HUD Releases Evidence-Driven Publication on Regulatory Barriers to Affordable Housing

27 Jul

The Department of Housing and Urban Development’s quarterly newsletter Evidence Matters recently released an entire issue dedicated to regulatory barriers to affordable housing. In just over 20 pages, HUD researchers put forth a compelling argument that well-intentioned zoning law place the value of community aesthetics and preferences over livability for LMI renters and homeowners. In high-cost cities and and in Pittsburgh’s high-cost neighborhoods, the effect is multiplied. This will not be news to many of our readers, but it is heartening that HUD, even under the aegis of Secretary Carson, recognizes the detrimental impact of slow permitting, density restrictions, minimum lot sizes, and more.

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Evidence Matters concludes that, given the evidence available, “regulation appears to raise home prices, reduce construction, and reduce the elasticity of the housing supply….” They note that construction costs have stayed relatively flat and in pace with inflation over the last several decades, but housing and rental prices have not, rising faster than inflation (and certainly people’s wages). This would indicate that it is land prices, not the labor and materials put into a dwelling, that drive up costs. When further restrictions are put on costly land, e.g. parking minimums and density maximums, the supply dwindles further due to a reduction in total potential units.

 

The report separates land use and zoning regulations into essentially two streams – regulations that slow the housing pipeline and those that constrain supply and increase land prices. It is a fairly measured overview of the potential downsides of regulation, focusing primarily on exclusionary zoning practices, but also drawing attention to the cost of historical preservation, environmental regulation, and community input processes. Examples of regulation that increase the cost of creating or rehabilitating housing include:

 

  • Complex and expensive permitting and and review processes
  • Environmental regulation/remediation
  • Review and approval requirements for multifamily developments that are not required of single family homes and duplexes
  • Historical preservation review
  • Community forums and input
  • Urban growth boundaries

 

Examples of regulations that drive up the cost of land and reduce the supply include:

  • Density requirements that limit how many units can be built in a given lot
  • Minimum lot sizes. These are very common and exist in many of Allegheny County’s municipalities, including Pittsburgh.
  • Height limits
  • Parking minimums
  • Set backs and side yards
  • Prohibition of multifamily housing
  • Prohibition of accessory dwelling units
  • Prohibition of manufactured housing
  • Impact fees

 

Policy done well should balance public cost and benefit with equity, but what we can see in the history of housing regulation is that the cost ends up being borne disproportionately by those with the least to give. Some regulatory barriers, such as historical preservation and community approval, come with a cost that is far outweighed by its benefit. Others, such as parking minimums, are an outdated and expensive barrier to the creation of more supply. If you’d like to see more from Evidence Matters, you can find all their past issues here.

Alix Levy

Research Analyst at PCRG
Despite repeated attempts, Alix has always found a reason to stay in her hometown of Pittsburgh. She received both her undergraduate and graduate degrees from the University of Pittsburgh, with a one-year stint in Freiburg, Germany studying the European Union. Prior to joining PCRG, Alix was a community development consultant and adjunct professor. You can find her running around the East End, reading on her back patio, yelling about politics, and planning what to cook next.