Zoning, Affordability, and COVID-19

July 15, 2020 by admin
Housing, Land Use, Policy/Legislative

Housing Affordability & Single-Family Zoning

A recent piece by none other than Chuck Maron (founder of Strong Towns) published in, of all places,  The American Conservative, brings back to the fore the recent debate about doing away with exclusive zones for single-family homes to, among other things, deal with the housing affordability crisis.  Titled It’s Time to Abolish Single-Family Zoning, Mahron makes the argument that exclusive zoning for single-family homes is not a conservative political principle, but is rather exactly the opposite, he says:

“…the suburbs would go away because they can’t exist without excessive and ongoing federal subsidy.

The progressive left has discovered that single-family zoning has racist underpinnings. That’s great, because we should now have no problem finding common cause for repealing this most distorting of regulations, one that the federal government never should have forced cities to adopt to begin with.

In fact, the conservative thing for suburban leaders to do here is to not wait for the federal government to tempt us with more handouts, but to go ahead and show those progressives running the big cities that we live by our principles, that we embrace vibrant markets and free people, by preemptively repealing single-family zoning.”

Several local and state governments around the country have, within the last year or so, undertaken moves to ban or severely restrict the use of exclusive single-family zoning, among them Minneapolis, Seattle, Toronto, and the State of Oregon.  There have been some very interesting and thought-provoking writings on this topic recently as well, most notably It’s Time to End Single-Family Zoning in the Journal of APA, and a recent opinion piece by Carol Galante in the New York Times.

Here in Utah, the housing affordability issue provoked actions such as a housing affordability task force headed up by Lt. Governor Spencer Cox, and the subsequent creation of the Commission on Housing Affordability by the state legislature.  The business community also acted with the creation of the Housing Gap Coalition.  Early on, there was talk at the legislative and business community levels about restrictions or stipulations on local land use regulations to encourage the production of more housing, under the theory that more housing supply would lead to better affordability (the supply-and-demand principle).  But local officials pushed back indicating that the major issues with housing affordability were the costs of labor, materials and land, not so much land use controls.

Subsequent work by these various groups led to the crafting and passage of bills by the legislature that would not so much mandate or restrict local land use controls, but rather link land use outcomes to state funding for transportation, and to policy outcomes for mandated moderate-income housing plans, most notably SB136 in the 2018 session and HB34 in the 2019 session.  Despite some early threats, Utah did not follow the path set by some places around the country (noted above) to restrict use of single-family zones.

Housing Affordability and COVID-19

So, what has happened with the housing affordability issue subsequently, and with the impact from COVID-19 and associated economic recession?

Cameron Diehl, executive director of the Utah League of Cities and Towns, gives a summary of local government actions that have been undertaken subsequent to the requirements of SB136 and HB34 by local governments around the state, which show an increasing move toward diversification in land use regulations.  In particular, the trend toward adoption of ordinances to permit Accessory Dwelling Units (ADUs), mixed use, and transit oriented developments (TODs) are prominent.  Is this making a difference?

A recent report by the Kem C. Gardner Institute shows that new construction last year and so far this year are closing the gap in housing (creation of new households v. construction of new housing units), which is good news, but Michael Parker of Ivory Co. notes that at the current rate, it would take 33 years to close the gap completely.  New construction is indeed up, but Mike Ostermiller of the Northern Wasatch Association of Realtors noted in a recent ULI Utah panel discussion that this July, there are some 6400 homes for sale listed in the Multiple Listing Service, whereas typically in July in past years the number has been closer to 10,000.  Chris Gamvroulas, President of Ivory Development, also on the ULI panel, said that typically Ivory has about 30% of its new home sales referred by realtors.  Right now it is closer to 60%, indicating that homebuyers are having a hard time finding homes to buy.  While all this bodes well for the housing market, the industry is having a hard time keeping up, and such indicators usually mean increasing housing prices.

A story in last week’s issue of The Economist recalled that during most recessions, housing markets usually suffer because of hits to rent and mortgage payers’ ability to cover their housing costs.  However, the story notes, the COVID recessions is behaving “oddly” – housing markets are not tanking.

“…researchers noted before the pandemic that the supply of new housing in America was failing to keep up with demand—owing in part to increasingly complex land regulations and reduced competition in house-building. Social-distancing requirements are also likely to hold construction back in the coming months. With supply constrained and demand boosted, house prices seem to rest on solid foundations.”

So it appears that the current recession is not having the expected moderating effect on the housing market and thus, affordability.  So what is likely to happen on the land use regulation scene upcoming?

Cameron Diehl, in a presentation to the Housing Gap Coalition meeting on July 10, said that action by local and state officials has been focusing on fleshing out the ramifications for Transportation Investment Corridors outlined in SB136.  This year’s League conference will pay attention to this issue, much as recent past League meetings focused on SB34.

However, Chris Gamvroulas, a member of the Commission on Housing Affordability, indicated that he has been charged by the Commission with chairing a subcommittee of Commission members to look at land use issues in housing affordability.  Chris said in the Housing Gap Coalition webcast that he anticipates that there will be serious consideration given to the role of local land use regulation, with possible substantial legislative changes.

Single-family zoning, anyone?

Written by: Wilf Sommerkorn