Can Looser Zoning Rules Help the Housing Shortage? Biden Thinks So

President Biden’s infrastructure plan will set aside $5 billion for a grant program aimed at tackling “exclusionary” zoning laws that inflate housing costs. Economists and urbanists say loosening zoning and land-use restrictions can address a key hurdle to developing more affordable housing. These zoning laws inflate housing and construction costs, resulting in families locked out of areas with more opportunities, says the Wall Street Journal. Housing shortages are not exclusive to dense cities such as Boston and San Francisco, but metros such as Grand Rapids, Mich. and Austin, Texas. Housing shortages accelerated as a result of record-low mortgage rates and the pandemic.

“There are so many decisions made at the local level that can impede the development of affordable housing that federal policy makers should push communities to reorganize their approach to development from the ground up,” wrote Jim Parrott and Mark Zandi in a report last week for the Urban Institute, a Washington-based research group. Mr. Parrott is a former Obama administration housing adviser, and Mr. Zandi is the chief economist of Moody’s Analytics.

Some economists and urbanists say easing zoning and land-use restrictions would address a key barrier to expanding the supply of dwellings available for rent or sale, which is the tightest in 30 years. Local regulations on environmental protection and road, school and sewer capacity often have strong support among residents, who generally want to keep property values high.

Joseph Gyourko, a real-estate and finance professor at the University of Pennsylvania’s Wharton School, said the Biden administration’s proposed grant program would help compensate for the costs and burdens of new construction, such as increased congestion, that can stymie affordable housing projects.

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