The Ability of Small Suburban Municipalities to Limit Multifamily Housing

Monday - July 17 2023, 09:37 UTC - 1 year ago

Small suburban municipalities within the US are often preventing the addition of multifamily housing, an effective measure to reduce costs. Though it might seem like a minor impact, the resultant lack of extra housing in these areas can be felt locally. Studies have found similar results to those seen in the San Francisco Bay Area in metros nationwide.

The odd headlines about little towns in the San Francisco Bay Area just keep coming. First Woodside, a tiny suburb where several Silicon Valley CEOs have lived, tried to declare itself a mountain lion habitat to evade a new California law that enabled owners of single-family homes to subdivide their lots to create additional housing. Then wealthy Atherton, with a population of 7,000 and a median home sale price of US$7.5 million, tried to update its state-mandated housing plan. Until very recently, 100% of Atherton’s residentially zoned land allowed only single-family houses on large lots. When the City Council considered rezoning a handful of properties to allow townhouses, strenuous objections poured in from such notable local residents as basketball star Steph Curry and billionaire venture capitalist Marc Andreessen. A council member argued that the town should "express and explain the specialness of Atherton … to succeed in reducing [the state’s] expectations of us." .

On first glance, these might seem like extreme cases of privilege, oddities from quirky California. But as our new book on the politics of housing shows, the ability of small suburban municipalities to limit multifamily housing is more the rule than the exception.

Small governments’ big role in limiting housing .

Adding new housing is one of the few ways to limit the escalation of rents and home prices in high-cost metros like San Francisco, New York and Washington, D.C. Even new "luxury" apartments or condos can reduce competition for older units, taking some pressure off rents for people with lower incomes.

However, locating new apartments and townhomes near jobs can be difficult. It means building them in existing communities, where small local governments often constrain housing development.

To study the impact small governments’ opposition is having on housing, we used census tract data from California’s metro areas to examine multifamily housing development between the Census Bureau’s 2008-2012 American Community Survey and its 2014-2018 survey, a time when the housing market was rapidly recovering from the Great Recession.

Over that span, according to our statistical estimates, a typical neighborhood-size census tract located within a city of 100,000 residents saw the development of 46 more new multifamily units than an otherwise very similar census tract located within a smaller city of 30,000 residents. In other words, smaller cities, which typically are suburban in nature, added far fewer multifamily units.

An extra 46 new apartments might sound like a small number, but it can make a real difference at the neighborhood level. Nearly half the census tracts in our sample – each with around 1,200 to 8,000 residents – gained five or fewer multifamily units.

Cities across the US face similar struggles .

This pattern of slower rates of multifamily housing development in smaller jurisdictions is hardly unique to the Bay Area. When we examined census data from metro areas nationwide, we similarly found that neighborhoods in small jurisdictions gained fewer multifamily units. We took into account a lengthy list of economic, geographic and deregulatory factors, such as metro-area income levels, land costs, rules allowing housing development, and local rental prices.