Ending Single-Family Zoning: Is There a Plan B?

There is a lot to like about the two Viewpoints by Wegmann (this issue) and Manville, Monkkonen, and Lens (this issue). The U.S. zoning system does need to be shaken up. To two Australian planning academics, the proportion of U.S. cities devoted to single-family housing, as well as the tight regulation surrounding the R1 zoning rules, seems extraordinary. For example, in the city/state we are writing from (Sydney, New South Wales), secondary dwellings are allowed on all lots greater than about 4,800 ft (0.11 acre) and changing planning rules to promote the “missing middle” has been the part of recent planning reforms in New South Wales and elsewhere in Australia (New South Wales Department of Planning, 2018). But going from 80% R1 to no R1 in one single change as advocated by the authors is likely not a smart or appropriate implementation strategy. There are a number of significant problems. First, some parts of the city might not be very well suited to changes to R1 zoning, which would lead to additional population. Examples include areas with small lots, heritage housing, very constrained drainage and sewerage systems, or little open space, as well as parts of the city fringe where promoting more housing might lead to even greater private car usage. Moreover, thinking of how you would like your city to function in 10 years’ time might mean that putting four houses on a large lot might be the last thing you want to do in lots near a train station because it might sterilize future attempts to build higher density housing such as multistory apartments. Moreover, if R1 zones outside walkable distance of good-quality transit are changed to allow denser housing, there will be intensified auto use. This brings potential problems. In terms of local planning rules, off-street parking codes will probably need to be changed to keep allowable off-street parking at existing levels for each densified lot to avoid remaining open spaces on each lot becoming full of parked automobiles. The other problem with intensified auto use is the extra pressure on nearby highways, which may already be congested in peak hours. A further issue is that despite the call for planners to fight the good fight over density, removing all R1 zones from planning schemes would be a very difficult exercise. Planning has been seen as public enemy number one by die-hard neoliberal commentators in Australia, and the only reason planning has been able to hold the line against some pretty crazy developer-led planning reforms has been through the support of the middle class, who are happy sitting in their R1 zones, albeit reluctantly accepting secondary dwellings on large lots. Getting through a mass change to R1 zoning in the United States without blowing up middle class support for planning might be very difficult. Surely a better implementation strategy is to have a modified set of rules in current R1 areas that are suitable for more density (let’s call it “R1.5”) and monitor the impacts. This would also visualize what the demand looked like for the missing middle and the developer/builder interest. You might also give potential purchasers some warning that you are going to adopt R1.5 zoning at a particular point in time. Our two final comments are concerning infrastructure funding and the likely impacts on housing prices. In regard to infrastructure, when an R1.5 zoning scheme is adopted, it is important to tax the planning uplift to allow cash-strapped local governments to provide some additional resources, especially open space, for new residents. However, the difficulty of creating new open space in existing residential areas will still constrain the extent to which density can be increased unless there is existing spare open space capacity. In terms of housing affordability, the improvements in affordability with these zoning reforms are likely to be modest. The impacts of zoning on house prices have always been overcooked in the economics literature. Australia had far more restrictive planning systems in the early 1990s than today, but real house price increases in the 1990s were modest. It was only when interest rates began falling toward the end of that decade that house price inflation accelerated. If you want to do something about rising house prices, zoning improvements will help, but other measures such as taxation changes and regulating housing finance would be much more significant. The simple supply and demand argument used to explain house prices by property lobbyists is not well suited to a good where the new housing stock produced every year is a very small fraction of the total housing supply and where demand is so mediated by access to housing finance (Ryan-Collins, 2019).