Burdensome regulations on housing construction have contributed to the skyrocketing costs and limited supply in the housing market. These regulations, including minimum lot sizes, setback requirements, square footage minimums, floor-area ratio restrictions, height restrictions, parking requirements, and abuse of environmental reviews, have all worked together to impede the construction of new housing units. The result is a significant housing crisis that affects young people’s ability to find affordable rentals. While some argue that regulations are necessary for safety and quality of life, it is vital to acknowledge the detrimental impact they have on housing affordability and accessibility.
Constraints on Supply and Soaring Costs
The issue of burdensome regulations represents one of the most critical economic challenges faced by individuals seeking affordable housing. As these regulations limit the supply of housing, prices subsequently skyrocket. The imposition of minimum lot sizes, setback requirements, square footage minimums, and floor-area ratio restrictions reduces the number of housing units that can be constructed on a particular piece of land. Similarly, overzealous height restrictions and parking requirements further restrict the amount of available housing.
Furthermore, abuse of environmental reviews, historic designations, community reviews, overzealous multi-family housing (MFH) requirements, and below-market mandates add additional layers of complexity and cost to the construction process. Often, these regulations favor large multinational corporations, while doing little to benefit actual families. In some cases, illegal collusion among companies to fix prices exacerbates the problem, leaving hundreds of empty units priced out of reach for many individuals.
Regulations and their Benefits
While it is essential to recognize that some regulations exist to promote safety and improve the quality of life for residents, it is equally crucial to address the negative consequences these regulations have on housing availability. Regulations related to pollution control and zoning, for instance, ensure that industrial areas are set apart from residential ones, safeguarding neighborhoods from harmful emissions. However, not all regulations serve this purpose, as exemplified by the historical motivations behind zoning laws, which aimed to segregate wealthy residents from those residing in apartments.
Reassessing the Regulatory State
The current housing emergency across the nation highlights the urgent need to take a more proactive approach towards trimming back excessive regulations that have restricted and ossified our cities. Zoning, although sometimes associated with safety and public health concerns, often goes beyond these factors. Nonetheless, even without zoning laws, public nuisance laws and other safety regulations prohibit the establishment of risky operations near communities.
Comparative Housing Strategies
Looking at other successful urban areas worldwide, such as Manhattan, Hong Kong, Seoul, and Tokyo, which have overcome housing challenges, it becomes apparent that a combination of deregulation and urban planning can solve the housing crisis. Tokyo, for example, benefits from an ease of construction rooted in accommodating regulations, allowing them to build hundreds of thousands of housing units annually. By learning from the strategies employed in these cities, it is possible to increase housing supply without compromising safety or quality.
The burdensome regulations on housing construction have significantly contributed to the housing crisis, driving up costs and limiting supply. While some regulations serve crucial safety and quality of life purposes, others hinder the construction of affordable housing units. It is imperative to strike a balance between necessary regulations and the need for accessible and affordable housing. By learning from successful strategies implemented around the world, we can work towards easing restrictions and creating a more equitable housing market for all.
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Author Eliza Ng