Small Suburbs, Large Lots: How the Scale of Land-Use Regulation Affects Housing Affordability, Equity, and the Climate

Housing costs in major coastal metropolitan areas nationwide have skyrocketed, impacting people, the economy, and the environment. Landuse regulation, controlled primarily at the local level, plays a major role in determining housing production. In response to this mounting housing crisis, scholars, policymakers, and commentators are debating whether greater state involvement in local land-use decision-making is the best path forward. We argue here that there are good reasons to believe that continuing on the current path—with local control of land-use regulation as it is— will lead to persistent underproduction of housing. The benefits of housing production are primarily regional, including improved job markets, increased socioeconomic mobility, and reduced greenhouse gas emissions. But the costs associated with producing more housing are often local, felt at the neighborhood level. Local governments whose voters are impacted by the local negative impacts of housing and will usually have less incentive to consider those regional, and national, benefits and approve housing. Recent political science, planning, economics, and legal research shows that smaller local jurisdictions tend to produce less housing, and when political institutions decentralize control over housing to the sublocal (e.g., neighborhood) scale, less housing is approved. A central theory in academic research in land-use regulation and local government law has been the idea that competition among highly fragmented local governments can produce more efficient outcomes in public services and land-use regulation, even if there may be significant inequities across local jurisdictions in outcomes. Our analysis shows that this theory no longer accurately describes how fragmented local governance affects economic efficiency. Indeed, our analysis makes clear that fragmented local governance is both inequitable and inefficient, at least in the context of land-use regulation. Our analysis also raises questions about local government law scholarship contending that increased local governmental power can effectively address the dysfunctions of metropolitan areas in the United States. We present a range of policy proposals to address the problems we identify. First, greater state intervention in local land-use regulation is necessary. While a greater state role need not (and probably should not) entirely displace local control, it is essential to ensure that the larger-scale benefits of housing are appropriately considered. Second, we note that the highly fragmented local land-use regulatory system imposes challenges for housing production, in part, because variation among local regulatory practices creates barriers to entry for new housing across jurisdictions. Accordingly, we advocate for a state role to increase the standardization of local land-use regulatory tools as a key step to help advance greater housing production, even where local control is maintained