Correction: This explainer has been updated to reflect new estimates of the cost of regulations on housing construction and clarify that these estimates incorporate the cost of regulations at all levels of government, including local land use and zoning.
The United States, as of 2021, had an estimated “underbuilding” deficit of 5.5 to 6.8 million housing units. This shortfall has grown by 52% since 2018. The number of entry level homes (less than 1,400 square feet) built each year has remained roughly the same since the 1970s, despite the U.S. population increasing from 203 million in 1970 to 329 million in 2020. In 2022, it is estimated that housing inventory will further decline. Land-use regulations and zoning are two key factors limiting housing production. In fact, regulations at all levels of government, including local land use and zoning, account for an estimated 24% of the total construction costs for single-family homes and 40% for multifamily homes. To compound the issue, regulations can create significant bottlenecks in the housing construction pipeline.
At the outset of a project, a developer goes through the site assessment process. This process includes evaluating the local government’s comprehensive plan and reviewing the land-use regulations such as zoning. This explainer seeks to provide some basic information on how zoning affects housing supply—first describing local governments’ comprehensive plans and, second, zoning and some of its critical elements.
Local governments use comprehensive plans to articulate their desired development and activities. Increasingly, they incorporate specific goals related to environmental and social sustainability elements, including water and land conservation and inclusive housing.
Many states require what comprehensive plans should contain and how often the plans should be updated. Some jurisdictions update their plan every 5-10 years, but it is not unheard of for a jurisdiction to leave regulations in place for decades. Comprehensive plans serve to set local goals for land-use management and economic growth, but they can also be obstacles to meeting a community’s changing needs and desires. Zoning regulations can be one of the most significant land-use elements related to comprehensive plans.
Zoning is a means of regulating site usage, most often categorizing areas as 1) special use districts, including parks, government buildings and schools; 2) residential; 3) industrial; 4) commercial; and, occasionally, 5) agriculture. These categories are further refined into sub-categories, such as heavy or light industry, types of retail, single-family homes, townhouses or multifamily buildings for purchase or for rent.
Zoning was originally envisioned to separate noxious industry from residential areas, decrease urban crowding, and create middle-class homes in locations outside of cities. These laws and regulations were also used to restrict neighborhoods by race and ethnicity—with Baltimore being one of the earliest examples. While such overt use of race in land use was effectively ended in 1917 when the Supreme Court struck down a racial residence ordinance adopted by Louisville, KY, research shows that discriminatory zoning and land use decisions continued to drive segregation and racial inequities.
Particularly in the post-WWII period, local governments set aside the largest portion of zoned residential land for single-family homes, often with the federal government’s encouragement. In fact, it is estimated that 75% of land in many American cities is zoned for single-family use only. Cities as diverse as Charlotte, NC, and San Jose, CA, zone 84% to 94% of city land, respectively, for detached, single-family homes.
Relatively smaller set-asides for multifamily housing were often placed exclusively in commercially-zoned areas. Black neighborhoods, in particular, were targeted for both higher-density and industrial-use zoning.
Typically, each zoning use category has specific rules including, but not limited, to minimum lot sizes, floor area ratios, setbacks, parking, height, and occupancy regulations:
- Minimum lot sizes – Localities regulate the minimum size a lot must be for development. Many single-family lots are designated to be a minimum of 1-acre. For example, Desegregate Connecticut found that 81% of residential land statewide is designated single-family, with 49% requiring at least 2-acre minimum lots. These large lots drive up housing prices, and the resulting low-density populations preclude mass transit, making residents car dependent.
- Floor area ratios (FAR) — Sometimes referred to as “lot coverage,” FAR is the ratio of the building’s footprint or floor area to the size of the buildable section of the lot. This restricts the amount of space a building can occupy a lot.
- Setbacks — A setback describes the amount of land that must be between the periphery of the lot and the edge of the building. This presents a scenario where land-use regulations may state that a single-family house must be sited on a minimum 1-acre lot, with a FAR of 50% and have a 15-foot setback, that is the building must be 15 feet from the edge of the lot.
- Height restrictions — Buildings are subject to height restrictions and the American Planning Association notes that most communities have height restrictions applicable to all zoning categories. An oft-cited reason is to preserve the character of a neighborhood or city, or because of flight paths—Washington, D.C., being one well-known example. To spur development, in 2019, Cleveland increased its height restrictions downtown.
- Parking ratios — Parking regulations provide guidance on the amount of parking a building should have depending on the occupancy of the building, as approved by local ordinance. For example, to develop a multifamily project, a developer may be required to provide two parking spaces per housing unit. This type of regulation may offer no flexibility to consider mass transit availability, or the target housing market’s automobile ownership rate. Requiring minimum parking requirements removes land from actual housing. The Brookings Institution estimates that constructing a parking structure results in $50,000 average cost per housing unit.
Since zoning became widespread in the United States, local governments have set aside a significant amount of land for single-family houses, often separating these lots from those where the construction of multifamily rental homes is permitted. This practice has significant implications for housing supply, housing affordability, and healthy communities.
- Available land for multifamily homes is not as plentiful and is likely to be less connected to the most economically productive areas of localities. Residents in these areas tend to have less access to quality local services and amenities.
- The scarcity of these units drives up their rental prices, which in turn consumes a greater portion of household income and then requires renters to allocate a significant proportion of their income to transportation. This limits the ability of residents to build savings.
- Zoning and land use decisions, directly and indirectly, have helped perpetuate socioeconomic, racial, and ethnic segregation. African Americans, Latinos, and lower-income households are more likely to live in rental units, especially multifamily homes, located in communities with fewer jobs and amenities and higher rates of poverty, crime, and pollution.
Many comprehensive plans now have a stated aim of increasing the supply of affordable housing and to encourage greater diversity, such as Wheat Ridge, CO, outside of Denver, and Maricopa County, AZ. However, without changing zoning regulations, such efforts can be severely hindered. Recognizing these impacts, some state and local governments have initiated a range of strategies to address land-use and zoning barriers to housing development:
- Minneapolis, MN eliminated single-family zoning and off-street parking minimums in 2019 to incentivize mixed use development, affordable housing, and transit-oriented development
- Cincinnati, OH reduced the size of minimum lots and reduced setbacks in older neighborhoods, to encourage infill development
- Grand Rapids, MI reduced parking requirements, allowed accessory dwelling units by right in all zones, and reduced minimum lot sizes, among other changes, starting in 2015 with a community planning initiative.
Such efforts provide lessons for other communities and a guide for federal policymakers on best practices to help incentivize and promote development.
For more BPC work on zoning and land-use regulations:
Support Research Like This
With your support, BPC can continue to fund important research like this by combining the best ideas from both parties to promote health, security, and opportunity for all Americans.Donate Now