Housing: The Unwelcome Wagon Rolls On

As a suburban reporter in the '70s, I witnessed dozens of zoning battles. Hostile crowds shouted down recycling centers, Montessori schools, low-income apartment complexes, upper-income apartment complexes—almost anything that anybody ever wanted to build, except for single-family homes just like the ones people were already living in. Then one day the owner of a property zoned for industry came in asking for a zone change that would allow him to build single-family homes. The whole neighborhood—living in identical single-family homes—objected. Realizing the owner had been unable to attract an industrial developer, the residents wanted the property to remain a vacant lot.

So it goes all over America. Housing researchers estimate that zoning delays and building-code requirements add some $15,000 to $30,000 to the price of a new home in many parts of the country. "Starter homes"—simple, no-frills structures that first-time home buyers can afford—are almost impossible to build in exclusive suburbs. Apartments are fought everywhere. Mobile homes (average owner income, $18,000) are restricted to industrial zones—when they are allowed at all. Then people wonder why we have an "affordable housing problem."

Into this thicket has sallied the Department of Housing and Urban Development. With the publication of Not in My Back Yard—Removing Barriers to Affordable Housing, HUD has put the federal government on record against this tyranny of the already-housed majority. The report, issued by the Advisory Commission on Regulatory Barriers to Affordable Housing, may not win many votes. But now that states and municipalities can no longer expect the federal government to build low-income housing, people are taking notice.

"The cost of housing is being driven up by an increasingly expensive and time-consuming permit-approval process, by exclusionary zoning, and by well-intentioned laws aimed at protecting the environment and other features of modern-day life," writes former New Jersey Gov. Thomas Kean, who chaired the commission. "The result is that fewer and fewer young families can afford to buy or rent the home they want."

The commission points out what has been obvious for a long time. Housing is actually one of the most highly regulated industries in the nation. This fact usually escapes notice because the regulation is done at the local and municipal levels, rather than at the state or federal level.

In 1970, for example, housing prices in California were right at the national average, even though the state's population had increased almost 50 percent during the previous decade. After two decades of environmental protection, building moratoria, tightened zoning ordinances, no-growth referenda, and rent-control ordinances that now affect half the tenant population, California has housing prices that are twice the national average and leads the nation in homelessness.

Or look at what happened in Takoma Park, Maryland, a rent-controlled suburb of Washington that fancies itself the "Berkeley of the East." In the early '80s, some Takoma Park residents finally persuaded the City Council to crack down on "illegal" apartments that people had been renting in their homes since World War II. The battle lasted 10 years, but in 1988 the city government finally evicted over 600 low-income people from their apartments. The affordable-housing commission estimates that more than 10 million similar apartments around the country cannot be rented because of zoning laws.

To counter these kinds of policies, the commission offers several strategies: The federal government should encourage states and municipalities to remove local barriers to housing, partly by threatening to withhold federal housing assistance. Residential projects of under $250,000 should be exempted from the Davis-Bacon Act, which requires the payment of union wages in projects receiving federal funding. (The cutoff is now $2,000.) Federal programs for wetlands preservation and the protection of endangered species should be modified to take into account their impact on housing construction. "Housing impact statements" should be added to already lengthy environmental-impact statements.

All this sounds suspiciously like an addition to the supply of regulation and paperwork, rather than affordable housing. On other subjects, the report is even less forthcoming. Not in My Backyard says almost nothing about rent control, even though it's causing housing shortages in the major cities of the East and West coasts. (The 1990 census shows that cities with rent control have almost twice as many homeless people per capita as cities without rent control.) In general, the report has the flavor of one of those perennial Washington alerts that will be cited 10 years from now to show how little progress has been made.

Modular and manufactured housing, for example, have been a favorite of federal housing reports since HUD Secretary George Romney tried to launch "Operation Breakthrough" in 1968. The iron triangle of union regulations, municipal planning-board skepticism, and homeowners' unwillingness to countenance such "tacky" stuff in the neighborhood brought a quick end to that. Modular housing is now making some headway, but only because it has become so sophisticated that it is virtually indistinguishable from the "stick-built" variety.

But beyond all the talk about breakthrough technologies and "stimulating regulatory reform," Not in My Backyard fails to confront the most difficult problem of all: Zoning remains the bread and butter of homeowners, the most politically conscious element of most suburban communities. The people whose investments are being protected are also the ones who are writing the laws. They refuse to accept the reality that investments involve risk, that prices can go up or down.

The great irony of the zoning wars is that people who use the power of the government to protect their own investments honestly believe they are doing so in the name of "property rights." While guarding what they view as their own property rights, they refuse to acknowledge the property rights of others. And therein lies the secret to solving the affordable housing problem—although HUD never quite manages to put its finger on it. We are all going to have to be a little more tolerant of each other's presence.

Contributing Editor William Tucker is a staff writer at Forbes.