The decline in housing affordability in the US combined with metropolitan segregation has encouraged a bourgeoning interest in identifying strategies to reduce living costs while ensuring access to quality public services. One strategy focuses on reforming land-use regulations—usually managed by local governments.
Those advocating for change argue that restrictive zoning codes, such as those that limit construction to single-family homes, are widespread and were introduced partly to enforce racial segregation. They emphasize that comparative analyses demonstrate correlations between zoning restrictions, less housing construction, and higher housing costs. As such, they call for regulatory liberalization. This has resulted in rezoning in cities like Minneapolis, Minnesota, and states like California.
Despite this interest in leveraging zoning reforms to spur construction and increase affordability, there has been little research until recently on the outcomes of these regulatory changes. But a budding realm of research is exploring regulatory changes—both those that increase and reduce allowed density—and their effects. This paper examines the body of research that has studied outcomes of proactive rezoning efforts that public officials have used to spur real-estate market responses. These efforts are those most relevant to policymakers seeking to intervene through planning.
Why this matters
Understanding variations in how reforms produce outcomes makes all the difference in determining policy effectiveness. This review examines studies that have teased out downstream effects of proactive zoning. Though the rezonings evaluated vary in form and areas impacted (e.g., in terms of housing types allowed and local real estate markets), this research nevertheless represents a substantial and cohesive body of work. These studies provide new information about zoning’s impacts, beyond the comparisons of static zoning policies in previous research.
How we did it
I conducted this review by examining all peer-reviewed empirical English-language research on housing-related land-use regulatory change that I could identify as of spring 2023. I used keyword searches to create a database of articles and working papers, then examined references to fill gaps. I classified research based on areas of study (effects on construction, costs, and demographics) and analyzed based on context (location, real estate market, and rezoning scale). I included all with relevant findings.
These studies generally use quantitative methods, though some use qualitative approaches. Most explore “upzoning”—increasing allowed development and reducing “restrictiveness,” by, for example, authorizing larger buildings. A few examine “downzoning,” which is the opposite. For perspective, the review includes descriptions of a selection of highly referenced articles detailing static zoning comparisons.
What we found
I develop a framework for theorizing how rezonings influence housing-related outcomes, showing the possible, and sometimes contradictory, avenues for reforms to influence housing markets. While the studies reviewed vary in the degree to which they disentangle rezoning’s effects from why certain areas were selected for changes (e.g., neighborhood support or economic development potential), they nonetheless provide key data on how land-use rules influence the built environment. The below summary of research findings related to zoning change impacts explores changes based on three indicators: levels of housing production, housing prices, and neighborhood demographics.
Levels of housing production:
- Short-term: Contrasting evidence on outcomes. Some find no uptick in construction in upzoned areas; others show significant increases, especially among accessory dwelling units and units for higher-income residents.
- Long-term: Increase in housing construction in upzoned areas. Initial evidence that this construction does not substitute for construction elsewhere, though the magnitude of increase is limited compared to regional demand. Construction is parcel-dependent and based on potential value increase. Downzoning reduces housing production and density.
- Short-term: Most researchers find increased housing costs that parallel increased construction allowances, with a minority finding no change or price decreases. Underdeveloped properties are more likely to increase in value, but effects may depend on neighborhood demographics and walkability.
- Long-term: Upzoned parcels likely retain higher values, responding to increased development rights. There is some evidence that increased values are associated with more units and lower rents at the upzoned, municipal, and regional scales, but more research is needed to substantiate this claim. Downzoning may increase housing prices.
- Short-term: There is preliminary evidence that upzoning reduces racial integration, but the causal chain is difficult to establish. Speculation on upzoned real estate may increase the share of non-Hispanic white people in a community, whle increasing moving rates, especially among people of color.
- Long-term: Some evidence that communities that upzone become more racially diverse over several decades. Downzoning may provoke the opposite reaction, reduce population densities, and increase incomes in impacted areas.
Overall, this review shows that upzoned areas may or may not experience increased housing construction over the short term but likely experience small increases over the long term compared to areas without such changes. However, most studies included in this review examine relatively small upzonings. Researchers largely conclude that reducing development constraints increases property values, particularly for parcels ripe for development. Downzoning policies are largely associated with reduced construction and less affordability. I identify mixed evidence for rezoning’s impacts on the demographic compositions of affected communities. Effects are market-dependent and vary by reform scale. Early data suggests that upzonings generate positive effects on regional construction and affordability, but more research is needed.