Can’t Find a Home You Can Afford? Your Would-Be Neighbors May Be to Blame

Can’t Find a Home You Can Afford? Your Would-Be Neighbors May Be to Blame

What’s the real reason there aren’t enough homes on the market for desperate would-be homeowners? You could blame the recession that stopped building in its tracks, the nationwide construction worker shortage, or the rising prices of materials and land.

Or, there’s another possible culprit: the neighbors.

Adding more new homes to most markets would help to bring skyrocketing prices back down to Earth. But all over the nation, eager builders are being stymied by local zoning boards and commissions, which dictate what kinds of buildings can go up and where they can go. These groups are made up of locals who are elected or appointed to serve on them. And they’re typically influenced, and even swayed, by the preferences of existing, community residents.

Often, zoning rules are put in place to preserve the existing character of a neighborhood. Residents of a quaint suburb of modest, two-story homes rarely want to look out their windows to see manufacturing plants or gleaming high-rises next door. That’s why areas are usually zoned for residential, commercial, or industrial uses.

But zoning also constrains the supply of available housing in some cities, driving up prices to mind-boggling heights and forcing would-be residents to move farther and farther out.

“A lot of cities are reaching a crisis of affordability and supply of housing,” says Rachel Meltzer, an urban policy professor at The New School in New York City. “But cities can really use [zoning] to direct how housing is built.”

Just look at what happened in California, where median home prices are nearly $1 million in the heart of Silicon Valley’s San Jose and even software engineers are living in vans. The housing crisis led state Sen. Scott Wiener to introduce bill, SB 827, that would have allowed apartment and condo buildings up to five stories near public transit stops.

But neighborhood activists complained that municipalities should control the look and feel of their neighborhoods and that the new housing could push out longtime residents. So in April, Wiener’s colleagues killed the proposal.

“Historically, we’ve told each community, ‘Do what you want.’ We have allowed cities to impose dramatic zoning restrictions,” Wiener says. “I respect that people want their neighborhoods to stay the way they are … but if your kids can’t come back to their communities after college because there’s nowhere to live and there are people living in cars, that’s a problem.”

Stay out! How zoning has changed

It wasn’t always like this. Zoning was originally used mainly to separate residential neighborhoods from industrial ones. But in the past 30 years, communities have moved toward preventing new-home booms, says Dartmouth College economics professor Bill Fischel.

That’s because they often want to preserve the look of their neighborhoods, limit the amount of traffic, and not overtax social services such as public schools.

“People are being very vocal now about what they don’t want to see in their neighborhoods,” Fischel says.

Zoning can also be used to keep prospective home buyers and renters out. Some places have put subtle restrictions in place, insisting houses are built on certain size lots, meaning developers have to build bigger, more expensive houses on them—essentially dictating who can afford to live there.

Some states such as Massachusetts have enacted “anti-snob” laws, which require local governments to issue permits to developers if there wasn’t enough affordable housing in the area.

But to opponents of development, “neighborhood character” isn’t just a real estate buzzword. For nearly a decade, general contractor Nicholas Ferreri, 63, has been fighting a nine-story hotel going up a few feet away from the two-story house in Queens, NY, that he’s lived in for the past 29 years.

“It’s a horror,” says Ferreri, who claims the construction next door has damaged the foundation of his house. “It doesn’t do the neighborhood any favors.”

But since the area he lives in wasn’t zoned as strictly residential, there was little he could do when the developer bought several adjoining single-family homes on his block and tore them down to erect the hotel. Except file lawsuits and dig in for a battle.

“We were a quiet, little neighborhood not far from [New York City],” says Ferreri. “Now it’s chaos here.”

Zoning rules aren’t etched in stone

Zoning regulations carry a cost—one that is often passed on to the buyers of new homes. Government regulations at all levels made up 24.3% of the final price of a new single-family home, according to a 2016 National Association of Home Builders report. The median price of a newly constructed home was $312,400 in April—21.1% more than the $257,900 median price of an existing home.

Some places are trying to overhaul their zoning rules, in an effort to promote healthy growth.

A slimmed-down zoning rulebook is before politicians in Prince George’s County, MD, just outside Washington, DC. That county is trying to simplify what was once a 15-page document but over the years has grown into a 1,200-page tome with a patchwork of rules that often conflict.

“The old codes were written for a very different time,” says Derick Berlage, chief of countywide planning for the county.

Changes include faster approvals for smaller developments of up to 10 houses, so that developer dollars aren’t mired in red tape that can take up to three years to cut through.

“Our goal is to protect the public interest without chasing away good projects and needed investment,” Berlage says.

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