13_Policy Responses to Restrictive Zoning Flashcards
What are some policy responses to the excessive costs brought on by housing regulations?
Upzoning, Inclusionary Zoning, Rent Control
What is upzoning, and how does it relate to the YIMBY movement?
Upzoning refers to revising zoning codes to permit greater density in an area (residential or commercial). The YIMBY movement (‘Yes In My Back Yard’) pushes for removing local barriers to new housing development. Goal: Increase housing supply and reduce prices.
Example: California SB 50 bill.
What are the advantages of upzoning?
Addresses the root cause of housing shortages. Economists consider it a ‘first-best’ solution. No direct government spending required.
What are some drawbacks of upzoning?
Permissive zoning doesn’t guarantee development (red tape, approvals may delay progress). Relies on the ‘filtering’ process to create affordable units, which can take time.
What is inclusionary zoning (IZ)?
IZ requires developers of market-rate housing to include affordable units in their developments. Idea: Expensive market-rate units ‘cross-subsidize’ affordable units. Participation can be mandatory or voluntary. Some IZ programs relax zoning restrictions in exchange for affordable housing.
Example: NYC Inclusionary Zoning Program.
What are the benefits of inclusionary zoning?
Produces affordable units directly. No direct government budgetary cost. Less distortionary when paired with ‘density bonuses’ or relaxed zoning restrictions.
What are the downsides of inclusionary zoning?
Can act as a tax on new development, potentially discouraging construction. Has a mixed track record in successfully producing affordable housing units.
What is the difference between rent control and rent stabilization?
Rent control: Limits the maximum allowable rent (1st generation policy). Rent stabilization: Regulates allowable rent increases (2nd generation policy). Usually applies to a subset of housing (e.g., pre-existing buildings).
Example: NYC has 966,000 rent-stabilized units (44% of rental stock) and 22,000 rent-controlled units (1%).
What are the benefits of rent control?
Provides large benefits to tenants through lower rents. Does not require direct government subsidies. Reaches more households than zoning or subsidies. Can push rents down through monopolistic competition.
What are the drawbacks of rent control?
Reduces incentives for building maintenance. Discourages new construction. Causes misallocation of households (e.g., tenants staying in units that no longer fit their needs).
