 1974 and over 12,500 units have been produced. Fairfax County, the largest jurisdiction in the DC metro region, implemented inclusionary zoning over 10 years ago. When it comes to producing affordable housing in the DC region through inclusionary zoning, the suburbs are way out ahead of the District on this front.