Research Desk
The Anti-Growth of Restrictive Zoning
The economic effects of the pandemic have caused particular stress in California, where home purchasing and renting prices are far above the national average, with recent data revealing that while nominal wages have grown by 14 percent since 2012, home prices have simultaneously risen by 68 percent (Source). Over half of households in California, an estimated 54 percent, spend more than one-third of their income on their housing costs, and identify themselves as ‘cost-burdened,’ and more than a quarter of these same households contribute over half of their income towards housing costs, placing them in the ‘highly cost-burdened’ category, and leaving them at risk for highly unstable housing situations.
As cities continue to re-evaluate their budgets to address the needs of both residents and businesses, an increasing number of local governments are looking towards rewriting their zoning plans as a way to lay the foundation for greater economic growth (Source 7). While zoning plans serve as the blueprint for many cities, balancing residential, commercial, and industrial designations in order to prioritize both liveability and economic vitality, many historical zoning plans have been formed with more politicized motivations.
The vast majority of residential zoned land across the Bay Area is zoned exclusively for single family development
These zoning practices have not only resulted in unequal renting and homeownership opportunities, but they have also resulted in the stunting of cities’ economic growth (Source 4). Studies in the past have shown how overly restrictive zoning plans have stymied economic trajectories by discouraging high-skilled workers from relocating, overburdening middle class families who forgo other spending in order to pay rent, and stifling the entrepreneurship potential of both local businesses and larger companies.
Past studies on the zoning restrictions of New York, San Francisco, and San Jose found that relaxing the three cities’ zoning levels to that of the average US city would lead to a 36.3 increase in the city’s economic aggregate output (Source 5, 8). Specifically, restrictive zoning plans drive up prices by restricting the level of commercial office spaces, decreasing the number of possible locations for light industrial businesses, and encouraging high business turnover due to uncontrolled rent prices (Source 9, 13).
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