Lesson Plan For The Future
The Housing Crisis and Zoning
How do we solve the housing crisis? Land Use Policy Changes
“Zoning Makes Things Illegal”
What is the history of zoning and building codes? Zoning is considered a “Police Power.” It all began in 1921 when merchants in New York wanted to keep the customers away from the workers (who were mostly immigrants).
Today, affordability is an issue, availability is an issue, homelessness is an issue, maintaining and servicing a sprawling community and public funding for services are issues, climate change is an issue. Social and racial justice are issues.
What were the intentions of the origin of zoning laws? Exclusion.
The only way to solve these major issues of our time are with better land management policies, and reformed zoning laws (In California, SB 9 and 10, for example).
What are your ideas to solve the biggest issues and challenges of this generation?
Reducing the land component cost as part of the affordability solution makes the most sense.
Tobias J. Peter Director of Research, Housing Center Research Fellow, American Enterprise Institute offered this statement before the Senate Committee on Banking, Housing, and Urban Affairs
“Many of the housing problems we face today as a nation have occurred, not in spite of federal policies, but because of them. Two policies in particular have been major contributors to the separate and unequal housing legacy we find ourselves in today. Racial discrimination in residential zoning policies espoused by the federal government may be traced back to 1921 and foreclosure-prone affordable housing policies back to 1954. These two policies continue to contribute to disparate outcomes and put low-income and minority borrowers needlessly in harm’s way and severely limit their opportunities to build generational wealth.
- Zoning policies espoused by the federal government and widely adopted around the country have constrained the private sector’s ability to build adequate housing, thus fueling housing unaffordability.
- Starting in 1921, one-unit detached zoning policies became widespread through the actions of the federal government. Justified as actions “promoting health, safety, morals, or the general welfare”, they were in fact thinly veiled efforts to promote racial segregation of residential development.
- These policies have created an artificial supply shortage. We estimate without these policies an additional eight million homes would have and can still be built without subsidy by private enterprise.
- This supply shortage has resulted in higher home prices and rents and greater levels of debt in order to become a homeowner.
- Worsening affordability has severely affected low-income households, especially Black ones, by severely restricting the opportunity to sustainably purchase a home.
- Foreclosure-prone affordable housing policies began in 1954, when Congress authorized FHA to use the 30-year loan, and have been primarily targeted at low-income and minority borrowers.
- These policies have subsidized debt by providing excessive leverage.
- Coupled with the supply shortage, the increased demand from additional leverage has fueled unsustainable lending and higher home prices.
- This is the paradox of accessible lending: When supply is constrained, credit easing will make entry-level homes less affordable.
- During the Financial Crisis, these policies contributed to 8.6 million of foreclosures and other forced dispositions, which were proportionally higher in low-income and minority neighborhoods.
- The foreclosure rate of 27% in low-income census tracts (defined as <80% of area median income) was 1.5 times as high as the 18% foreclosure rate in high-income census tracts (defined as ≥120% of area median income).
- The foreclosure rate of 30% in census tracts with a Black and/or Hispanic share of households of at least 50% was twice as high as the 16% foreclosure rate in census tracts with a Black and/or Hispanic share of households of less than 10%.
- These policies have not built generational wealth.
- Today, the nation finds itself in the midst of the second home price boom in less than a generation.
- The national seller’s market is now in its 101st month and levels of supply are at record lows. Home prices are rising in the 10-15% range compared to a year ago.
- Home price appreciation is being propelled by the Fed’s low interest policies and quantitative easing, the desire for more space as more people work from home, and a wide credit box, particularly at FHA.
- Across the states you represent, affordability has worsened, especially for low-income and minority households. You can trace just how bad affordability has become from key housing market indicators for your state provided in Appendix A.
- The COVID-19 pandemic has revealed the same fault lines that were present before the Financial Crisis, thus maintaining separate and unequal outcomes in the housing market.
- Delinquencies are still largely geographically concentrated in low-income and minority neighborhoods, where federal policies provide widespread access to default-prone leverage.
Most importantly these federal policies have impeded the creation of generational wealth for lower-income and minority households and have served to perpetuate the legacy of racial discrimination and socio-economic stratification in housing. Due to their ongoing impact, there is a growing danger that housing is going to become even more separate and unequal. This is not a viable path forward.”