Experts Say Relaxed Zoning Rules Will Boost Housing Supply

The most effective way to increase the supply of housing would be to relax zoning rules, according to results from Zillow’s Home Price Expectations Survey. This survey questions housing experts on their expectations and solutions for the housing market. Experts also predict new construction will slow as home prices rise, resulting in fewer homeowners. The cost of building materials, labor, and land will slow new construction, according to the survey. On average, the experts predicted a 2.5% decrease in construction from December 2020 levels. More than half of the surveyed experts said relaxing zoning rules would increase housing supply.

When asked what could be done to increase housing supply, relaxing zoning rules was the top choice — 56% of panelists chose it as one of up to three main factors to help increase housing supply, and it was scored as the most effective single strategy. Previous Zillow research has found even a modest amount of upzoning in large metro areas could add 3.3 million homes to the U.S. housing stock, creating room for more than half of the missing households since the Great Recession — a major reason for today’s frenzied housing demand. A majority (57%) of homeowners previously surveyed by Zillow previously said they believe they and others should be able to add additional housing on their property, and 30% said they would be willing to invest money to create housing on their own property, if allowed.

Other panelist recommendations for increasing housing supply included easing the land subdivision process, relaxing local review regulations for projects of a certain size, accelerating the adoption of new construction technologies and increasing training to build up the construction workforce. 

Of course, new construction isn’t the only path to more inventory — a majority of the same panel, when surveyed in Q1 2021, said they expect housing inventory to begin growing again this year, with an increase in existing homes being listed for sale being the most likely catalyst for inventory growth. Previous Zillow research has shown widespread coronavirus vaccine distribution could make some 14 million households newly comfortable moving that don’t necessarily feel that way now. 

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