High price possible for ignoring zoning issues

IN politics, zoning regulations typically fly below the public radar but those policies can have major repercussions, including lower quality of life for many citizens. A recent report from the Up for Growth National Coalition shows how regulations that restrict housing construction can harm families.

The coalition, which includes groups ranging from real estate developers to chambers of commerce, examined the disconnect between local housing supply and demand. Between 2000 and 2015, the group’s report found, 23 states fell 7.3 million units short of meeting the housing needs of a growing population, which represented over 5 percent of the total housing stock in the U.S. This has “created a supply and demand imbalance that is reflected in today’s home prices.”

According to the S&P CoreLogic Case-Shiller National Home Price Index, home prices nationally rose 6.2 percent over the 12 months of 2017, which was roughly twice the rate of income growth and three times the rate of inflation.

The housing shortage is driven, to a large degree, by regulations that restrict construction of homes and apartments. Often such regulations are touted as preserving “green space” or similarly attractive-sounding rationales, and the regulations tend to benefit the owners of existing housing, which gives them a constituency. But the broader impact is that market supply isn’t allowed to meet consumer demand, so prices surge.

The report notes this problem is created not only by zoning regulations, but by “escalating and misaligned fee structures” and “lengthy review processes that invite gaming and abuse by growth opponents and can delay projects, create unpredictability, reduce incentives to invest and increase the per-unit of cost of development.”

California is the worst offender and accounts for roughly half the national housing shortfall identified in the 23 states highlighted in the report. But shortages also have become apparent in places like Idaho, Utah and Arizona — states that, not coincidentally, have become popular landing places for those fleeing California.

Oklahoma is not among the states cited as having a housing shortage. But data in the report show housing prices in much of Oklahoma are still rising faster than inflation. The Up for Growth report shows that housing values in Oklahoma County increased 100 percent from 2000 to 2016, far faster than cumulative inflation, which was nearly 40 percent during that time frame.

The report also shows 30 to 40 percent of households in Oklahoma County spend more than 30 percent of their gross income on housing expenses, which the report notes is “a commonly accepted measure of the maximum amount that should be spent on housing.” While that’s better than much of California, where more than 40 percent of households spend a comparable amount on housing in many counties, the gap between Oklahoma County and the West Coast is not as large as one might expect on that metric.

The housing shortage and attendant exorbitant costs in California and other states didn’t arise overnight. They are the cumulative result of policy decisions made over many years. The Up for Growth report shows why Oklahomans should follow zoning issues more closely. It turns out there is a high price to be paid — literally — when those debates go ignored.