Valuable Mercatus Center Study Surveys Progress and Setbacks in the Struggle Against Exclusionary Zoning

Eli Kahn and Salim Furth provide overview of developments in the states, and lessons that can be learned.

(Photo: Kate Collins/Ithaca Journal)

Exclusionary zoning is the most important property rights issue of our time, a stifler of economic growth, and a major obstacle to opportunity for the poor and disadvantaged. While liberals, conservatives and libertarians all have compelling reasons to oppose it, there are also powerful NIMBY factions on both right and left defending it.

Despite daunting political obstacles, zoning reform has made some important progress in recent years. In an important new Mercatus Center study, housing policy experts Eli Kahn and Salim Furth survey the successes and failures of the last year. Here is an excerpt summarizing some of their conclusions:

In an article published six months ago, one of us flagged a "housing revolution brewing" among state legislatures in 2023.1 With over 200 bills related to housing supply introduced so far, there has certainly been no lack of would-be revolutionaries. And in four states—Montana, Rhode Island, Vermont, and Washington—these efforts have clearly succeeded on a large scale. Elsewhere, results have been mixed. High-profile reform efforts sputtered in Arizona, Colorado, and New York. More quietly, significant reforms have been passed in several other states….

With half the year spent, most states have concluded their legislative sessions, allowing us a moment for retrospection. With help from colleagues, we read and tracked about 200 state-level bills that touched on housing supply policies, from accessory dwelling unit (ADU) regulations to minimum lot sizes to permit process streamlining. Our analysis was limited in two notable ways: we did not track bills related to housing finance, such as affordable housing funding and tax policy, and we set aside California entirely…..

While the small size of our dataset makes it hard for us to draw firm conclusions, we have observed a few themes in the data:

1. Four states passed ambitious "housing packages," significantly revising (if not fully revolutionizing) their housing supply regimes.
2. In three additional states where housing omnibus bills were introduced, the bills faced high-profile public debate and vigorous opposition. In these states, the major package ultimately failed.
3. The most common legislative successes were permit streamlining and allowing residential uses in commercial zones.
4. Political alignment on housing supply remains chaotic: in different states considering similar legislation, the same party ended up opposing it in one state and supporting it in another. (This can be said of both major parties.)….

Genuine progress on housing supply is happening throughout the country, in states red and blue; urban and rural; northeastern, southern, midwestern, and western. The book isn't closed: some states, most notably California, are just getting into the heart of their legislative season. Others, such as Massachusetts, hold two-year legislative sessions and may act later on ambitious bills. In a year marked by well-known disappointments in Colorado and New York, it's worth emphasizing how much more was politically possible this year than in previous years. In the recent past,California and Oregon have arguably been alone in enacting sweeping statewide zoning reforms; four more states joined them in just the first half of 2023. Many other states passed narrower housing supply reforms. Even in states that experienced high-profile failures, the issue of housing supply has become an ongoing priority.

In assessing the causes of success and failure, Kahn and Furth emphasize a number of factors, most notably the need for bipartisan support, which was crucial to this year's most striking YIMBY ("yes in my backyard") victory, the new reforms enacted in Montana. Faced with unified opposition by the out party, the majority often has difficulty overcoming its on NIMBY faction, even if the latter is a relatively small minority within the party. As the authors describe, unified Republican opposition in Colorado played a key role defeating reforms in that Democratic-controlled state, and unified Democratic opposition helped achieve a similar result in GOP-ruled Texas. Only in Rhode Island (where the minority Republican Party is incredibly weak) did a majority party manage to pass major reforms despite unified opposition from the minority.

Overall, I am impressed that zoning reform has made as much progress as it has, given the forces arrayed against it, including widespread public ignorance about the basic economics of housing.

The Mercatus Center study won't be the last word on the zoning reform movement. Among other things, we need more systematic analysis of how public and elite opinion interact in various states to further or stifle YIMBY policies. In addition, the political struggle over these issues is far from over. States that narrowly failed to pass reforms this year might reconsider in the future, as California did after some initial failures there. But Kahn and Furth have produced a valuable and insightful overview of recent developments. And their emphasis on bipartisanship is a particularly useful lesson.