A new study by UCLA Professor Shane Phillips, Build the “zoning buffer”: use large upstream areas to increase housing capacity without increasing land valuesemphasizes the need to maintain sufficient zoning stamp—the gap between the existing housing stock and the maximum number of units permitted by current zoning—to increase housing affordability.
Phillips’ research indicates that urban housing prices have risen as cities have shrunk, reducing supply and driving the price of suitable packages to fills. For example, in 1960, Los Angeles had the zoning capacity to expand its housing stock by 300%; By 1980 this had fallen to 34%, declining to just 7% by 2016, as shown below. Downzoning has not stopped population or employment growth, but it has reduced opportunities for additional housing. Over time, this shortage created our current housing crisis.
To combat this, many cities are zoning to allow for higher density housing, usually in targeted locations such as along thoroughfares or near transit stations. While this strategy may increase housing production in these areas, it may lead to higher land prices that erode the affordability of new homes. This study examines how zoning buffer affects land values and housing production and affordability.
When zoning buffers are small, land with redevelopment potential remains scarce, and small-scale rezoning will result in land value increases that are largely captured by existing landowners. Larger-scale zoning can create a large zoning buffer, reducing the scarcity of land with redevelopment potential, so landlords don’t have the clout to demand more from a developer than a buyer of typical house. This allows developers to replace single-family homes with multiplexes, townhouses and other types of multi-family housing, resulting in more moderately priced development and lower house prices.
Based on this analysis, Phillips argues that local or regional housing affordability can only be achieved through “broad zoning”, defined as a significant increase in density on 25% to 50% of the land in an area. .
This study contributes to our understanding of why urban housing prices are rising and how communities can increase affordability. It emphasizes the importance of scale—the need to zone enough urban land—to create a large, competitive market for plots ready for moderately priced infill development.