People in America are worried about the sky-high rent prices, as revealed by a recent study conducted by the Pew Charitable Trusts. There's a broad agreement across the political spectrum in support of initiatives that promote housing construction, particularly affordable units.
The housing market is grappling with a substantial housing shortage and soaring property prices, resulting in numerous cities across the U.S. taking measures to loosen zoning laws and expand housing options. However, these efforts often face resistance from local communities.
Recently, cities such as Salt Lake City and Minneapolis have introduced zoning reforms, enabling a variety of housing types normally limited to single-family zones. This has resulted in an expansion of housing choices and a decrease in costs. Other cities opt for Inclusionary Zoning (IZ) policies, requiring developers to incorporate affordable units in new developments. While this strategy may unintentionally raise costs for market-rate housing, ultimately reducing housing production.
Cities also offer density bonuses and expedited approval processes to developers, encouraging construction of more accessible housing. For instance, California has enacted SB 9 and SB 10 to facilitate duplexes and small multifamily developments in single-family zones.
Developers face numerous challenges, including community resistance, restrictive zoning laws, time-consuming approval processes, funding shortages, and balancing density with livability.
To overcome these obstacles, policymakers and developers can collaborate to cultivate sensible zoning reforms and incentives, thereby contributing to a more inclusive and affordable housing market.
Zoning Reforms for a Better Housing Landscape
- Zoning Reforms for Housing Sufficiency: In an effort to increase housing choices and reduce costs, planners advocate for streamlined permitting processes, modernized Low-Income Housing Tax Credit (LIHTC) programs, and initiatives like the Pathways to Removing Obstacles to Housing (PRO Housing) [1]. Cities like Salt Lake City and Minneapolis are implementing zoning reforms, enabling various housing types in single-family zones while exempting them from certain lot requirements [2].
- Inclusionary Zoning Policies: Implementing IZ policies requiring developers to set aside a specific percentage of new units for affordable housing can be beneficial, offering developers benefits such as density bonuses or lenient zoning rules [3].
- Higher-Density Development: Reducing minimum lot sizes, modifying parking requirements, and expanding multifamily zoning can incentivize higher-density development, aiming to increase housing supply and lower prices [4].
- Land Use and Zoning Reforms: Over 80% of cities are involved in land use or zoning reform, with most recently updating their zoning or land use policies to optimize vacant land for housing [5].
- Infrastructure Investments: Federal funding for infrastructure improvements in urban areas is being used to stimulate housing growth. However, these projects necessitate years of planning and execution [6].
Despite these endeavors, developers encounter several challenges:
- High Land Costs: Expensive land acquisition is a significant hurdle, particularly in urban areas [2].
- Regulatory Barriers: Lengthy approval processes and strict zoning laws can slow down projects and add to costs. Developers often encounter resistance from local communities due to concerns about property values or neighborhood alterations [2][6].
- Community Opposition: Affordable housing projects frequently face resistance from local communities, resulting in delays and increased costs, a phenomenon known as NIMBYism (Not In My Backyard) [6].
- Financing Troubles: Securing funds for affordable housing projects is often more complex than for luxury developments, due to lower returns on investment. This financial challenge makes it tough for developers to pursue affordable housing initiatives [2].
- Bureaucratic Delays: Permitting delays are a significant issue, as developers face lengthy approval processes that prolong timelines and increase costs [6].
