New research from the Urban Institute, “Land-Use Reforms and Housing Costs: Does Allowing for Increased Density Lead to Greater Affordability?,” evaluates the relationship between local land-use reforms and changes to the housing supply and median rent. The authors find that reforms that loosen restrictions and allow higher densities were associated with an 0.8% increase in housing supply three to nine years after reform passage. The increase was statistically significant for units affordable to renters with higher-than-middle incomes. However, the authors found no evidence of an increase in units affordable for renters with low-to-moderate incomes. These findings highlight the need for policymakers to provide greater investments in subsidy programs for affordable housing development and in rental assistance for low-income renters alongside land-use reforms to sufficiently address communities’ housing needs.
The authors relied on newspaper articles covering 1,136 cities in eight metropolitan regions between 2000 and 2019 to identify 180 land-use reforms, 84 of which increased restrictions and reduced allowable densities and 96 of which loosened restrictions and increased allowable densities. The authors relied on address counts from the U.S. Postal Service to measure changes in the number of housing units. Finally, they used American Community Survey (ACS) data to track changes in demographics, housing costs, and housing affordability.
Three to nine years after reforms aimed at loosening restrictions were passed, the authors found a 0.8% increase in housing supply. Renters with higher incomes were the main beneficiaries of these reforms, as evidenced by the 43% short-term increase and 63% medium-to-long-term increase in the number of units affordable to families with incomes higher than the national median. The impact on the number of units affordable to those with extremely low incomes and very low incomes was positive but not statistically significant. The authors note that the number of units for extremely low-income renters may be too small to detect statistically significant changes. Increases in land-use restrictiveness were not associated with cities’ changes in overall housing supply, but more restrictive policies were associated with a $50 rise in median rents and a decline in the number of rental units that were affordable to middle-income households.
These findings suggest that land-use reforms should be supplemented with policies and public investments to create and preserve affordable housing, which the authors suggest might be more effective, especially in the short term, to help alleviate affordability challenges faced by low-income renters.
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