The funny thing about zoning as a binding constraint on growth (and eventual affordability) for any urban area is that when property owners use it to induce scarcity they set themselves up for a revolt by a community that realizes that they can upzone in a way that is attractive to developers. Building restrictions and other regulatory factors in the metro Boston area eventually manifested as a development boom in southern New Hampshire that has persisted for several decades. The next frontier for Boston linked businesses and large multi-family is the I-495 beltway. Emily Hamilton's study of Tyson's Corner helps describe this template and it's beneficial impacts.
However, the binding constraint can shift from zoning to transportation infrastructure. If a state or town refuses to improve roads then an outlying community can be effectively abandoned for decades. "You can't get there from here" is a real thing in many parts of New England.
Hi Kevin! Small thing: would you be able to clarify this paragraph? I get the feeling there might be a word or two missing... how did zoning become binding after 2008? Was it because there would otherwise have been a shift from new SFH to new multifamily?
"But, that debate isn’t particularly relevant to large sections of the country, like Canton. We have discovered, since 2008, that zoning in the Canton area would bind if Canton grew large enough. It wasn’t binding before 2008 because Canton wasn’t growing into a city large enough where the tradeoffs between density and livability become important. It was binding after 2008 because we had a moral panic and made it illegal for most families in Canton to finance the sorts of homes that Canton still needs to build with a stable population."
Canton was a market sort of in stasis. Land was inexpensive, demand for housing was flat. And, under those conditions, construction is just maintenance. Maybe 0.5% of the housing stock is replaced each year as homes age, etc. Before 2008, that was about 1,300 units/year. So, every year, there are a certain number of moves, in, out, and within the city, and about 1,200 of those ended up funding a new unit. About 1,100 would end up being single-family homes and about 100 would be apartments. If rents or prices had increased even a little, one of those transitioning families would choose to buy a new home instead of an existing home. So, the rental value & prices on homes moved along sideways.
Canton's zoning is very restrictive (which is very normal), so it would have probably been hard to build much more than 100 new apartments each year. But, it probably didn't matter. Without zoning, residents and landlords might have chosen that proportion anyway, and even if they would have built more apartments, it wasn't hard to meet demand with new single-family homes.
Then the mortgage panic cut out a large portion of potential buyers from the single-family market, and single-family prices crashed - single-family construction dropped by 600 units.
Rents didn't crash. But, since prices crashed, the new homes weren't built, and rents increased.
Presumably, if 100 new apartments would have been built when rents were flat, builders might have been looking to build 600 additional apartments to make up the gap when rents increased. And, here, the zoning probably was binding. It would probably be difficult to get 600 additional apartments constructed in Canton under current planning rules.
That didn't matter when 1,100 single-family homes were keeping rents low, but it did matter when the single-family construction collapsed and rents started to rise.
Does that help? I was a bit terse in that paragraph.
This is a really clear explanation and perspective. Thank you for providing context that I believe can be applied to the organizing for affordable housing that we are doing in Maricopa County.
Sarcasm? Here? Never would I have suspected.....
The funny thing about zoning as a binding constraint on growth (and eventual affordability) for any urban area is that when property owners use it to induce scarcity they set themselves up for a revolt by a community that realizes that they can upzone in a way that is attractive to developers. Building restrictions and other regulatory factors in the metro Boston area eventually manifested as a development boom in southern New Hampshire that has persisted for several decades. The next frontier for Boston linked businesses and large multi-family is the I-495 beltway. Emily Hamilton's study of Tyson's Corner helps describe this template and it's beneficial impacts.
However, the binding constraint can shift from zoning to transportation infrastructure. If a state or town refuses to improve roads then an outlying community can be effectively abandoned for decades. "You can't get there from here" is a real thing in many parts of New England.
Hi Kevin! Small thing: would you be able to clarify this paragraph? I get the feeling there might be a word or two missing... how did zoning become binding after 2008? Was it because there would otherwise have been a shift from new SFH to new multifamily?
"But, that debate isn’t particularly relevant to large sections of the country, like Canton. We have discovered, since 2008, that zoning in the Canton area would bind if Canton grew large enough. It wasn’t binding before 2008 because Canton wasn’t growing into a city large enough where the tradeoffs between density and livability become important. It was binding after 2008 because we had a moral panic and made it illegal for most families in Canton to finance the sorts of homes that Canton still needs to build with a stable population."
Canton was a market sort of in stasis. Land was inexpensive, demand for housing was flat. And, under those conditions, construction is just maintenance. Maybe 0.5% of the housing stock is replaced each year as homes age, etc. Before 2008, that was about 1,300 units/year. So, every year, there are a certain number of moves, in, out, and within the city, and about 1,200 of those ended up funding a new unit. About 1,100 would end up being single-family homes and about 100 would be apartments. If rents or prices had increased even a little, one of those transitioning families would choose to buy a new home instead of an existing home. So, the rental value & prices on homes moved along sideways.
Canton's zoning is very restrictive (which is very normal), so it would have probably been hard to build much more than 100 new apartments each year. But, it probably didn't matter. Without zoning, residents and landlords might have chosen that proportion anyway, and even if they would have built more apartments, it wasn't hard to meet demand with new single-family homes.
Then the mortgage panic cut out a large portion of potential buyers from the single-family market, and single-family prices crashed - single-family construction dropped by 600 units.
Rents didn't crash. But, since prices crashed, the new homes weren't built, and rents increased.
Presumably, if 100 new apartments would have been built when rents were flat, builders might have been looking to build 600 additional apartments to make up the gap when rents increased. And, here, the zoning probably was binding. It would probably be difficult to get 600 additional apartments constructed in Canton under current planning rules.
That didn't matter when 1,100 single-family homes were keeping rents low, but it did matter when the single-family construction collapsed and rents started to rise.
Does that help? I was a bit terse in that paragraph.
This is a really clear explanation and perspective. Thank you for providing context that I believe can be applied to the organizing for affordable housing that we are doing in Maricopa County.