Deregulate the Suburbs

T he Trump administration’s “Yes in My Back Yard” turn was interesting while it lasted.

Back in 2018, Ben Carson, who heads Trump’s Department of Housing and Urban Development (HUD), laid out a plan to replace the Obama administration’s “Affirmatively Furthering Fair Housing” rule. The Obama policy, which Carson had already suspended, required local governments to analyze the demographic compositions of their neighborhoods — a detailed, laborious process — and figure out ways to engineer more integration, unless they wanted to lose federal housing funds. The Carson plan, by contrast, harnessed the power of the free market. As Michael Tanner put it, Carson had “let it be known that he intends to link federal housing funds to local officials’ willingness to reduce regulations that restrict affordable housing. He wants to ensure that if mayors and governors continue to pander to wealthy special interests by enacting barriers to housing construction, Washington will no longer bail them out.”

But now the administration’s flirtations with the YIMBY crowd have come to an end. The president rejected the Carson plan, finding it didn’t do enough to preserve local control. The final HUD policy, released earlier this month, says a jurisdiction can “affirmatively further fair housing,” as required by the Fair Housing Act of 1968, simply by doing anything that “rationally relates” to that objective. Trump and Carson coauthored a recent Wall Street Journal op-ed vowing to “protect America’s suburbs.”

How should conservatives feel about all this? We can be glad that the federal government is butting out of state and local affairs. But we should also loathe the regulations that Carson was targeting before, and try to remove them at lower levels of government.

To put it bluntly, zoning regulations that aggressively restrict density, both in big cities and in the suburbs, are horrible. They make housing far more expensive than it needs to be. They limit what owners can build on their property. They make it hard for the working class (and in some cases even the middle class) to live in thriving places with lots of jobs, which misallocates the labor supply and hinders upward mobility. They prevent economically strong cities from growing. And they stunt economic growth in general: By one estimate, housing constraints “lowered aggregate US growth by 36 percent from 1964 to 2009.”

Without government intervention, the free market matches the supply of housing to the demand for it. When a city grows, it becomes profitable to build new neighborhoods and further develop existing lots — with a blend of single-family homes, apartments, etc., that fits local preferences and works within the constraints of the area’s geography. Onerous zoning rules prevent the market from adjusting this way, making existing property owners wealthy as their property values skyrocket but harming everyone else. Such regulations take a variety of forms, from height restrictions to growth boundaries to single-family zoning (which dictates that only single-family houses may be built, often across most of a jurisdiction’s land mass).

Curtailing these regulations would be an obvious good. But there are legitimate questions regarding the best way to do it. This passage from Trump and Carson’s op-ed illustrates the difficulty, if only by indiscriminately lumping together several very different things:

A once-unthinkable agenda, a relentless push for more high-density housing in single-family residential neighborhoods, has become the mainstream goal of the left. For eight years under Obama-Biden, HUD pressured Westchester County, N.Y., to change its zoning rules. Although Westchester was never found to have discriminated against anyone, HUD used the threat of withholding federal money to pressure it to raise property taxes and build nearly 11,000 low-income, high-density apartments. Other liberal-run cities and states have also taken up the cause. Minneapolis abolished single-family zoning this year — a few months before it voted to abolish its police force. Oregon outlawed single-family zoning last year. For the past three years, the state senator who represents Speaker Nancy Pelosi’s San Francisco has led a push to abolish single-family zoning in California.

In Westchester’s case, the federal government pushed the county to change its zoning rules and build a specific number of apartments. This was an affront to federalism and to the idea that market forces should decide how many apartments get built, even if you can argue that federal housing dollars shouldn’t go to places that deliberately make housing unaffordable.

Oregon’s case was quite different. It involved the state overriding local zoning policies. This does raise some federalism-adjacent issues, because local governments should generally have some leeway to make their own decisions. But the relationship between the states and their cities is fundamentally different from the relationship between the federal government and the states. The states are sovereign, and the federal government may interfere in their affairs only in certain specific circumstances; by contrast, local governments exist only because the states choose to recognize them and have only the powers that states choose to grant them. Given the warped incentives that local governments face here — residents want their property values to go up, while people who want to move in but can’t afford to don’t get a vote — there is a very good argument that states should be stepping in to kill the most harmful local housing policies.

Finally, that Trump and Carson would call out the city of Minneapolis is just . . . baffling. What could possibly be the problem with a city’s liberalizing its own damn zoning code to allow more types of housing to be built in more places?

Nothing, that’s what. More cities should follow Minneapolis’s lead and eliminate regulations that drive up housing prices. And now that the federal government is out of the game, states should think about stepping in when cities won’t, too.