Research Finds High-Demand Municipalities Have Experienced Limited Housing Growth as Likely Result of Exclusionary Regulations

A new study published by the Urban Institute, “Homing In: What Types of Municipalities Are Adding Residential Units, And Which Are Mounting Barriers to Housing?,” investigates how housing unit growth is distributed across different municipalities and whether growth – or lack thereof – is associated with demographic characteristics and housing market demand. The study finds that between 2000 and 2020, municipalities with lower home values, lower median incomes, lower rates of higher education, and more moderate political views experienced the lowest rates of housing growth. Additionally, most municipalities with high demand for housing development added less than their “fair share” of housing units compared to their respective metropolitan area, despite having the resources to do so.

The author of the report used decennial Census data from 2000 to 2020 and American Community Survey (ACS) data to compile demographic information – such as income and education levels – and information about housing characteristics – such as housing costs and housing unit growth – from municipalities nationwide. To determine whether municipalities were proportionally contributing to housing supply, the author calculated a “fair share” housing growth ratio comparing the rate of housing growth in a given municipality to the rate of housing growth in the municipality’s respective metropolitan area overall. This fair share ratio illustrates which municipalities are creating disproportionately high or low amounts of housing compared to their greater metro areas.

The study finds that municipalities with lower rates of educational attainment, lower home values, lower median incomes, and more moderate political ideologies had lower levels of housing growth compared to national averages. Among municipalities in the bottom quintile of adults with a bachelor’s degree, median housing unit growth was 3.1%, far lower than the 10% growth observed in municipalities in the top quintile of percent adults with a bachelor’s degree. Municipalities in the bottom quintile of median housing value experienced only .2% growth in housing units, compared to 12.1% and 7.8% growth in municipalities within the middle and top quintiles of housing value, respectively. Municipalities with a greater share of residents holding moderate political views also had lower levels of housing growth at 5.6%, compared to 15.1% for more conservative municipalities and 9.4% for more liberal municipalities.

The research also finds that many municipalities with high demand for housing failed to produce their fair share of housing unit development, compared to their metropolitan area. The author defines high demand municipalities as those that have housing values at least 30% greater than their respective metropolitan area and are located in a metropolitan area that experienced an increase in housing units between 2000 and 2020. Around 70% of high demand municipalities added less than their fair share of housing, while approximately 40% either added less than half of their fair share of housing or lost already existing units. High demand municipalities that added the fewest new housing units were mostly midsized suburbs and municipalities with a large share of single-family homes.

The research demonstrates that while a variety of factors are associated with housing unit growth, high demand municipalities often have the most resources to add new homes but fail to do so. The author notes this is likely a result of exclusionary land use policies and zoning regulations, which limit the ability of developers to construct multifamily housing units, suppressing the national housing supply. Future research should assess the extent to which these exclusionary regulations constrain housing growth.

Read the report at: