Plaintiffs – Appellants,

v.

City of New Braunfels, Texas,

Defendant – Appellee.

Introduction and summary of argument

In 2011, the City of New Braunfels passed an ordinance banning short-term rentals (STRs) in large portions of the city. A coalition of STR owners challenged the ban, arguing it violated their property rights under the Fourteenth Amendment and the Texas Constitution.

The city initially moved to dismiss the case without any discovery, claiming STRs were nuisances. The lower court granted the motion, but this Court—after considering party briefing and supporting amicus briefs—reversed, directing the district court to weigh the evidence after discovery.

Discovery revealed the city’s claims were baseless. STRs in New Braunfels are prevalent, and the city has issued no nuisance citations against STR properties. Studies and data contradicted the city’s assertions about property values and neighborhood character. Nevertheless, the district court granted the city’s motion for summary judgment in a cursory opinion that ignored the evidence and this Court’s directive. This appeal thus seeks to restore meaningful judicial scrutiny to property-rights cases.

This controversy highlights two unresolved aspects of the ongoing housing debate—one legal, the other political. First, under the common-law conception of ownership, private proprietors are firmly within their “bundle of rights” to lease realty for as long or as short as they wish. They can only be prohibited from engaging in nuisant or harmful uses. Since at least Cedar Point Nursery v. Hassid (2021), the Supreme Court has clarified that property rights are fundamental and thus subject to at least a heightened degree of judicial scrutiny. 594 U.S. 139, 158 (2021) (“We cannot agree that the right to exclude is an empty formality, subject to modification at the government’s pleasure. On the contrary, it is a ‘fundamental element of the property right’ that cannot be balanced away.”) (cleaned up).

This contrasts with “rational basis review,” which attaches to rules and regulations that do not implicate fundamental rights and are, therefore, permitted for any conceivable police-power purpose. This is certainly the case under Texas law. Zaatari v. City of Austin, 615 S.W.3d 172 (Tex. App.–Austin 2019) (holding city ordinance banning short-term rentals of single-family residences not owner occupied was infringed on fundamental property rights). As amici will discuss, heightened constitutional protection against restrictions, specifically on short-term rentals, is not limited to the property rights of owners but extends to guests’ reciprocal “right to establish a home.” See, e.g., Keen v. City of Manhattan Beach, 292 Cal. Rptr. 3d 366, 370 (Cal. App. 2022) (“It is possible to reside somewhere for a night, a week, or a lifetime”); Wilkinson v. Chiwawa Comms. Ass’n, 327 P.2d 614, 620 (Wash. 2014) (“If a vacation renter uses a home ‘for the purposes of eating, sleeping, and other residential purposes,’ this use is residential, not commercial, no matter how short the rental duration.”).

Second, America’s housing sector has been in turmoil for decades now—at least as early as the mid-2000s. Despite widespread awareness and justified concern for the ever-dwindling supply of available units, innovative solutions—including short-term rentals alongside accessory-dwelling units and rowhouse developments—remain relatively few and far between.

Short-term rentals are acute targets of powerful NIMBY (“not in my backyard”) pushback and the longtime failure of proponents to organize a coherent political and policy response. As one among several correctives, amici strongly believe that caselaw on the topic of increasing access to housing should begin integrating a growing research literature demonstrating the economic, social, and cultural benefits of these alternatives that far outweigh the exaggerated externalities.

Full Brief: ‘Marfil v. City of New Braunfels’

The post Marfil v. City of New Braunfels: Regulating short-term rentals appeared first on Reason Foundation.

Texas House Bill 24 would strengthen property rights and improve housing affordability.

Exclusionary zoning partitions land by use to avoid incompatible uses next to each other. Some of that is certainly necessary to prevent all manner of clashes and harmful spillovers between neighboring properties. However, zoning also does far more than that. It often serves as the primary tool of local planners who want to substitute their vision of how land should be used for the vision of the property owners and suborn individual property rights to achieve their own plans. 

This doesn’t just rip away property rights. It worsens housing affordability by restricting supply and hampering workforce mobility, making it harder for people to relocate for better jobs and better housing, which stifles innovation and adaptability. It even affects environmental sustainability by pushing housing further from city centers, leading to more sprawl, car dependence, and pollution. If we want a thriving economy that truly supports people from all walks of life, we need to rethink zoning policies that limit new business growth and affordable housing options and restrict who gets access to opportunity.

A better approach would be to establish clearer property rights and limit the scope of local government intervention in routine housing decisions. HB 24 takes important steps in that direction.

The bill would limit the ability of neighbors and NIMBY (not in my backyard) activist groups to file protests against zoning changes initiated by a property owner or when local governments choose to make zoning rules less restrictive. It would not prevent protests, still allowing them when a proposed change creates major opposition. However, it would prevent small but active groups from stopping changes. This would allow property owners to exercise their property rights without arbitrary protest from a handful of people. It would also do the same for local governments who want to deregulate land use a bit to encourage housing growth and affordability.

The bill would also allow individuals or organizations to take civil action against local governments that do not enact requested less restrictive zoning changes and are not effectively protested. This would avoid the all-too-common “death by inaction” for zoning reforms that strengthen property rights. 

At the same time, HB 24 would not affect deed-restricted or homeowner association restrictions on land use. Those restrictions are agreed upon in the contract when buying properties and are effectively part of the property rights arrangements owners choose to buy. They provide an option for those who want to avoid neighbors changing how they use their property rather than calling for local governments to use zoning to do so. 

HB 24 would improve property rights in Texas and allow for greater housing supply and affordability without taking away any power of local governments to prevent incompatible uses or of homeowners to choose restricted communities if they want those types of restrictions. 

The post Texas House Bill 24 would strengthen property rights, improve housing affordability appeared first on Reason Foundation.

Housing vouchers have long been a crucial support for low-income families, helping to close the gap between rental costs and what families can afford. However, vouchers alone cannot fix the problem if there aren’t enough homes to use them. To tackle the housing crisis, policymakers must address supply shortages and affordability through a dual approach that prioritizes expanding housing supply and improving the effectiveness of vouchers.

The housing affordability crisis has grown more urgent, with rents growing higher and climbing faster than general inflation over the past few years. Homeownership feels increasingly out of reach for millions, as the median price of an existing home was over $400,000 in November 2024, according to the National Association of Realtors.

Meanwhile, renters are bearing the brunt of this housing squeeze, with nearly half spending over 30% of their income on rent and a quarter dedicating over 50%. These rising costs are directly tied to supply shortages, as limited availability drives up rent and sale prices. Addressing this imbalance requires significant investment in housing development, especially in high-demand areas.

But investment alone can only go so far. State and local regulations and policies greatly diminish housing supply. For example, restrictive zoning laws, such as single-family zoning and limits on mixed-use development, prevent the construction of more diverse and affordable housing options. Houston is a great example of how a city can increase housing supply without overcomplicating the process. Unlike cities bogged down by single-use zoning and large lot requirements, Houston has taken a different approach that encourages smaller, higher-density housing. In 1998, the city reduced its minimum lot size from 5,000 square feet to just 1,400 square feet within its I-610 Inner Loop, later expanding this policy citywide. This small but meaningful change has made a big impact.

Between 2005 and 2018, Houston added nearly 75,000 new housing units within the Inner Loop alone. That’s double the number of new units built in San Francisco and Oakland combined during the same period, even though those cities have about the same land area. Houston’s reform allowed developers to replace single-family homes with up to three smaller detached houses or town homes, leading to the construction of 28,000 small-lot infill units—over a third of all new housing in the area.

What’s even more impressive is how these policies have helped keep housing affordable. Despite decades of rapid growth, Houston’s median home price is still below the national median, and rents are about half what they are in Los Angeles. It’s proof that light-touch density reforms can help cities grow while keeping costs down.

But this isn’t about building massive apartment complexes everywhere; it’s about making small, smart changes that add housing where they’re needed most. Historically, cities like New York in the 1920s and post-World War II suburban developments kept housing affordable by building at scale. Back then, permitting processes were simpler, and zoning accommodated growth instead of obstructing it. Today, fear of change and neighborhood resistance have slowed housing production to a crawl, particularly in areas where demand is highest. By 2023, per capita permitting rates were less than half of what they were in 1973, leaving supply woefully short of demand. Light touch reforms to permitting are key to encouraging much-needed housing supply.

Equally important is facilitating voucher use. The effectiveness of vouchers is often undermined by landlord reluctance to participate in the program. Many landlords cite administrative burdens, slow payment processing, and concerns about tenant reliability as reasons for opting out of accepting housing vouchers. This has created significant challenges for families trying to secure housing, especially in areas with tight rental markets or a shortage of moderately priced options. In some instances, landlords only accept vouchers for properties in less desirable locations, which restricts families’ access to safe and high-opportunity neighborhoods.

One solution for policymakers is local protections against voucher discrimination, like those implemented in Newark and Washington, D.C. In Newark, laws focused on source-of-income discrimination have reduced refusal rates to 31%, while in Washington, D.C., similar protections have brought refusal rates down to just 15%. DC has also adopted innovative policies, such as neighborhood-specific payment standards and higher “fair market rents,” which incentivize landlords in high-demand areas to participate in the program. These examples demonstrate how targeted legislation can significantly improve voucher acceptance and expand opportunities for families to live in safer neighborhoods with better resources and opportunities.

Nevertheless, these efforts are ineffective without a broader availability of affordable housing units to meet the demand. The scale of unmet needs is staggering: only one in four eligible households receives rental assistance, leaving millions of families without help. In 2021 alone, over 8.5 million very low-income households paid more than half their income on rent or lived in inadequate housing. These figures highlight that the housing crisis is not just about supply—it’s also deeply tied to affordability. Despite their benefits, vouchers often fall short of meeting rising rents, as adjustments to voucher amounts frequently lag behind housing market increases. In regions without sufficient housing supply, families with vouchers face steep competition for units, further limiting their ability to find stable housing.

Regional disparities compound this mismatch between voucher availability and housing supply. While metropolitan areas like Washington, D.C., and Newark have adopted policies like Small Area Fair Market Rents (SAFMRs) to align voucher values with local markets, many regions lag behind. In these areas, voucher holders typically face limited options, which reinforces existing inequities and restricts access to high-opportunity neighborhoods. To make vouchers more effective, policymakers must take deliberate action.

Rather than expanding subsidies in a system constrained by restrictive housing policies, efforts should focus on addressing the root causes of housing shortages. Expanding vouchers without increasing housing supply risks inflating costs and wasting taxpayer dollars on a system that is already under strain. Policymakers must instead tie efforts to improve vouchers directly to efforts that reduce supply restrictions, working toward a housing system where subsidies are more effective and ultimately less necessary.

Addressing the housing supply shortage is critical. Without enough units, families with vouchers will continue to struggle to find housing, and landlords retain significant power to discriminate. Increasing housing availability would reduce this power, making voucher programs more effective. Policymakers should enhance outreach programs for landlords to minimize administrative burdens and encourage participation, making voucher programs more accessible and appealing to property owners. Additionally, they should adopt measures prohibiting discrimination against voucher holders and invest in supportive services like housing navigation, tenant education, and community-based resources to help families maintain stable housing.

By simultaneously reducing supply restrictions and improving voucher programs, we can make housing subsidies more effective while reducing the overall need for them. A housing market that works for everyone not only lifts low-income families but also strengthens communities, reduces economic inequality, and fosters long-term stability for renters and homeowners alike. Achieving this vision will require bold reforms, significant investment in housing development, and thoughtful integration of subsidies—showing that innovation and compassion can go hand in hand.

The post From shortage to stability: Why vouchers need housing supply to work appeared first on Reason Foundation.

Although zoning is often framed today as a tool for protecting communities from harmful industrial encroachment, its early origins were rooted more in maintaining social order, property values, and segregation by class and race. Early zoning laws, such as New York City’s 1916 Zoning Resolution, were designed primarily to control building heights and separate commercial activities from residential areas. While zoning laws later began to incorporate health and environmental considerations by separating residential areas from factories, highways, and waste sites, their initial intent was largely focused on economic and social control, with a significant impact on who had access to desirable neighborhoods. However, these regulations have evolved, shaping not only the physical landscape of cities but also reinforcing social and economic divides. Understanding the tradeoffs of modern zoning requires an examination of both its protective benefits and its role in perpetuating inequality and limiting opportunities for many, particularly low-income and marginalized communities.

In the early 20^th century, racial zoning explicitly separated Black and white communities. Even after the Supreme Court ruled in Buchanan v. Warley (1917) that racial zoning was unconstitutional, many municipalities implemented facially neutral laws like single-family zoning that effectively excluded lower-income families from wealthier areas. These laws ensured that certain neighborhoods remained exclusive by setting prohibitive standards for the type and density of housing allowed. As a result, communities that were once segregated by race were now segregated by income, limiting access to better schools, jobs, and public services for lower-income and minority residents.

While the explicit racial component of zoning has faded, its legacy lives on in the way zoning laws still disproportionately impact racial minorities and low-income communities. Exclusionary zoning—especially single-family zoning—restricts the types of homes that can be built, like multi-family housing or affordable apartment complexes, which limits the housing supply and drives up costs. This doesn’t just worsen the housing crisis and keep people from moving into high-opportunity neighborhoods; it also holds back the broader economy. Exclusionary zoning hampers workforce mobility, making it harder for people to relocate for better jobs, which stifles innovation and adaptability. It even affects environmental sustainability by pushing housing further from city centers, leading to more sprawl, car dependence, and pollution. If we want a thriving economy that truly supports people from all walks of life, we need to rethink zoning policies that limit affordable housing options and restrict who gets access to opportunity.

Exclusionary zoning also raises important constitutional concerns. The takings clause of the Fifth Amendment states that when the government takes private property for public use, it must provide just compensation. However, the courts have not generally interpreted it this way. In the 1926 case Village of Euclid v. Ambler Realty Co., the Supreme Court ruled that zoning is a valid use of government power, meaning most zoning laws are not considered a “‘taking‘” under the Fifth Amendment. This decision effectively shielded exclusionary zoning from constitutional challenges related to property rights and compensation. Some legal scholars argue that exclusionary zoning, by severely limiting how property owners can use their land, constitutes a form of regulatory taking. These restrictions not only reduce property values but also infringe on the right to use and enjoy property, a fundamental principle of property law that dates back to the founding of the United States. Property owners are often left without compensation for the reduced value and restricted use of their land due to zoning regulations, raising questions about the constitutionality of such laws.

The Supreme Court’s ruling in Euclid, which upheld zoning as a valid exercise of police power, allowed municipalities to continue using zoning laws to regulate land use. However, the ruling has faced increasing scrutiny for enabling local governments to impose regulations that exclude low-income and minority families from certain neighborhoods. Critics argue that Euclid not only empowered local governments to classify land by its use but also entrenched socioeconomic divides by making housing unaffordable in desirable areas.

The economic implications of exclusionary zoning are vast. Economists Gilles Duranton and Diego Puga found that eliminating zoning restrictions in major urban areas could increase the U.S.’s GDP by nearly 8%, largely by allowing people to move to areas where they would be more productive. Zoning restrictions limit mobility, preventing individuals from accessing better jobs and educational opportunities. Zoning laws that limit the density and type of housing in a given area can also drive up housing prices, effectively pricing out many lower-income families from accessing affordable housing.

Although public meetings play a central role in determining zoning policies and housing development decisions, they aren’t always effective in addressing the broader needs of communities. These meetings often allow outside actors, business stakeholders, and activists with specific agendas to dominate the conversation, excluding the very communities most affected by zoning restrictions. In practice, these meetings are typically attended by well-established homeowners and residents with vested interests in maintaining the status quo, which can exacerbate inequalities, especially among communities of color. For instance, a study in Boston revealed that 95% of participants at public meetings were white, despite the city’s diverse population, and a majority of comments opposed new housing developments—reflecting the interests of those who may wish to keep lower-income and minority families out of their neighborhoods. Opposition often stems from those living near proposed projects, amplifying “Not In My Backyard” sentiments that hinder inclusive development and sometimes delay project approvals even when official recommendations are positive. 

A better approach would be to establish clearer property rights and limit the scope of local government intervention in routine housing decisions. By defining what types of property developments are allowed “by right,” we could reduce the number of minor projects subjected to these meetings, reserving public hearings only for proposals that significantly impact neighboring properties. While public meetings may be intended as a democratic tool, they often disadvantage renters, low-income individuals, and people of color, as they’re held at inconvenient times and lack accommodations for those with transportation or childcare needs. By default, zoning policies become shaped by a narrow subset of the population, perpetuating a cycle where more privileged groups influence decisions that disproportionately harm marginalized communities.

Beyond limiting access to housing, zoning laws have also contributed to environmental injustices. Low-income communities and neighborhoods of color are often targeted as sites for hazardous waste facilities, landfills, and other polluting industries. Zoning laws regulating industrial and residential uses have historically placed these harmful developments in poorer areas, while wealthier communities are largely shielded from these hazards. This has led to higher rates of pollution and health problems in low-income areas, perpetuating environmental racism and contributing to long-term health disparities.

While zoning was originally intended to protect communities from industrial encroachment, its unequal application has created toxic environments in some neighborhoods while safeguarding others. For example, in Cancer Alley, Louisiana, petrochemical plants were established in predominantly Black communities, exploiting these areas due to perceived lower political resistance. Over time, lower property values in such areas have attracted more low-income residents, including other marginalized groups, further embedding these communities within high-risk, polluted environments. The combined impact of living near such facilities, with limited access to healthcare and services, has only deepened the disparities faced by these communities.

The modern complexity of zoning lies in its dual role: on one hand, it protects communities from harmful industrial encroachment, but on the other, it limits access to affordable housing and perpetuates segregation. This creates a challenging dilemma for urban planners and policymakers. How do we balance the need to protect communities while ensuring equitable access to housing and opportunity?

The constitutional implications of exclusionary zoning should not be ignored. By restricting property owners‘’ ability to develop their land and denying affordable housing to those who need it most, zoning laws may infringe upon property rights protected by the Fifth Amendment’s takings clause. At the same time, reforming zoning laws too hastily could leave communities vulnerable to unchecked development and environmental degradation.

The solution lies in reforming zoning laws to strike a balance between protecting communities from harmful developments and ensuring that all residents—regardless of income—have access to affordable housing and opportunity. This might involve loosening zoning restrictions in wealthier areas to allow for more multi-family and affordable housing, ensuring that enough housing is built in desirable areas so that costs stay low, and even making it possible for low-income residents to live farther from industrial zones. Allowing more density in many, though not all, parts of town, including clusters of rental apartments in suburban neighborhoods, could further increase affordable options while still preserving the character of different areas.

The challenge for policymakers and urban planners is finding the right balance: protecting communities’ health and safety while also making space for economic growth and housing opportunities that work for everyone, no matter their income or background. Housing supply must meet demand, and zoning must avoid uses that could disrupt communities. Public meetings are a key part of this, but they need to be structured so that a handful of activists don’t speak louder than the larger community.

This means that planners and local officials have to be mindful of the people who don’t show up to these meetings—often those who are low-income, renters, or people of color, who feel the impact of restrictive zoning the most. We need a clear system of property rights that lays out what can be done “by right” without needing a public meeting, so those meetings can be reserved for projects that really impact the neighborhood.

It’s time for urban planners, policymakers, and community organizations to step up and create a fair and practical zoning system. Instead of sticking with outdated, restrictive policies, we need to make changes that reflect the real needs of all our communities. Only then can we start building neighborhoods where everyone has a fair shot at opportunity and stability and where zoning isn’t a barrier to growth but a tool for a more inclusive future.

The post Dividing Lines: Understanding the tradeoffs in modern zoning and its impact on communities appeared first on Reason Foundation.

While some progress has been made, medium-density housing is still far outpaced by traditional single-family homes. Currently, 75% of residential land in U.S. cities is zoned exclusively for single-family detached homes. Zoning restrictions are a substantial barrier to housing development, both in terms of the quantity and the type of homes that can be built. Relaxing zoning is one way to expand the supply of housing voluntarily and effectively. However, this policy change faces substantial opposition from homeowners. 

Homeowners who oppose density increases in their neighborhoods typically have two concerns: the potential for multi-family development to adversely affect their property values and the potential for it to alter the structural and design character of their neighborhoods. While understandable, both reasons are insufficient to justify the current zoning regime, which restricts property rights and the supply of housing. 

One problem is that those who use local government to restrict dense development in their neighborhoods on the grounds of a potential decline in the market value of their home are conflating their property rights with entitlement to value. Property rights do not and cannot extend to maintaining a specific price of a home. Markets and all the actors that participate in them determine home prices. Under the most common understanding of property rights, neighbors should not be able to dictate what an owner does with their property unless it poses a tangible and demonstrable invasion of their parcel. The use of local zoning restrictions to enforce a certain value is a misuse of government power. Organized homeowners who treat homes as investments rather than depreciable consumption goods vote in favor of policies that maintain the value of their investment under the assumption that multifamily development entering their community will diminish it. This pattern is outlined in “The Homevoter Hypothesis” by William A Fischel and empirically backed up in the following research. 

The motivations of homeowners are clear and rational. However, they do not justify exclusionary zoning over most of the country’s residential land. One alternative to lobbying local government could be the use of deeds and private covenants, as is commonly done in Houston, Texas. These legal tools are a much more voluntary and individualized approach to residential land use regulation. Without these, many current exclusionary zoning laws are based on a faulty understanding of property rights. They are further based on the unsupported fear that the addition of multifamily housing automatically decreases their property values. 

Despite common perceptions, research has consistently shown that multifamily developments do not necessarily decrease property values and can even increase them. The Joint Center for Housing Studies compiled a review of the existing literature in 2007. It concluded that while there are anecdotal cases where property values have declined upon entry of a multifamily residence, “in general, neither multifamily rental housing, nor low-income housing, causes neighboring property values to decline.” More recent research from 2020 has arrived at the same conclusion.

In a case study observing Little Rock, Arkansas, and employing a difference-in-difference analysis, researchers found that “most forms of multifamily housing have either no effect or a positive effect on sales prices for single-family homes within 2,000 feet of a new multifamily housing development.” Of course, with large additions to supply nationally, home values should be expected to decline–alleviation of the housing affordability crisis is the goal of expanding supply. However, research has repeatedly suggested that the presence of multifamily development does not in itself decimate property values on the neighborhood level.

This basis for rejecting denser development based on a fear of declining property values is not only dubious in principle but also unsupported by existing literature. Property values, however, are only part of the concern of homeowners; community character is another. Homeowners buy into neighborhoods with the expectation of a specific lifestyle and an architecturally consistent design. Missing middle policies balance the desire to maintain the suburban character of neighborhoods by increasing density marginally. This usually means allowing duplexes, triplexes, and fourplexes in places where only single-family detached homes were allowed before (though specifics vary by state and locality). Numerous other less common developments are also covered by the umbrella of missing middle housing.

Recently, medium-density development, defined here as developments with between two and four units, has been modestly climbing, likely due in part to the enactment of zoning reforms (see Figure 1). A comparison of recent missing middle policies in California, Oregon, and Florida highlights successes and remaining challenges in passing missing middle policies to remedy the existing housing shortage.  

California Senate Bill 9

On September 16, 2021, Governor Gavin Newsom signed Senate Bill 9 into law, effectively ending exclusive single-family zoning in California. This law, also known as the Housing Opportunity and More Efficiency (HOME) Act, preempts local governments and automatically grants homeowners and developers the right to either split their lot into between two and four separate lots or develop additional structures with a minimum of 800 feet in floor area on one lot (which can be either attached or detached). Note that this does not require developers to build more units on each lot; single-family home construction is still allowed, and many buyers prefer it. But now, state law does not allow local governments to ban developers from putting more units on a lot if they desire. The HOME Act is a missing middle housing policy in the pure sense—modest density increases that allow for middle-income housing.

Existing property owners are also now allowed to add units to their property, adding a second unit or rebuilding as a duplex, for example. These additional structures still must comply with all other regulations and impact fees and maintain “neighborhood scale” (floor-to-area ratio (FAR), height restrictions, aesthetic considerations, etc.) Instead of requiring an application for special permission, owners may now expressly split their lot, transform their home into a duplex, or add an accessory dwelling unit (ADU) onto their property. California was already passing a string of ADU-friendly legislation, and S.B. 9 only furthered the commitment to supporting ADU policy. These additional units can provide valuable streams of income to homeowners or provide the opportunity for family members to live near them. The HOME Act removes a roadblock to a practical way to add housing supply through the voluntary projects of homeowners. 

The most vocal opposition to S.B. 9 has come from city governments over the preemption of their zoning authority. First, cities were concerned that just allowing the option found in S.B. 9 did not guarantee additional housing. The California League of Cities executive director and CEO, Carolyn Coleman, said the following when urging Governor Newsom to veto the bill: 

We’re disappointed that the Legislature passed Senate Bill 9 and urge Governor Newsom to veto this flawed legislation. SB 9 would undermine the ability of local governments to responsibly plan for the type of housing that communities need, while usurping local democracy and the input of local residents. 

These complaints beg two questions. The first is how much democracy and majority rule are desirable when making decisions about property rights. Democratic decision-making is useful for certain policies, but its place in determining whether or not an individual can build a duplex on their own land (if they are not creating a tangible invasion onto the property of another) is much more dubious. The HOME Act would be a reinstatement of property rights that should have been respected all along. 

The second is whether localities are inherently more capable of planning what kind of housing is necessary for communities than the homeowners and developers who directly bear the cost of additions. Both existing community members and developers are free to build middle-density development under this law. Presumably, they would not invest in unprofitable projects that would not benefit consumers because of the loss of their investment. Individuals, whether homeowners or developers, who take on projects have every reason to perform the necessary market research and, with housing prices consistently high, have an incentive to develop additional housing units. With the ongoing housing shortage and consequent affordability crisis, communities need more housing, and the market is signaling to developers that they would benefit from providing it. 

While understandably disgruntled with the overriding of their authority and planning considerations, cities should not overlook the ability of homeowners and developers to make wise decisions about the housing additions their communities would benefit from, especially because of the stakes they hold in their decisions. 

The League of Cities is correct: Senate Bill 9 does not guarantee additions to the housing supply. It does not require any duplexes or ADUs to be constructed; it only gives developers and homeowners the option to choose. However, considering the severity of the housing crisis and consequent profit incentives for homeowners, it is reasonable to expect they will respond accordingly, and they have (see Figure 2). 

Data on ADU permitting from the California Department of Housing and Community Development suggest homeowners immediately exercised their right to modify their property. After the passing of this legislation, California experienced the largest single-year increase in ADU construction in its history, with 4,827 more permits issued in 2021 than in 2020, and the trend has continued—though not at such a staggering pace. While data on single-unit to duplex expansion are not available, evidence from ADUs alone suggests homeowners are not only willing but do, in fact, add to the supply of housing when given the opportunity. 

California’s S.B. 9 is an example of a modest and incremental housing policy that has helped add to the supply of housing. Though not without opposition, its focus on homeowner choice, option expansion, and extreme cost-effectiveness makes it an important policy for other states to consider emulating. 

Oregon House Bill 2001

Oregon’s 2019 missing middle housing policy, House Bill 2001, is very similar to California’s Senate Bill 9 in the way it approaches density increases incrementally. Oregon’s state government created a tiered system that allows developers and homeowners even more choices, depending on local populations. 

By mid-2021, this law required that duplexes be automatically permitted in areas zoned for detached single-family homes in cities with between 1,000 and 25,000 residents. By mid-2022, cities with populations above 25,000 were required to allow not only duplexes but triplexes, fourplexes, cottage clusters, and townhomes as well. Towns with under 1,000 residents are exempt from any zoning alteration requirement. 

Despite the seemingly modest proposals of his bill, it had opponents from multiple angles. Some opponents say that developers will take advantage of this loosening of zoning not to build affordable housing but to build more expensive duplexes. Whether this is the case is yet to be clear, but even expanding the supply of high-end development increases housing supply and overall affordability. Further, multiple affordable housing coalitions supported the bill. Before this legislation, developers could not build anything but single-family homes on these plots—whether affordable or otherwise. H.B. 2001 gives more options for developers to fill a missing space in the housing market with medium-density housing. 

Further, members of local government councils are concerned about the trampling of their authority to determine the best housing measures for their communities. Local government officials say they would prefer to be funded for planning projects rather than have their zoning authority undermined. However, these are the same localities that put the original barriers to denser housing in place. H.B. 2001 allows for private market solutions to the housing shortage, focused on voluntary additions made by developers and homeowners alike. 

Medium-density housing has been on the rise in Oregon since the early 2010s (see Figure 3). The passing of H.B. 2001 has made it easier for individuals to construct these types of housing. Further, it considers the varying needs of cities of different sizes by creating a ladder of density increases. When passing state-wide legislation, policymakers may benefit from considering a tiered system to increase political feasibility while enforcing the property rights of developers and homeowners. 

Florida Senate Bill 102

Florida Senate Bill 328, otherwise known as the Live Local Act 2023 (LLA), takes a radically different approach to missing middle housing than the two previous two laws discussed. This law is the revised and updated version of Senate Bill 102 (the original “Live Local Act”), which passed in 2023. In both versions, this law is much less incremental than both Senate Bill 9 in California and House Bill 2001 in Oregon. Due to Florida’s substantial housing shortage across the low-middle range of the income spectrum, this law aggressively incentivizes additions to supply via additions to “workforce housing.” 

LLA allows developers to override local use restrictions if they are building affordable housing. Specifically, it allows for residential development on plots zoned for commercial, mixed-use, or industrial use as long as 40% of units are rental units that will be affordable for 30 years. One of the primary intentions of this bill is to allow working individuals to live closer to their place of employment – something that many current zoning laws make very difficult.

Affordable in the context of the bill is defined as not charging individuals who make up to 120% of area median income (AMI) more than 30% of their monthly income for rent. This AMI threshold is a key indicator of alliance with missing middle principles, requiring that additional housing is designed for middle-income earners. Unlike California’s HOME Act and Oregon’s H.B. 2001, which both only hint at the type of development they incentivize by universally allowing plexes and ADUs, LLA enforces a strict affordability threshold, without which developers will not gain a zoning bypass. 

While originally allowing substantial bypassing of local height restrictions, the amended version of LLA allows localities more say in height restriction if the proposed developments are near single-family home neighborhoods. 

Further, LLA offers property tax exemptions to developers willing to substantially add to the supply of affordable housing. Instead of targeting modest density increases, this exemption applies to massive multifamily developments. It is sometimes referred to as the Multifamily Middle Market Property Tax Exemption. If more than 70 units in a development are designated as affordable, there are two categories of tax exemption that developers can qualify for. To developments with units affordable to those making between 80% and 120% AMI, a 75% exemption is granted. If they are all affordable to those making less than 80% AMI, a full exemption is granted. 

These are not the only provisions included in LLA, though they are most pertinent to the discussion of missing middle housing policy. 

Officials in localities have, predictably, protested this bill. In addition to contesting the override of their authority, some have argued that this bill adds the wrong kind of development. By not only allowing but incentivizing affordable housing, they worry that the LLA will encourage residential development instead of the industrial and commercial development their specific area needs. As discussed in California’s case, it is not always immediately obvious that developers will engage in unnecessary projects, considering their need to make a return on their venture.

However, LLA’s substantial tax exemptions make incentive distortion a more realistic possibility. Officials of some smaller cities were further worried about detractions from their tax base brought up by the large tax exemptions awarded to large developments. These are reasonable concerns. The LLA strays from the missing middle playbook by going beyond simply allowing voluntary additions and explicitly incentivizing large projects inconsistent with the character of many residential neighborhoods. This deviation has made it a target of substantial protest. 

While LLA directly addresses affordable housing, it lacks many of the typical characteristics of a missing middle policy. The income threshold prioritizes middle-to-low-income earners, but LLA lacks the homeownership element and the marginal nature of the density increases. Because the bill is so new, whether it will be successful in substantially adding to the supply of affordable housing is yet to be seen. However, it offers an alternative perspective and approach to missing middle housing. 

S.B. 9 in California, H.B. 2001 in Oregon, and S.B. 328 in Florida are a few examples of recent and successful state-wide missing middle housing policies. They are far from the only ones. Experience in a number of communities shows that simply allowing duplexes can have large impacts on housing supply and affordability. The marginal density increases offered by typical missing middle policy simultaneously refocus property rights, maintain the general character of neighborhoods, and add to the supply of housing voluntarily. While not perfect in every case, missing middle policy broadly is a promising step toward expanding the housing supply.  

The post Missing middle housing policies balance interests while addressing the affordable housing crisis appeared first on Reason Foundation.

Rent control, including variations such as rent stabilization, is a government-imposed price control (usually a limit) on what private properties may charge for rent. Seven states currently have rent control laws, and 20 states introduced bills related to rent control in 2024.

How rent control harms housing

• Reduced housing supply and upkeep: In San Francisco, rent control led to a 15% reduction in the number of available rental units between 1979 and 1994 as landlords converted properties to condos or sold them​. Nationwide, 61% of housing providers have deferred or expect to defer maintenance and improvements due to rent control limiting revenue to cover rising repair and upkeep costs.
• Suppressed property value and investment: In Cambridge, Massachusetts, deregulated property values increased by 45% after rent control was lifted. After deregulation, properties in Cambridge that neighbored rent-controlled homes saw a 25% rise in value. In New York City, rent-controlled buildings dropped in value by 34% between 2019 and 2023, while non-controlled units increased in value by 23% during the same period.
• Reduced mobility and diversity: In San Francisco, tenant mobility fell by 19%, with empty-nesters staying in larger units, pushing young families out of the city. In New York City, long-term tenants benefit from low rents, but newcomers face skyrocketing prices in uncontrolled units.

Policy alternatives

• Housing vouchers: Housing vouchers could provide rent subsidies for low-income individuals in the private market. Removing price limits and simplifying the inspection and eviction processes would enhance accessibility, enabling tenants to secure stable housing while allowing landlords flexibility.
• Less restrictive zoning and building regulations: Zoning and building regulations raise development costs, limiting the construction of affordable rental units. Reducing these regulatory barriers and simplifying approval processes will encourage new construction and increase housing supply.

Full backgrounder: Rent control implications and policy alternatives

The post Rent control implications and policy alternatives appeared first on Reason Foundation.

California, Florida, and Georgia voters will decide on housing ballot issues ranging from homestead tax exemptions to rent control. 

California Proposition 33: Prohibit State Limitations on Local Rent Control Initiative

Florida Amendment 5: Annual Inflation Adjustment for Homestead Property Tax Exemption Value Amendment

Georgia Amendment 1: Local Option Homestead Property Tax Exemption Amendment

The post Voters’ guide to 2024 ballot initiatives related to housing appeared first on Reason Foundation.

Construction built through 3D printing uses a printer to stack thin layers of concrete, creating the skeleton of a home. This technology is derived from a process known as “contour crafting.” This process makes building intricate and curved shapes easier than traditional construction due to the maneuverability of the robotic arm which lays the concrete and the ability to give precise instructions. In addition to complex form construction, 3DCP has noticeable cost and time-saving benefits. One advantage is the reduction in labor. 

Aside from the people needed to program the printer and to install finishes like plumbing and wiring, the printer does the bulk of the homebuilding. The resulting reduction in labor costs alone makes 3D printing an attractive option for developers.

A 2018 study by British and Malaysian engineers compared the cost of building a traditional home in the United Kingdom to that of a comparable 3D-printed home. Not accounting for the initial investment in a printer, these researchers estimated a 30% reduction in building costs per home.

Further, 3D printing as a construction method has substantial time-saving benefits. COBOD International is a company specializing in the use of 3D printing technology in construction. Evidence from COBOD suggests that 3D-printed homes can be built up to 20 times faster than traditional homes —critical at a time when a nationwide housing shortage has kept prices high. 

While the cost- and time-reducing capabilities of 3D-printed construction are clear, there are questions about incorporating the technology into residential construction broadly. A 2018 study from California Polytechnic State University suggests that the size limitations of 3D construction and lack of aesthetic appeal will prove primary barriers to the broad acceptance of this new technology. Substantial progress has already been made on both fronts. 

At the time of the study, most 3D-printed homes ranged between 600 and 900 square feet. The study attributes this size limitation to the cost of a printer large enough to construct more sizable structures and the consequent unaffordability of the homes produced. Understandably, the size constraint at the time of the study did not align with the needs of would-be homeowners in the United States, making 3D printing an undesirable construction tool for housing development.

Further, this study cites the exclusively concrete design and lack of customization options as potentially aesthetically off-putting to homebuyers. Innovative startups working on 3D construction have already put their efforts towards the development of better-looking and larger homes.

ICON, a 3D construction firm, in partnership with Lennar, is currently in the process of building a community, Wolf Ranch, of 100 3D-printed homes in Georgetown, Texas. As of July, 95 out of the 100 planned homes have been finished, and many have been sold and occupied. Once completed, this will be the largest community of 3D-printed houses in the world. 

Counter to preliminary size concerns, these homes range between 1,850 and 3,000 square feet and have between three and four bedrooms–in line with the average size of an American home. ICON built Wolf Ranch using their original 3D printer, but they have since unveiled a new 3D printer that can construct two-story buildings up to 27 feet tall. Rapid advancements in printing capabilities have dispelled concerns about the size of homes. 

The promise of affordability, however, has yet to fully manifest. Wolf Ranch homes have been sold for between $475,000 and $599,000. These prices are near the median home price in the Austin area. While not necessarily an overnight solution to bringing down housing prices, 3D-printed home construction is nevertheless a useful tool to bring timely and cost-effective additions to the supply of housing. Given that the housing affordability crisis is largely shortage-driven, further use of 3DCP will be necessary to fully realize its cost-saving potential–especially if traditional home dimensions and aesthetics are to be maintained. 

Other developers have adopted 3D printing on a smaller scale–both in terms of quantity and the size of the houses themselves. Mighty Buildings in California, for example, has specialized in smaller homes that include accessory dwelling units (ADUs) and are nearly carbon-neutral. Currently, only 8% of 3D-printed homes in the United States are designed as ADUs, though the growing acceptance of ADUs in local zoning is likely to expand this use. 

While acknowledging the lucrative nature of 3D-printed construction, the National Association of Homebuilders (NAHB) warns that there may be legal barriers to implementing this new technology: 

 “… [A]nyone interested in residential 3D printed construction should have the expectation that they will face heightened scrutiny from building and code officials, and will likely need to draft new contracts in order to capture the relationship nuances.” 

One potential setback is the inconsistency of local building codes regarding 3D printing. An attempt to unify standards was incorporated into the International Residential Code, the comprehensive set of standards compiled by the International Code Council to regulate development. It is now up to municipalities to either adopt these recommendations or institute their own. Either way, legal clarity is a crucial step in incentivizing the use of 3DCP. 

Further, because the technology is new and has ample room for error in the software, hardware, and printing elements, potential legal disputes could arise when mistakes are made involving parties not typically part of construction disputes. Construction contracts and liability rules must evolve to consider the responsibility of software companies and technology providers. A similar process is going on with liability in automated vehicles as part and parcel of these technological changes. 

As affordable housing advocates and policymakers examine solutions to the current housing crisis, lowering barriers to the use of technological advancements should not be overlooked. Three-dimensional printing presents a cost- and time-effective alternative to traditional construction methods that can be used in conventional single-family home construction and ADUs. Now, the role of government should be to remove barriers and set clear standards. 

The post 3D-printed homes: Advancements in technology and remaining challenges  appeared first on Reason Foundation.

In the face of an affordable housing crisis and rent increases in much of the country, the pressure for policymakers to act is great. However, a policy that creates new problems while attempting to fix others should be avoided.

That has always been the chief problem with rent control: it stops rents from rising but creates other problems that make it an overall poor policy. President Biden’s proposal is not traditional rent control, which tends to have many controls on when and how property owners can change the rents they charge, but it will have similar distortionary effects. And it certainly fuels the fire of advocates for state and local rent control proposals, whose activism has been on the rise.

The current housing crisis is primarily caused by a nationwide housing shortage. Among other factors, the fallout from the 2008 subprime mortgage crisis has resulted in the worst decade for housing construction since the 1960s. Fannie Mae estimated that in 2019 the U.S was 3.8 million housing units (both rental and for sale) short. The COVID-19 pandemic only worsened the situation through materials shortages, though rent increases have recently slowed as developers respond to price incentives.

The primary cause of price hikes is a shortage of housing supply. Demand is simply outstripping affordable and available housing units. Effective policy should focus on adding housing units in the private market to meet demand. Economic research suggests that rent stabilization laws (a derivative/soft form of rent controls), like Biden’s, reduce the supply of housing, thereby exacerbating the problem.

Rent control policy’s effects

Most of the research related to this is on rent control rather than rent stabilization like Biden’s proposal, but the effects are likely similar. As with much economic research, rent control policy outcomes can be hard to assess. Economics 101 tells us that in a free market, rent control’s price cap decreases profitability, inevitably leading to less rental housing being available.

However, some studies disagree. This article by Rutgers professor Mark Paul goes over many studies that find positive effects of rent control, mainly for those people who live in rent-controlled units whose costs are frozen. The research is clear that some people do benefit from rent control.

However, a 2012 University of Chicago survey of a diverse panel of economists found that 81% agreed that local rent control ordinances have not positively impacted the amount and quality of rental housing. A very recent comprehensive survey of the effects of rent control concludes:

[A]lthough rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including, among others, higher rents for uncontrolled units, lower mobility and reduced residential construction. These unintended effects counteract the desired effect, thus, diminishing the net benefit of rent control.

The Brookings Institution has also concluded, “Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood.”

San Francisco is a great example with long experience using rent control. A study by Stanford University researchers in 2017 found:

[Rent control] reduced their supply of available rental housing by 15%, by either converting to condos/TICs, selling to owner-occupied or redeveloping buildings. This led to a city-wide rent increase of 7% and caused $5 billion of welfare losses to all renters. … Taken together, we see rent control …  increased property investment, demolition, and reconstruction of new buildings, conversion to owner-occupied housing and a decline in the number of renters per building. All of these responses lead to a housing stock which caters to higher income individuals. Rent control has actually fueled the gentrification of San Francisco, the exact opposite of the policy’s intended goal.

After President Biden’s rent stabilization plan announcement, several housing experts and economists released warnings concerning the proposed policy. Bob Brokesmit, president and CEO of the Mortgage Bankers Association, called it a “counterproductive policy idea that ultimately harms renters by distorting market pricing, discouraging new construction, and degrading the quality of rental housing.”

The Washington Post quoted Jason Furman, a chief economist in the Obama administration, saying, “Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”

Aware of these negative effects, most states have taken direct action against rent control and stabilization ordinances on the local level.

Figure 1 color codes the United States by the legal status of rent control by state. Considering the overwhelmingly unpopular nature of rent controls and similar policies, the proposed federal rent stabilization is likely to encounter substantial pushback.

Figure 1: Legal Status of Rent Control by State

Alternatives to rent control

Many U.S. cities provide adequate supplies of affordable rental housing without rent control. Average rents in some large, growing cities like Nashville, Houston, and Las Vegas have been declining, while rents in other cities like San José, Minneapolis, and Jacksonville have skyrocketed. The difference is the former are aggressively allowing new housing to be built and the latter are restricting new housing supply.

What causes rents to increase faster than wages, in part, are local government restrictions on housing supply that drive up costs. Policies and approaches that allow housing supply to meet demand inevitably keep housing more affordable. Local governments need to permit sufficient housing construction and also allow for denser development and redevelopment.

About 75% of all “residential” zoned land in the United States is currently zoned for the exclusive development of single-family detached homes. Aside from converting structures to allow for denser occupancy, thinking long-term and incentivizing local governments to reform their zoning and land use plans to benefit multi-family development would be a better use of federal attention on housing policy. Also, allowing current property owners to add accessory dwelling units like granny flats or basement apartments, or rebuilding on their lot with a duplex instead of a single home can dramatically increase supply without dramatically changing the character of a neighborhood.

Rather than sweeping price controls, one simple way to increase housing supply is to address the multiple categories of commercial real estate that are now underutilized and ripe for conversion to residential uses. Hotels, retail stores, and shopping malls are market sectors currently shrinking due to the COVID-19 crisis and the rise of online shopping. Local governments could take advantage of this trend by rezoning commercial properties to permit residential use, allowing new housing stock to be added much more easily and inexpensively than through ground-up construction. The resulting supply could help push down rents in many parts of the country without rent regulation.

The post Why President Biden’s rent stabilization proposal won’t solve the housing crisis appeared first on Reason Foundation.

As inflation rises, the cost of buying a home is also going up even more because the 30-year residential home interest rate has increased from less than 4% to almost 5.5%. Rising inflation is also causing Americans to spend more on basic staples, such as food and gasoline, and Americans have fewer savings available than at any time in the last three years, with the average savings rate decreasing every month but one since July 2021. The result of these and other trends means homeownership is increasingly out of reach for many working-class and middle-class Americans. 

The biggest changes to housing policy need to be made at the local level, where governments need to make changes to zoning laws, building-approval processes, and height limits that prevent more housing from hitting the market. 

The Washington, D.C., region is a prime example of how harmful housing regulations reduce supply and drive up prices. The region has the fourth most expensive housing stock in the country, despite lacking the oceans and the mountains that serve as natural geographical barriers in the other metropolitan areas— San Francisco, New York, Los Angeles, and Honolulu—that make up the rest of America’s five most expensive housing markets. 

The first step is to relax Euclidean zoning regulations. Despite the demand for townhouses and smaller houses, Prince George’s County, Maryland, still has a preponderance of single-family homes zoned on a one-acre or larger lot. Local planners should allow mixed-use zoning as long as there are no public health problems (the original justification for Euclidean zoning).

The region should allow buildings to be set closer to the road, stop requiring that developers include a minimum number of parking spaces for residential developments, and allow multiple housing types to be constructed in the same development.

In suburban areas, single-family homes, cottage courts, and side-by-side duplexes might be a good fit. In central cities, cottage courts, side-by-side duplexes, and small multiplexes might be appropriate. Let all options and choices bloom.

The region also needs to eliminate onerous restrictions for the reconstruction of multi-family housing. Arlington County, Virginia, likes to fashion itself as one of the most progressive communities in the country. But its zoning code reads like it was written in 1922 instead of 2022. Arlington Now spotlighted how Arlington County’s zoning process is making multi-family housing too expensive to build. Renovating multi-family housing on an existing lot requires a community review, a planning commission approval, and county board approval. Yet, renovating a single-family home requires a board of zoning appeals review only. The multi-family review process should be streamlined. 

Fast-growing areas also need to eliminate growth restrictions, such as large lot zoning, agricultural reserves, height limitations, and floor area ratios. 

Suburban Loudoun County, Virginia, has a de facto urban growth boundary along U.S. Route 15 preventing growth in the western half of the county.

Montgomery County, Maryland, has set aside a third of its total land area as an agricultural reserve limiting growth northwest of D.C., even as the region’s metropolitan planning organization (MPO), the Washington Metropolitan Council of Governments, reports that there is virtually no agricultural activity in this “agriculture reserve.”

Meanwhile, the District of Columbia imposes a height limit of 130 feet. The height limit was not enacted to prevent structures from being taller than the U.S. Capitol but is a 19^th-century relic that was intended to ensure a fire truck’s ladder could access the top floor of a building and could clearly be done away with now.

Fairfax County, Virginia, has a strict floor-area-ratio (FAR) limit—the ratio of a building’s floor area to the lot, of 0.25. This ratio prevents building on 75% of a property. Similar suburban districts across the country have FARs of 0.40 or higher. 

In addition to getting rid of these bad policies, leaders also need to fight back against Not In My Backyard (NIMBY) activists. Many NIMBYs make bogus claims, such as building more housing will lead to more crime, less tree cover, and negatively change neighborhood character. While some of these concerns are understandable, they are often exaggerated and can almost always be reasonably addressed or debunked.

For example, key environmental areas can be protected without preserving all of the nation’s abundant farmland. It would take about 30% of existing U.S. farmland to feed all of America.

Eliminating unnecessary restrictions that are driving up housing prices would enable regions to build the amount of housing that metro areas need. This would help ensure housing and the American dream of owning a home doesn’t continue to become a luxury good only available to upper-income Americans. Eliminating the housing shortage, which would put downward pressure on housing prices in metro areas, would help solve one of the biggest problems facing American cities and the workers under the age of 40 they hope to attract.

The post Steps metro governments can take to address housing affordability, skyrocketing prices appeared first on Reason Foundation.

In 2017, the city of Los Angeles and Los Angeles County had the second-highest total homeless population (55,188 total),  with almost 75 percent of those people unsheltered. Between 2016 and 2017, individual homelessness grew 9 percent (15,540 people) in major U.S. cities. Los Angeles accounted for 60 percent of the increase.

Homelessness impacts many vulnerable communities in Los Angeles, including veterans. According to the Los Angeles Homeless Services Authority, a total of 4,828 veterans experienced homelessness on a given night in 2017, up 57 percent from the 2016’s figure of 3,071. In February 2018, the Los Angeles Times reported 500 homeless veterans had housing vouchers with nowhere to redeem them.

In May 2018, the Veterans’ Administration (VA) issued a request for information (RFI) seeking private contractors to potentially fulfill the role of Housing Specialist/Landlord Liaison for homeless veterans in the Greater Los Angeles area.

To help find permanent housing for homeless veterans, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Veterans Affairs Supportive Housing (VASH) currently run a combined program (HUD-VASH).

The HUD-VASH program combines Housing Choice Vouchers (HCV), which can be used for privately-owned housing for veterans with VA case management and clinical services to eligible homeless veterans. Since 2008, HUD-VASH has allocated more than 85,000 vouchers to veterans experiencing long-term or repeated homelessness.

However, with increased demand in housing units and decreased housing inventory, landlords across Los Angeles are becoming more cautious with respect to underwriting and leasing evaluations, creating new challenges for the program. Insufficient landlord participation in the HUD-VASH program has resulted in long delays in finding housing for veterans.

To help make the program more effective, HUD-VASH is looking to public-private partnerships (PPPs) for help and the RFI would provide the framework for the private sector to work with HUD-VASH in a combined effort to ending homelessness.

According to the RFI, contractors would work closely with HUD-VASH program staff, providing assistance with marketing, recruitment, relationship development, and tenancy management support of landlords in the community to expand the availability of apartments for veterans accepted into the HUD-VASH program of the Greater Los Angeles Healthcare System.

The objective is to secure long-term relationships with landlords wishing to rent their units to HUD-VASH participants using HVCs. The RFI contractor performance requirements include provisions such as identifying 10 new landlords who are not familiar with the HUD-VASH program and 30 new prospective units for rent, as well as providing education for landlords.

Contractors would also have reporting requirements through monthly written reports and are required to notify the VA of any negative incidents involving a veteran, any pending evictions and to provide any necessary documentation.

The RFI also seeks contractors with a proven track record of experience involving property management for populations served by social assistance programs. The contractors would also be expected to collect performance improvement feedback from landlords and present that information during quarterly staff meetings with HUD-VASH staff. The contractors would also create ways to honor landlords through special events and award ceremonies.

The lengthy requirements for governments wishing to engage in PPPs to ensure private sector accountability in providing a good or service are not uncommon. Combing government and nonprofit resources to achieve a greater good such as ending homelessness has had historical success when executed correctly.

In addition to the Los Angeles-area HUD-VASH program, many other municipalities are using public-private partnerships to address homelessness:

• A Seattle-based nonprofit known as Building Changes has shown promising results by pooling together government, nonprofits and philanthropy to employ an approach to ending homelessness known as ‘diversion’—an early engagement tool that, while not a fit for all homeless cases, works for many and saves money when it does by avoiding more costly approaches.
• Community Shelter Board (CSB), a charity organization in Columbus, Ohio, uses the combined resources of government, nonprofits, and philanthropic organizations to fight homelessness. By managing the funding for local homeless programs and permanent supportive housing, CSB has also demonstrated successful results using PPPs.
• Your Way Home in Montgomery County, PA, is an award-winning program that brings together county government, nonprofits, and other philanthropic groups to work together in a unified, coordinated way to combat homelessness in the county. The success in reducing their homeless populations can also be attributed, in part, to PPPs.

Public-private partnerships are a valuable tool in leveraging collective resources to accomplish the goal of reducing homelessness. The HUD-VASH program’s collaboration with Los Angeles-area landlords provides another example of how PPPs can help solve some of the persistent problems that traditional approaches have left behind.

The post Public-Private Partnership Program Is Helping Serve Homeless Veterans and Their Families appeared first on Reason Foundation.

As this case demonstrates, however, municipalities and counties have devised schemes to evade the prohibition on uncompensated takings. Here, the City of West Hollywood implemented a zoning ordinance that requires developers who build multi-unit housing either (1) to sell or rent a percentage of that housing at below-market prices or (2) to pay an “in lieu” fee that West Hollywood calculates using a formula created by statute.

616croftave_v_cityofwesthollywood_case_16-1137

The post 616 Croft Ave. v. City of West Hollywood, Case No. 16-1137 appeared first on Reason Foundation.

But that forum also highlighted some of the myths about affordable housing I keep seeing pop up:

1. Average salaries and average home prices in a city need to be aligned, and policymakers need to address the gap;
2. We can create affordable housing by mandating that developers sell some new units in every development at much lower prices.

These myths are at best a distraction from tackling affordable housing, and at worst actually make housing more expensive.

Housing and labor markets are not the same market

I have repeatedly seen graphs showing that average salaries paid for many good jobs in Sarasota are not sufficient to pay average home prices in the area. Usually the graph is part of an argument that the region will have a hard time employing workers who can’t afford to buy a home here. But let’s break that issue down.

For starters, the market for labor and the market for housing are very, very different. Labor is very mobile, as people move to chase jobs or better pay all the time. Supply and demand for labor change a lot and rapidly with changes in the national, regional and local economy. Housing is not mobile, and supply and demand change much more slowly — especially supply.

If businesses have a hard time finding certain professional workers at the salary they are offering, they will raise salaries to attract the workers they need. Meanwhile, if demand for housing is high, developers will start working on new projects and eventually supply more housing.

The fact that salaries for so many jobs in Sarasota are less than that needed to afford to buy a house is a clear indication that a number of things are going on. Clearly enough workers are willing to come to Sarasota for that level of wages. And they are clearly able to find a place to live. People who can’t afford to buy a home—or simply don’t want to—rent one. There is nothing wrong with that and no reason to say everyone needs to be able to buy a home, especially early in their career. Finally, many people have a partner who also works, and the combined household income is enough to afford a home. Comparing average salaries to housing prices assumes only single-worker families are trying to buy homes, which is usually not true at the affordable housing level.

Put simply, the labor market in Sarasota is adjusting all the time, and fairly quickly. If we allow the housing supply to adjust too, even if slower, things will balance out. Especially if we let go of the strange notion that everyone needs to be able to buy a house, rather than embrace the idea that everyone needs to be able to find a good place to live.

Wealth vs. youth

A special version of the concern about Sarasota area incomes vs. housing prices is the concern about a “brain drain” of young people leaving Sarasota because they can’t afford housing here, which surveys by the Sarasota Chamber of Commerce indicate is a real problem.

But this is a harsh reality of living in a place that is so desirable, especially to those with wealth. Wealthy, older individuals are competing with young workers for housing, and the wealthy can simply outbid them. As long as supply of housing is less than demand, the willingness of the wealthy to pay more will drive up housing prices.

Young people who want to live in Sarasota will have to be creative. Just like young people who want to live in Manhattan, they can’t expect to live like the wealthy, many of whom are reaping the benefits of decades of hard work themselves. Renting, roommates, longer commutes, smaller housing, older fixer-uppers, etc. are all part of the mix.

Affordable housing mandates don’t work

Too many people think we can just force builders to build housing and sell it at “affordable” prices. But the data from places that have done this show it results in fewer homes being built and raises average prices of homes. For example, in the Los Angeles region affordable housing mandates led to 770 affordable units being sold over seven years, while during the same period reducing the total number of new units built by more than 17,000 and raising the average home price by about $50,000.

Just think about it logically. In a market where homes are selling well, if a developer has to sell some units at below market prices, he will have to simply raise the price of the other units to pay the difference. That price hike means some people who could afford to buy a new home at market prices now cannot. So the mandate makes some people able to afford housing while making others unable to do so.

Worse, many developers just go to the next county to build, reducing the local supply of housing, again driving up average prices, and spreading regional housing over a broader area. It is a vicious spiral that makes housing less affordable, not more.

Stick to our knitting

The most important way to reduce the cost of housing in a region is allowing the supply of housing to keep up with demand. This does not mean new housing has to be cheap housing either, because cheap housing tends to be the older, smaller homes, freed up for young workers or lower income families when wealthier people move into new, higher-priced homes. That is how the housing market has worked in modern times, and too many people forget that and think the young and lower earners need to be able to buy new houses.

At the same time, the city and county governments need to work with developers who want to build affordable housing projects, especially rental units. Again, the historic reality of housing markets shows that this is where people entering the market, or having hard times, get their housing. Adequate supply that grows with demand is vital here as well to keep prices reasonable.

Finally, city and county governments need to ensure the regulatory process for new development flows smoothly. A well-functioning process for working with developers is crucial to allowing the supply of housing to keep up with demand and keeping prices in balance.

Adrian Moore, Ph.D., is vice president of Reason Foundation, co-author of the book “Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century,” and lives in Sarasota.

The post Affordable Housing Myths appeared first on Reason Foundation.

What is missing from our affordable-housing discussion is the age-old concept of the “housing ladder.” Affordable housing is created when homeowners sell – maybe upgrading, moving to a bigger home for the kids, or downsizing, as they get older. These home sales are supposed to open up older, more modest homes for first-time, often younger homeowners.

Thirty years ago, no one thought a young couple just getting started should be shopping for a brand new, just-built home. Everyone understood that your first home would probably be 20-to-30 years old. After a few more years of saving money and a promotion or two at work, the young couple might look to upgrade.

Today, local governments in Orange County and neighboring counties have ignored the housing ladder and pursued many ruinous policies in pursuit of building new “affordable housing,” believing that everyone should be able to afford a brand new, large home right now.

Subsidizing housing has long been popular in California policy circles. But, in most cases, subsidies have distorted the housing market, created more demand for purchases and driven home prices up. And then they lock recipients into their homes – owners can’t afford to sell and buy another home without further subsidies. Thus, fewer homes hit the market, and prices soar for available homes.

The most popular affordable-housing policy in Orange County has been mandating developers to sell some new homes at below-market rates. Typically, developers must sell a percentage of units at “affordable” prices in return for approval of a development, and sometimes developers are allowed to build more units in return for selling some at below-market prices. These policies are called “inclusionary housing.”

Reason Foundation studied these policies a decade ago and found that they reduced the supply of housing and raised average home prices – the exact opposite of the desired effect.

In the Los Angeles region, inclusionary housing policies led to 770 affordable units being sold over seven years, but reduced the total number of new units built by more than 17,000 and raised the average home price by about $50,000 during the same period.

Researchers at Harvard and the University of Pennsylvania have found that housing price differences between cities are not attributable to variation in land prices or construction costs but to regulatory differences, primarily zoning and building restrictions. Similar research from the Lincoln Land Institute found that “house prices in cities with stricter regulatory policies rose 30 percent to 60 percent relative to less-restrictively regulated cities over a 15-year period.” And according to National Association of Home Builders every “$1,000 increase in home price leads to about 232,447 households priced-out of the market for a median-priced new home.”

Creating more affordable housing requires deregulating markets for land and allowing market-driven densities and development, especially in the suburbs. It means simplified and reasonable building codes that serve real public safety concerns rather than special interest goals. It means setting impact fees sensibly to mitigate the real effects of more housing, such as increased traffic, not to extort design or aesthetic concessions from builders. When developers incur fees, home buyers are the ones who really pay them.

What ultimately drives housing affordability is supply and demand. Orange County has no shortage of demand for housing; supply is the problem. Everyone who buys a parcel of land should have an equal right to build a home or homes on it, so long as he doesn’t impose an undue burden on any others in the process.

We have decades of experience showing that interfering with housing markets makes homes less affordable, while working with the markets can put owning homes within reach for more people.

Adrian Moore is vice president of policy at Reason Foundation. This article originally appeared in the Orange County Register.

The post Orange County’s Affordable Housing Mandates Keep More Homes Out of Reach appeared first on Reason Foundation.

Many people seem to have forgotten about the age-old concept of the “housing ladder.” Affordable housing is created when homeowners sell to buy a newer or nicer home, opening up older and less nice homes for first-time, often younger, homeowners.

Thirty years ago, no one in his right mind thought a young couple just getting started should be shopping for a new home. Everyone understood your first home would be 20 to 30 years old, hopefully well maintained. Your first newly built home would come after a few promotions.

The housing ladder is still a very real part of the actual functioning housing market, yet it has almost disappeared from our public discourse on, and cultural perceptions of, affordable housing.

Subsidies are a popular policy option, but

Local programs to subsidize home purchases severely distort the market, creating more demand for purchases in a market where high demand is already driving prices up. In markets where some get subsidies to buy homes, the cost of homes for everyone else goes up. And that means people who were just barely able to buy a home on their own can no longer do so.

Another really bad but popular idea is to mandate developers sell some units below cost–so called “inclusionary zoning”

First, this falls right into the trap of trying to make new housing into affordable housing, rather than letting the housing ladder work. But even worse, it simply does not work.

A detailed empirical research project on the effects of these policies found that they reduced the supply of housing and raised average home prices – the exact opposite of the desired effect.

In the Los Angeles region, inclusionary housing policies led to 770 affordable units being sold over seven years, while during the same period reducing the total number of new units built by more than 17,000 and raising the average home price by about $50,000.

The reason is that developers need to cover their costs when they build homes. If they are forced to sell some below market, the remaining ones need to be priced above market.

Again, many potential homebuyers who could have afforded to buy a home on their own were priced out of the market by that $50,000 increase. When some are subsidized, others – typically those just barely making it on their own – take the brunt of it.

The only thing that actually works is to let the development and housing market work

Read the whole column here and see Reason’s work on affordable housing here.

The post No simple answers on affordable housing appeared first on Reason Foundation.

But generally, public policy about affordable housing stems from a combination of concerns about homelessness and about working-class families not being able to buy homes in the city.

As I speak to people about this issue, I am struck by how many suggest that “we need to build more housing that young workers can afford to buy,” or “look at all these high-end developments and large new homes. Regular workers can’t afford to buy those.”

The simple fact is new housing near downtown Sarasota is expensive housing. Land is expensive there, and lots of people with lots of money want to live there, and they will bid up the price of housing. But many owners of those multimillion-dollar condos didn’t start out being able to afford them either.

Many people seem to have forgotten about the age-old concept of the “housing ladder.” Affordable housing is created when homeowners sell to buy a newer or nicer home, opening up older and less nice homes for first-time, often younger, homeowners.

Thirty years ago, no one in his right mind thought a young couple just getting started should be shopping for a new home. Everyone understood your first home would be 20 to 30 years old, hopefully well maintained. Your first newly built home would come after a few promotions.

The housing ladder is still a very real part of the actual functioning housing market, yet it has almost disappeared from our public discourse on, and cultural perceptions of, affordable housing.

While ignoring the housing ladder, local governments all over the United States have pursued many ruinous policies in pursuit of “affordable housing,” believing that everyone should be able to afford a brand-new, large home.

Subsidizing housing has long been one of these often ruinous, albeit popular, policies. If these policies that target helping people rent homes are well designed with careful screening of recipients, are time-limited and are tied to other programs to help individuals succeed in escaping the need for assistance, such programs can be beneficial. But if they become a permanent entitlement, they neither help the housing market nor the individuals involved.

Worse by far are subsidies for home purchases, especially for young people. Young workers tend to have high-turnover, lower-skilled jobs because they don’t have the experience yet or simply don’t want to secure more stable circumstances. Many like being able to move on short notice to take advantage of better job or life opportunities.

When we subsidize housing for younger workers – for whom renting is often a better lifestyle match – we are communicating two wrong ideas: 1) that renting is less desirable for everyone than buying; and 2) that they should buy homes they cannot afford.

Local programs to subsidize home purchases severely distort the market, creating more demand for purchases in a market where high demand is already driving prices up. In markets where some get subsidies to buy homes, the cost of homes for everyone else goes up. And that means people who were just barely able to buy a home on their own can no longer do so.

Even more disastrous are government-owned housing projects. America’s cities are dotted with horrible public housing projects, many of which have been closed and bulldozed in recent decades. Managing housing is simply not a core competency of democratic local government.

At the same time, alongside the larger issue of housing affordability, we need effective efforts to address shelter for the homeless, domestic violence victims and similar situations. The best models are those with community-based and nonprofit housing units partnered with city and county social services.

This capitalizes on the city’s strengths at coordinating diverse services that are aimed at promoting self-sufficiency. By partnering with these services, the city stops managing housing itself.

When cities manage housing, they tend to regard their efforts as permanent entitlements instead of helping families become self-sufficient. Indeed, in many cities, housing projects support several generations of families. This is where nonprofit community organizations can help foster change for the families that need it most to end the cycle of government-supported housing.

The most popular affordable housing policies these days are mandates or restrictions on developers to sell some units at below-market rates. Typically, policies require a percentage of units to be sold at “affordable” prices in return for approval of a development, and sometimes developers are given “density bonuses” – allowed to build more units in return for selling some at below-market prices.

These policies are often called “inclusionary housing.” The Sarasota City Commission has discussed inclusionary housing policies, so understanding their inevitable failings is crucial.

First, this falls right into the trap of trying to make new housing into affordable housing, rather than letting the housing ladder work. But even worse, it simply does not work.

A detailed empirical research project on the effects of these policies found that they reduced the supply of housing and raised average home prices – the exact opposite of the desired effect.

In the Los Angeles region, inclusionary housing policies led to 770 affordable units being sold over seven years, while during the same period reducing the total number of new units built by more than 17,000 and raising the average home price by about $50,000.

The reason is that developers need to cover their costs when they build homes. If they are forced to sell some below market, the remaining ones need to be priced above market.

Again, many potential homebuyers who could have afforded to buy a home on their own were priced out of the market by that $50,000 increase. When some are subsidized, others – typically those just barely making it on their own – take the brunt of it.

What really drives housing affordability is supply and demand. We have no shortage of demand in Sarasota. Supply is the problem. Like so many places, Sarasota has throngs of people who have moved here, purchased their home and now want to put a stop to any more growth. They got theirs, and now they want to shut the gate on everyone else.

This stance is unfair and morally bankrupt. Moreover, it simply violates the property rights enshrined in our Constitution, which are crucial to our way of life.

Everyone who buys a parcel of land has equal right to build a home on it, so long as he doesn’t impose an undue burden on any others in the process. The fact that the economy involved developers to make this process more efficient doesn’t make the rights any less fundamental.

High home prices outside of downtown and on the keys can be squarely laid on the shoulders of land-use restrictions. Over the past decade, researchers at Harvard and the University of Pennsylvania studied this problem and found that housing price differences between cities are not attributable to variation in land prices or construction costs but to regulatory differences, primarily zoning and building restrictions.

Similar research for the Lincoln Institute of Land Policy found that “house prices in cities with stricter regulatory policies rose 30% to 60% relative to less restrictively regulated cities over a 15-year period.”

There are some rays of light in Sarasota’s affordable housing landscape. City commissioners have considered allowing more housing to be built in both downtown and on the city fringes.

Indeed, the recipe for affordable housing is to deregulate markets for land and allow market-driven densities and development, especially in the suburbs. It means getting rid of costly elements, such as building codes that serve arcane interests rather than measurably improving public health and safety. All those do is result in higher home prices.

It also means setting impact fees sensibly. These fees are supposed to mitigate the effects of more housing, such as increased traffic, but they have become a way for government to force builders to do their bidding. Remember, whenever developers are forced to pay more fees, that cost is eventually passed down to the homebuyer. So these impact fees should not be a bargaining chip, but a data-driven assessment of unusual impacts with fees set commensurate with addressing those impacts.

Those fees should be spent only on addressing those impacts effectively. Using high fees to limit growth or waiving or reducing fees to incentivize certain developments only distorts the market and makes the affordability problem worse.

There is no silver bullet. The lack of a clear definition of affordable housing means it will always be a messy policy area. But we have decades of experience showing that interfering with housing markets makes homes less affordable, while working with the markets puts homes in the reach of ever more people. That is my definition of affordable housing policies.

Adrian Moore is vice president of policy at Reason Foundation. This article originally appeared in the Sarasota Observer.

Correction: This article originally referred to the Lincoln Institute of Land Policy as the Lincoln Land Institute.

The post Market-Driven Solutions Can Help Create Affordable Housing in Sarasota appeared first on Reason Foundation.

Now the question is whether this means housing is on a sustainable path or if we’re in another bubble of artificially high prices and demand that’s bound to burst.

Typically, we hear housing prices are going up and think that means recovery. But that assumes there is something inherently good about housing prices being high. Homeowners looking to sell always want higher prices, but homebuyers don’t. Beyond the consideration of housing sales, to understand whether booming home prices really are a sign of market recovery it is critical to consider why prices are increasing.

If the cheap mortgages provided by low interest rates – hat tip to outgoing Federal Reserve Chairman Ben Bernanke – were the source of increasing demand over the past few years then the growth in housing prices may be temporary. When interest rates return to natural levels, the artificially cheap mortgages will disappear too, reducing buyers’ purchasing power and driving down housing prices.

At the same time, as long as Southern California remains a desirable place to live and work, strong demand to live here could continue to drive home prices and sales up.

So how do we determine if Southern California is experiencing the birth of a new bubble or a true recovery? The ratio of home prices to rental costs in a given area is a measure often considered when studying housing bubbles. Rents are closely tied to market supply and demand and are rarely susceptible to bubbles, so they serve as a baseline in determining if housing prices are inflated.

Between 1991 and 1999, the Federal Housing Finance Agency reports that home prices in the Anaheim-Santa Ana-Irvine metropolitan statistical area increased 11 percent (unadjusted for inflation). During the same period, renters in the same area saw their housing costs grow 12 percent, according to the Bureau of Labor Statistics. Translation: the price of homes was not inflated during the 1990s in Orange County – and in fact might have been undervalued a bit.

The story quickly changed, though. From the first quarter of 2000 to the same time in 2006, housing prices in Orange County jumped 155 percent. In the greater Los Angeles area prices spiked 178 percent. But BLS rental prices rose just 38 percent. Translation: the price of homes was significantly inflated relative to rents, signaling the housing bubble.

The year 2006 marked the top of the housing bubble for Southern California, and prices quickly collapsed for more than three years, according to FHFA data. Both Orange County and Los Angeles saw prices stabilize in 2009, and from the summer of 2012 through 2013, prices steadily climbed back to 2004 levels.

The warning sign for today’s market is that housing prices are once again growing much faster than the BLS rental market trend. Entering 2014, homes in Orange County are 20 percent higher than rents by BLS standards. In Los Angeles, home prices are 6 percent higher than rents.

In its most recent Bubble Watch Report, housing price monitor Trulia.com named Orange County and Los Angeles as the two most overvalued housing markets in the United States. And with the Federal Reserve beginning to throttle back on its quantitative easing policy that helped create lower mortgage rates, the air could be let out of Southern California’s new housing bubble quickly.

If the data looks like a bubble and acts like the last bubble, it’s probably a bubble. Orange County homeowners and buyers should consider the recent housing market crash before jumping onto the real estate “recovery” bandwagon.

Anthony Randazzo is director of economic research at Reason Foundation. This column originally ran in The Orange County Register.

The post A Housing Bubble in Orange County? appeared first on Reason Foundation.

Despite its popularity among voters, the mortgage interest deduction has long been a target for elimination. Most recently, President Obama’s deficit reduction commission (Simpson-Bowles) had it in its sights. While there is general sentiment among voters that the mortgage interest deduction is a good idea, there is little understanding of its effects. In order to understand the potential effect of closing this loophole, this study examines specifically who benefits from the MID and how much they benefit. It also provides an estimate of how much tax rates could be reduced if the deduction were eliminated but revenues were held constant.

The post Unmasking the Mortgage Interest Deduction: Who Benefits and by How Much? 2013 Update appeared first on Reason Foundation.