As the cost of housing has increased dramatically over the last decade, many states and cities have changed or considered changing their zoning rules to allow higher-density development in the hopes of bringing down costs by increasing supply. In doing so they’ve faced a fundamental question: Does it work?
A recent report from the Urban Institute suggests that it can. Evidence from New York and Philadelphia suggests that “upzoning,” or changing a zoning classification to allow bigger or denser projects, can result in more housing construction. In some cases, the results are significant; in others, modest or negligible.
- In New York, seven neighborhood-scale upzonings, as opposed to site-specific changes, had a major impact. They resulted in 4,000 additional units after four years compared with similar properties that hadn’t been upzoned.
- In Philadelphia, a rewrite of the citywide zoning code and gradual changes to neighborhood zoning maps resulted in more modest changes. There was no spike in overall development activity on upzoned blocks versus blocks that hadn’t been upzoned, though upzoned areas did tend to have a higher number of housing units per project.
- The researchers recommend that policymakers proactively decide which neighborhoods should support more housing construction and upzone them accordingly, rather than waiting for developers to act on a property-by-property basis.
- They caution, too, that upzoning can take years to result in substantially more housing construction, and the effect on housing prices can be tough to track. There have been some recent examples of cities seeing rents decline after permitting lots of housing, notably Austin. Previous research from the Urban Institute has suggested that zoning changes overall have very small impacts on housing supply and costs.
