An important piece in the Wall Street Journal describes a growing body of research and literature supporting the perception that land use regulation is meaningfully making housing less affordable, which is in turn reducing job growth and reducing the ability of people to move to places where the job market is hot. White House economists and President Obama himself are worried about how this overregulation increases income inequality and decreases mobility. And they are right to be worried.
What the piece fails to mentioned is how these policies help skew wealth distribution. The housing ‘haves’—people who already own homes in areas that have tight regulations—are likely to see the price of their real estate grow faster than would happen without restrictions that prevent new housing from being built. Housing ‘have-nots’, however, will find it harder to get their feet on the first rung of the housing ladder: starter homes become so expensive that young people and people of modest means are completely shut out of the market.
This is America, so race and class are a big part of the story. Tight regulations on land use are one of the favorite goals of the predominantly white upper middle class professionals who constitute an important base for the Democrats. For some, it’s about the environment. For some it’s about NIMBYism and protecting their real estate investments. For some its an ideological/cultural preference for ‘density’: the new urbanist goal to have everyone live in expensive, small apartments and take mass transit to work.
The people shut out of the market, however, tend to be lower income families, including minorities. And the construction jobs that come when new housing units are being built are a mainstay of good jobs at decent pay for both skilled and unskilled non-college educated workers.
President Obama, to his credit, has departed from Democratic orthodoxy on some issues during his time in the White House. He has, on the whole, sided with inner city kids against teacher unions more than many Democrats dared to do, and seems to understand the importance of school choice. He’s recently challenged students and left activists to embrace the cause of free speech, even when it means listening to arguments which you find ugly and disagreeable. For this White House to provide leadership against the over-zealous land use restrictions that choke growth, reduce opportunity, and increase economic polarization would be an important step forward.
As the WSJ piece notes, many land use regulations are matters for state and local governments (and properly so), so the President can only exhort and recommend on some of these. But there are other places where overzealous federal regulators make significant contributions to the problem—think the notorious overreach of EPA wetlands regulations. Shifting federal land use policy toward a pro-growth, pro-housing model would be a solid accomplishment for this President in the closing months of his tenure.