Killing the American Dream to save a mythic suburban one

The United States is in the midst of a housing crisis, and California has been hit especially hard. Costs to purchase and rent are increasing much faster than wages, and more Americans than ever believe homeownership is an unrealistic goal — including 48% of renters, according to one survey. One of the primary causes is zoning reform opponents’ Herculean efforts to preserve archaic regimes that restrict most residential land in the United States to single-family use — 61% in 2019.

Upzoning some of these single-family zones to multi-family use would help ease the shortage, as more residential units become available with the construction of new duplexes and triplexes, with the benefit of giving individuals more freedom over what they can do with their own land. In a similar vein, it would allow a freer market to decide which neighborhoods remain single-family and which begin to reflect a growing preference for an urban-suburban synthesis.

Some homeowners fear the end of single-family use will reduce property values. But in reality, as Matthew Yglesias observed, local land-use decisions tend to cause “systematic undervaluing of the value of building more houses.” To be sure, concerned homeowners are not some cabal. Like all of us, they are following what looks to be in their best economic interest: Fewer units in their neighborhood, with scarcity maintaining demand. Their instinct, however, is wrong—at least on a large scale.

Two economists have estimated that “stringent restrictions to new housing supply” from 1964 to 2009 shaved as much as 36 percent off of “aggregate U.S. growth.” Ouch. And a significant cause of this, as Harvard economist Edward Glaeser put it, is “the entrenched interests — like the homeowners who control local zoning boards and the wealthy residents of cooperatives who oppose all neighborhood change — that limit building in productive places.”

Last month, the New York Times featured a story about the planned conversion of a single-family lot in San Diego into a rental triplex. Some nearby homeowners were displeased. One longtime resident bemoaned the loss of the “American dream of living in a single-family neighborhood.” Such expectations, that the character of suburban neighborhoods would not and should never have to change, are not just offensive to those disdainful of the extra-market efforts used to maintain the status quo.

Without some movement in the joints, all the social ills that come with artificially restrictive housing markets will worsen. And, all things considered, the average reform proponent does not want or expect most suburbs to be reshaped.

State and local governments unpersuaded by assurances that reform would hardly mean the end of most single-family neighborhoods might soon experience firsthand the downstream effects of reduced ownership rates, high rent prices, and rising homelessness. Unfortunately for the average taxpayer, things must often go far — shake windows and rattle walls, as Dylan sang — before officials take meaningful action.

And California’s plight embodies this trend. Its housing shortage is arguably the worst in the nation, with scores of its towns and cities feeling the worst effects of decades of increasingly outdated zoning laws. Fresno, once one of the cheapest major cities in the state, is now all but “unaffordable.” Never mind the homelessness crises in Greater Los Angeles and the Bay Area. After years of foot-dragging, the state government has finally been forced to take sweeping action — perhaps less drastic had the issue been addressed earlier.

In September, Gov. Gavin Newsom signed Senate Bill 9, which, as Slate wrote, “effectively abolishes single-family zoning in the country’s largest state,” “allow[ing] owners to split their lots or convert homes to duplexes, regardless of local zoning.” Just because the law is drastic, however, does not mean it will succeed. California’s recent move is meaningful, but local NIMBYism remains a powerful foe. In one recent poll, only 55% of California homeowners favored building more houses in the state.

Other states and municipalities can learn from the costs of California’s failure to act sooner. Oregon in 2019 enacted statewide upzoning for cities over 10,000. Debate in other states is moving ever-closer to reform. It helps that various groups have begun to overcome the hurdles to collective action. Upzoning has the support of a diverse coalition, including the AARP, the NAACP (which has been leading the legal charge for decades), environmentalists, libertarians, and Millennials.

This makes sense. American social and economic practices and preferences have changed in recent decades—societies are always changing. But our legal geography has not kept up. Housing costs remain an albatross around an evolving country’s neck. Upzoning more single-family neighborhoods for multi-family use is a must for any comprehensive plan to ease America’s endemic housing crisis.

Sam Spiegelman is a legal associate in the Cato Institute’s Robert A. Levy Center for Constitutional Studies