Perched at the mouth of the Chesapeake Bay, the city of Norfolk, Virginia, has long relied on its proximity to water as a source of economic strength, from its history as a key port in the 18th and 19th centuries to its current role as the site of the world’s largest naval station. Miles of beaches and a downtown riverfront trail draw tourists and residents alike. But the location of this low-lying coastal city makes it especially vulnerable to the effects of climate change, including sea-level rise, flooding, and increasingly powerful and frequent coastal storms. 

To address these risks, leaders in Norfolk have put climate adaptation at the center of their long-term planning. In 2018, the city revised its zoning to codify resilience standards and nudge new development toward higher ground. A new study by Smart Growth America (SGA) will examine the economic impacts of that zoning change, including its effects on the municipal budget and projected effects on property values. The research—which will be led by Katharine Burgess, vice president of land use and development, and supported by the Lincoln Institute—will also include a national scan to identify and categorize other resilience zoning initiatives and develop a list of complementary policy approaches, addressing topics such as anti-displacement, housing affordability, and environmental justice. The team hopes those findings will serve as a resource for policy makers in cities across the United States. 

The study by SGA is one of seven projects the Lincoln Institute is supporting through a call for research on the intersection of land-based climate change adaptation, property values, and municipal finance. Over the next year, each project will explore the fiscal impacts that various climate adaptation approaches—such as green infrastructure, floodplain buyouts, and rezoning—have on the places that implement such approaches. 

“The findings of these research projects will illuminate fiscal dimensions of land-based adaptation measures and help communities identify more effective and equitable strategies to advance their climate goals,” said Amy Cotter, director of climate strategies at the Lincoln Institute. “We hope this research will help inform and change public policy, and ultimately change practice.” 

In addition to SGA’s study of resilience zoning in Norfolk, the following projects will receive support from the Lincoln Institute: 

• Erwin van der Krabben, professor of planning and property development at Radboud University in the Netherlands, will lead a team studying the current and prospective role of land-based financing mechanisms in urban climate adaptation, comparing cases from the United States, the United Kingdom, and the Netherlands. 
• Researchers from the South Africa–based consulting firm PDG will investigate the effect of stormwater infrastructure projects on property values and municipal fiscal health in Cape Town, which experiences persistent flooding exacerbated by climate change. 
• Resources for the Future will examine the effects of eliminating federal incentives for development in U.S. coastal areas at risk from climate change, analyzing the long-term effects of the Coastal Barrier Resources Act of 1982 and quantifying the program’s net impact on local property tax revenues. 
• A team from the Universidad de Costa Rica will conduct a comparison of the property value impact of municipal and national land use regulations for flood mitigation in the Quebrada Seca-Río Bermúdez watershed, located in the Heredia Metropolitan Area, using a dataset of 1,697 real estate listings and simulations of recent flood events. 
• Texas A&M University researchers will examine the effects of floodplain buyouts on nearby tax-assessed property values in the Houston metro area, with the goal of offering suggestions for municipalities on the appropriate scale, pace, and clustering of buyouts to minimize negative impacts on neighboring property values. 
• Jeffrey Cohen, professor of finance at the University of Connecticut and research fellow at the Federal Reserve’s Institute for Economic Equity, is leading a team that will study the current and projected impacts of green infrastructure on housing prices in shoreline areas of New Haven, Connecticut, and consider the potential of property assessment as a tool to encourage and finance additional green infrastructure projects. 

To learn more about current Lincoln Institute requests for proposals, fellowships, and other research opportunities, visit our research page. 

Katharine Wroth is the editor of Land Lines. 

Image: Low-lying Norfolk, Virginia, is taking steps to build climate resilience. Credit: Jupiterimages via Stockbyte/Getty Images.

When Jacob Gonzalez moved from Seattle back to his hometown of Pasco, Washington, to work for the region’s Council of Governments in 2013, his housing needs were both seemingly straightforward and surprisingly difficult to address. “All I wanted was a tiny apartment for me and my CDs. I didn’t even have a pet,” he explains. “But there weren’t many apartments, and I wasn’t going to stress myself out by paying for space I either didn’t need or couldn’t afford, or by paying for an older apartment that didn’t have what I wanted it to have.” So he moved in with his parents. 

Gonzalez joined the City of Pasco as a planner in 2018 and is now the planning manager for the city’s Community and Economic Development department. These days, he rents a small cottage a few miles from his childhood home. He recognizes that his option to fall back on family for temporary housing is a luxury most of his fellow residents of Pasco do not have. “Thanks to my parents, I had choices. Maybe I didn’t like my choices, but at least I had them, whereas a lot of our community members don’t have that flexibility. For many of them, housing is a challenge on a month-to-month basis.” 
 
Like virtually every community in the United States, Pasco is facing a significant shortage of affordable housing. Located on the rich soils of the Columbia Basin in southeastern Washington, Pasco is a city of about 80,000 residents and is part of the Tri-Cities, a regional hub that includes the cities of Kennewick and Richland and is collectively home to about 300,000 people. Established by the Northern Pacific Railway Company in the late nineteenth century, Pasco is largely agricultural. For many decades it has been considered an affordable place to buy a home in a region with high housing costs. 

Until a few years ago, Pasco could accommodate those buyers with housing stock that is 70 percent detached single-family and mostly built prior to 2000. However, Pasco has grown significantly in the past two decades and is now one of the fastest-growing cities in Washington. Today, Pasco is home to a relatively young and demographically diverse population; the median age in the city is 29, compared to 38 nationally, and more than half of residents identify as Hispanic or Latino. The rapid population growth is due at least in part to Pasco’s rapidly diversifying economy, which has expanded beyond its agricultural base to include job opportunities in public health and local government services. 

As the population has grown, land and housing costs have risen. In Pasco, the median home price has increased about 60 percent in less than five years, from $237,600 in 2017 to $379,000 in 2021. That’s in line with an average increase of 66 percent across Washington during the same time, but dramatically higher than the 21 percent national increase. According to Pasco’s 2018–2038 Comprehensive Plan, more than 15,000 additional units of housing will be required by 2038 to accommodate the projected 48,000 new residents. At its current rate of production, city staff estimate, Pasco will fall about 5,000 units short of that target.  

Pasco is not alone in grappling with housing issues related to rapid growth, says Martha Galvez, executive director of the Housing Solutions Lab at New York University’s Furman Center for Real Estate and Urban Policy. “Growth has been a really common theme among small and medium-sized cities,” Galvez notes. “Some of that growth is due to people migrating out of the big, hot coastal cities to smaller places where you can get more space for your dollar. And some of it is because these places are gaining jobs and attracting industries.” That’s the case in Pasco, where Amazon is building two warehouses, each more than one million square feet, and Darigold recently announced plans to build North America’s largest whey processing center. 

Broadly speaking, the shortage of affordable housing options plaguing nearly every community in America is at least partially the result of a significant decline in the production of single-family homes beginning in the mid-2000s, combined with stagnant wages and rising land and housing costs. The shortage has only worsened during the COVID-19 pandemic: low interest rates have stoked demand just as construction costs have increased due to labor and material shortages and supply chain challenges.  

Across the country, places like Pasco are exploring how land use decisions can help address the housing affordability crisis. Last year, Gonzalez and his colleagues participated in the Housing Solutions Workshop run by the Furman Center and Abt Associates, in partnership with the Lincoln Institute. Designed to help leaders from small and midsize communities develop and implement balanced and comprehensive local housing strategies, the program invited applications from communities with populations between 50,000 and 500,000, and selected participants through a competitive national process. Gonzalez says the workshop helped him and his colleagues better identify barriers to increasing the availability of affordable housing in Pasco and meaningful actions they could take. 

It was good timing. Two years earlier, the state of Washington had passed House Bill 1923, which offers communities the opportunity to qualify for planning grant assistance in exchange for a range of actions that promote urban density, such as authorizing multifamily zoning in areas previously zoned for single-family homes and approving smaller lot sizes. That legislation created an opportunity for Gonzalez and his colleagues. 

“We could apply for a grant, so that’s always appealing,” says Gonzalez. “And the legislation included a list of proposed code amendments we could make. So my department recommended three code amendments to the city council and the mayor.” 

In January of this year, the city of Pasco became one of 52 communities across Washington that have adopted some of the code amendments proposed in HB 1923. By doing so, Pasco is reforming the city’s approach to land use and demonstrating the critical role local governments can play in promoting housing affordability. 

Zoning for All 

Pasco’s historic approach to land use reflects its longstanding identity as a place where homeownership is affordable to people priced out of the region’s better-known cities. Because of this cultural expectation of affordable homeownership, the city’s primary focus has been ensuring a supply of single-family homes, and that was reflected in its zoning. Prior to the city council vote, 84 percent of the land that was zoned residential in Pasco was restricted to single-family homes. 

The result of zoning like this, which is common in communities across the country, can be not only a housing shortage, but also numerous missed opportunities for a more affordable, diverse range of housing options, says Michael Andersen, a senior housing researcher at the Sightline Institute, which researches economic and policy issues in the Pacific Northwest. 

“The effect of only allowing multifamily housing in such a small area is that you constrain the volume of lots that could be plausibly built on,” Andersen says. “And you then have to wait until whoever owns one of those lots is interested in doing something with it. Part of the way to increase the number of homes being built is to increase the odds on any given property that it is time to do something on that land. In hockey they say that you miss 100 percent of the shots you don’t take. With this zoning, Pasco decided not to take 84 percent of the shots.” 

Gonzalez and his colleagues understood this, so they worked with the city council to revise the city’s housing policies. Under an amendment to the city’s municipal code adopted in late January, 68 percent of land that is zoned residential will now be eligible for some forms of multifamily housing, including duplexes, triplexes, and, in some instances, small apartment buildings oriented around a courtyard. This represents a roughly fourfold increase in land available for multifamily properties, and allows for the development of “missing middle” housing—properties that occupy the middle of the housing spectrum, between detached single-family homes and massive multifamily developments. Missing middle housing usually includes two to twelve units, and can be built in a neighborhood of single-family homes without seeming out of place or altering the feel of the area. 

Creating opportunities for missing middle housing offers numerous benefits. For starters, missing middle housing can accommodate developers who would like to build properties other than detached single-family homes, and residents who would like to live in a smaller unit. It can also increase the availability of affordable housing, says Andersen. “Depending on the style, the homes may share walls or wood frames or exteriors, which not only reduces the cost of building missing middle housing but also helps to keep down the price of existing housing by providing affordable alternatives. Additionally, missing middle units can help tip a neighborhood into a level that it can support a bus line or a small commercial hub with a little corner grocery store, a coffee shop, something like that, which makes for a more walkable community and is also good for local economic development and social interactions.” 

While not everyone in Pasco supports the idea of denser housing, Gonzalez is confident that the community benefits from at least having the option to build it. “Our community is growing very quickly. People are moving here in their twenties and maybe they don’t want to buy a home, and we also have people who are older and want to age here. They can’t do that if the only option is to buy a detached single-family home,” he says. “That’s why we need a lot of everything—detached homes, townhomes, apartments—because, as a municipality, we have to plan for the needs of the community, and not just for preferences. Sure, there may be a preference for a big house on a large lot, but that should not preclude us from removing barriers and restrictive policies to make other forms of housing more attainable.” 

In addition to accommodating missing middle housing, the Pasco City Council passed a second code amendment that allows for “lot size averaging,” which allows individual lots in a multiparcel housing development to fall below the city’s minimum lot size requirements as long as the project’s average lot size can meet the requirement. In Pasco, where residential lots tend to be quite large—an average of 13,068 square feet, compared to 6,345 square feet in the western United States and 8,177 square feet nationally—allowing for smaller lots is a smart idea, says Andersen. 

“When you’re talking about lot sizes, you’re effectively telling residents that in order to live here you have to purchase or rent a certain amount of land,” says Andersen. “When the lot sizes are as large as Pasco’s, that’s a lot of land, and that cost can be a barrier to entry.” Larger lots also typically mean increased infrastructure costs. According to research by the Victoria Transport Policy Institute, urban sprawl can increase the cost of providing public services and infrastructure by 10 percent to 40 percent. As Andersen explains, that can lead to increased housing costs. 

The code amendments are also designed to encourage the creation of housing that increases access to hospitals, schools, major transportation routes, parks, and other critical services by allowing for slightly more flexibility. As Gonzalez explains, the emphasis on access stems from the fact that transportation costs are high in Pasco. According to the Center for Neighborhood Technology’s Housing and Transportation Affordability Index, Pasco residents spend 24 percent of their income on transportation and have the third-largest transportation costs as a percentage of total household costs among the state’s 20 largest cities (CNT 2022). By increasing access, the planning staff hopes to reduce transportation costs, in turn reducing overall household costs. 

To further reduce barriers to creating more housing, the Pasco City Council passed a third code amendment that authorizes the creation of Accessory Dwelling Units (ADUs) on all residential parcels that contain a single-family home. The amendment allows the ADU to be either attached—to a garage, for example—or freestanding, does not include a minimum parking requirement, and does not require the owner of the ADU to occupy the primary residence. While there is a maximum allowable size—the smaller of either 1,000 square feet or 55 percent of the primary dwelling—there is no minimum size requirement, nor are there design requirements beyond ensuring that the ADU complements the home. 

“We don’t want to overburden people or unnecessarily complicate the process,” explains Gonzalez. “That’s why we ultimately decided not to require parking. If we did, there would be many fewer lots that could feasibly have an ADU because the only place to put parking would be in the front yard. We wanted to avoid a situation in which our policies technically allow something, but in practice make it almost impossible to do.” 

Pursuing a Balanced, Comprehensive Strategy 

Pasco’s rezoning efforts are just one of the steps the city is taking to address housing affordability. The city also offers a down payment assistance program to first-time homebuyers, is working to identify opportunities to partner with local and regional stakeholders to better address housing needs, and is about to undertake a Housing Action Plan. Officials in Pasco are also exploring tax incentives and taking advantage of House Bill 1406, a revenue-sharing program for local governments that allows a percentage of local sales and use taxes to be credited against the state sales tax for housing investments. 

Still, Pasco aims to do more, says Gonzalez: “There was a lot of focus in the workshop on taking a balanced housing approach that addresses all the different aspects of our housing needs. We aspire toward it, but we aren’t there yet.” 

That idea of a balanced and comprehensive strategy is critical to effectively tackling housing issues, says Ingrid Gould Ellen, a professor of Urban Policy and Planning at New York University and the faculty director for the Furman Center. “There is no magic bullet to solve a jurisdiction’s housing challenges,” says Ellen, who coauthored Through the Roof: What Communities Can Do About the High Cost of Rental Housing in America, a Lincoln Institute Policy Focus Report (Ellen, Lubell, and Willis 2021). “Housing problems are complex and usually touch on a lot of different functions and policies that implicate different parts of local government, including the housing department, the planning department, and the buildings and finance departments.” 

Given the multifaceted nature of housing shortages, Ellen encourages local governments to adopt comprehensive strategies that use the full set of tools available to the various departments. As she explains, “localities that do not adopt a comprehensive approach run the risk of creating well-intentioned, well-designed housing plans that could be thwarted by, say, zoning codes that don’t allow for certain types of construction, or a tax code that disincentivizes the development of rental housing when it is rental housing you’re trying to promote through subsidies.” In taking a more comprehensive approach, local governments can take full advantage of their entire suite of resources, and can also align agencies that may otherwise remain siloed and at risk of unintentionally undermining each other.  

In addition to a housing plan that is comprehensive, Ellen advocates for one that is balanced, by which she means a plan that addresses a range of housing issues rather than a single barrier. “Partially, that’s a political issue,” she explains. “If you focus on a range of goals, then you are more likely to gain political acceptance and support.” She says a balanced plan is more likely to succeed by recognizing and addressing the multidimensional nature of housing challenges.  

In Through the Roof, Ellen and her coauthors Jeffrey Lubell and Mark A. Willis provide a framework for a balanced and comprehensive housing strategy that centers on advancing four broad goals (see figure 1). 

“This four-part framework for a balanced and comprehensive housing strategy groups individual policies into broader categories, so communities can assess where there are gaps in their local housing strategy and work to close them,” says Adam Langley, associate director of U.S. and Canadian programs at the Lincoln Institute. “The number of local housing programs and their scope often matters less than ensuring that a community has implemented at least one tool to address each part of the framework—that’s why it’s so important to consider comprehensiveness.” 

This framework is central to Local Housing Solutions, a joint initiative of the Furman Center and Abt Associates that provides actionable resources and step-by-step guidance to help cities develop, implement, and monitor housing strategies. With an emphasis on affordability and equity, the program is specifically targeted to local governments, both because their role is frequently overlooked in discussions of housing challenges, and because of their significant and unique power to address housing problems. 

“While all levels of government are important, local governments are particularly well-positioned to quarterback their local housing strategies,” Ellen explains, citing the local nature of the housing market and the power local governments have over the most critical tools affecting housing policy, including land use, building codes, permitting, and, at least to some degree, property taxes. “Even though the majority of the funding is coming from the federal government, and to a lesser degree the state government, it’s not just spending that matters. Those key decisions over how much housing can be built, what kind of housing can be built, and who can live where are really important and happen at the local level.” 

The Furman Center launched the Housing Solutions Workshop to support local governments as they make those decisions. In addition to Pasco, the 2021 cohort included teams of five to six senior leaders from Bethlehem, Pennsylvania; the City of Bozeman and Gallatin County, Montana; Huntsville, Alabama; and the City and County of Kalamazoo, Michigan. 

“In the workshop, our delegation kept finding ourselves talking about the fact that we have all these great policies, yet our development standards don’t get us there,” Gonzalez says. “The more we talked—and continue to talk—about it, the more I understand the importance of focusing on the implementation piece, which is the most difficult part. It’s especially true in a place like Pasco, where we have had years of rapid growth, years of not producing enough housing, and years of not having the right regulatory structure in place. I’m seeing now that we really have to dive into our objectives and measurements and strategies. We have to ask ourselves if our strategies are feasible. Are they practical and relevant for Pasco or are we just copying and pasting a policy from another city?”  

For Gonzalez, that shift in focus toward implementation is exemplified in the city’s recent passage of the three code amendments. “We didn’t make any mandates. We aren’t requiring property owners to build these types of housing. We are just making it an option, whereas two weeks ago it wasn’t an option. And by doing so, not only do we save builders and residents from the headache of not being able to do what they want to do, but we also streamline the permitting process, which is often a significant barrier, because we’ve made it so that there’s no longer a need to rezone the property. So it better aligns our comprehensive plan with our development standards.” 

Gonzalez knows that the recently adopted code amendments are not a panacea, and that Pasco has more to do to ensure that it is providing affordable housing options for all. And he is excited to continue with that work. In the coming year, he hopes to work with the Pasco City Council to reconsider existing development standards, including height and lot coverage, in order to identify opportunities to create a more modern, and more flexible, code. He also hopes to look into the policies that govern nonconforming properties—those that comply with earlier standards but not current ones—in an effort to ensure that policies are applied “based on health and safety, and not aesthetics.” He’d like to work more closely with neighboring cities Kennewick and Richland, which are experiencing similar shortages of affordable housing. And he wants to investigate density bonuses and tax exemptions for multifamily developments, among other things. 

“There is an urgency to the work,” he explains. “Fifteen years ago, when our comprehensive plan was adopted, there was no such thing as Uber or apps or on-demand pizza delivery. We have to change our policies so that they make sense for today’s residents, and for future residents. I think our community members deserve that.” 

Housing Affordability Initiatives at the Lincoln Institute 

In 2020, the Lincoln Institute embarked on several new housing-related projects, recognizing the importance of land policy in the housing affordability debate and its implications for reducing poverty and inequality, which is one of the Lincoln Institute’s six core goals. As part of this work, a cross-departmental team issued a call for research proposals, seeking to better understand barriers to implementing housing solutions at the scale needed to effectively address the U.S. housing affordability crisis and strategies to overcome those barriers. The commissioned papers cover a diverse set of topics and geographies, from case studies of U.S. political coalitions built to advance housing affordability to an exploration of the impact and applications of France’s fair-share housing law. The Lincoln Institute partnered with the NYU Furman Center and Abt Associates on the 2021 Housing Solutions Workshop described in this article, and hopes to offer another iteration of the workshop. The team will also undertake new research on state and local policies to improve housing markets. 

Loren Berlin is a writer and communications consultant specializing in housing and economic opportunity. Read more about her at www.lorenberlin.com. 

Lead image: The population of Washington’s Tri-Cities region, which includes Pasco, Richland, and Kennewick, grew 19.8 percent between 2010 and 2020. Credit: alohadave via iStock/Getty Images Plus.

Writing during the last Gilded Age, Henry George warned of the social and economic perils of giving away land value increases to landowners who had done nothing to earn them. In this new Gilded Age, wealth inequality coupled with persistently low interest rates is leading to a worsening redistribution of wealth, with a growing share flowing to the asset-rich while a growing share of families is priced out of decent housing. One positive outgrowth of the pandemic is the political will we’ve summoned to deal with two related challenges that have their roots in land policy: the housing affordability crisis and the wealth gaps created by structural racism. 

A consensus is emerging among policy analysts and policy makers that both challenges are the result of exclusionary land policies. While exclusion is the principal driver, it is not the only one. More important, no single remedy will magically call forth more affordable housing and simultaneously close wealth gaps. Dozens of local, state, and national governments—including that of Pasco, Washington, which we recently profiled—are reforming residential zoning that previously permitted only detached single-family dwellings. The logic of this intervention is sound. Single-family zoning constrains development with restrictions like minimum lot sizes. This drives up housing costs and excludes lower-income families from buying or renting in desirable neighborhoods. By relaxing these policies, it will be possible to produce more housing at lower prices. At least in theory. 

Market fundamentalists argue that the financial incentives are so powerful that if we make it possible to build two, four, or even twelve units on a parcel that formerly permitted one, we cannot help but solve the housing affordability crisis through increased production. But there is a big difference between permitting the development of multiple units and multiple units being developed. And there is no guarantee that these units will be affordable. Many unaffordable condos and apartments have been built in high-density locales like New York City, where affordable housing is in critically short supply. A lot of them are vacant. How can places like Pasco keep the same thing from happening? 

Part of the answer has to do with the housing market. As I’ve noted before, housing represents two very different commodities traded in the same market. Each unit can satisfy the demand for shelter for a family or the demand for yield from hungry investors. Often, but not always, a housing unit can satisfy both—when the owner occupies the unit. But more and more frequently, households find themselves competing for available shelter against investors drowning in liquidity. With the exception of a pathbreaking intervention by the Port of Cincinnati that I will discuss another time, the investors usually win.  

As global wealth inequality worsens, the wedge between shelter provision and investment opportunity is precipitating unassailable affordable housing shortages. But not housing shortages. We have some 20 million more units of housing in the United States than we have households, and there are more houses than households in every housing market in the country. Even in a tight market like Pasco, the U.S. Census reports that there are 23,126 housing units but only 22,174 households. The metro market that includes Pasco contains 106,104 housing units and 100,336 households. This oversupply is not vast, but it offers a good illustration: our problem is not supply, but the kind of housing we supply (or allow to be supplied). 

Land, too, is a commodity traded in multiple markets—as an investment good and a good with multiple uses: residential, industrial, commercial, and agricultural. The price of land derives from a complex mix of social, statutory, and economic factors that are almost completely outside the aegis of the landowner. If more people migrate to a city or neighborhood, the land value goes up. If infrastructure improvements are made, like wastewater treatment or accessible transportation, the value of the land goes up. If local policies allow for more intensive development on a parcel, its value will go up. 

Who wins when we allow multifamily construction on formerly single-family lots? Landowners who receive windfall increases in land values are among the big winners. This increase in property values puts nearby homeowners at risk, if it raises their tax bills. If zoning changes aren’t designed to be part of a broader strategy to tackle affordability, they could inadvertently usher in displacement. Planners in Pasco know this and are working on a suite of balanced and comprehensive tactics to keep their community affordable. 

This country’s legacy of racial exclusion further complicates land and housing markets, while eluding all efforts to address it. Historically, deed restrictions, legal covenants, and other overt, but now illegal, practices ensured that people were kept out of neighborhoods based on skin color, ethnicity, or religious affiliation. These were supplemented with blatantly racist finance practices established at the birth of the modern housing finance system. For six decades, we have attempted to confront these forms of structural racism using public policy, with very limited success. It is an important cautionary tale.  

Starting with the Civil Rights Act of 1964, the Fair Housing Act of 1968, and the Equal Credit Opportunity Act in 1974, the nation nominally prohibited discrimination in housing and lending. The Community Reinvestment Act of 1977 imposed further affirmative obligations on regulated lenders to meet the credit needs of their communities. And yet, in 2018 the Center for Investigative Reporting analyzed 31 million mortgages and found that people of color were denied conventional mortgages by regulated lenders at significantly higher rates than whites in 61 metropolitan areas, even after controlling for income and other socioeconomic factors. The national racial gap in homeownership rates is worse today than it was in 1960, when efforts to address housing discrimination began. 

Closing the racial wealth gap will require much more than leveling the financial playing field and producing more housing units. Stable, affordable housing in high-opportunity areas is foundational to the long-term economic success of families. But increasing the housing stock does not necessarily increase affordable housing for lower-income households, nor does it ensure that historically excluded populations will have access to wealth-building homeownership opportunities in thriving neighborhoods.  

In almost every housing market in the United States, we’re producing too much of the wrong kind of housing and letting the existing housing stock slip out of local control. Escalating rents are inspiring conversions of single-family homes to rental units at unprecedented rates. Single-family rental real estate investment trusts (SFR REITs) have become a hot investment. According to CoreLogic, investors acquired more than 25 percent of all the single-family homes purchased in the United States in the last two quarters of 2021.  

A single zoning reform will not change the way the market works, and nothing will stop global capital from bidding housing in desirable neighborhoods away from families that need shelter unless other actions are taken. We need aggressive inclusionary housing requirements that obligate landowners to build affordable housing when redeveloping former single-family sites. We also need to provide and protect opportunities for historically excluded families to purchase affordable homes and build wealth. Rather than giving away additional development rights to landowners, development rights should be sold. Development rights are traded actively in many private and some public markets in the United States. Municipalities could raise billions of dollars by selling development rights, and the proceeds could be used for affirmative efforts to address the racial wealth gap by, for example, providing generous down payment assistance or property tax relief. 

Once we have established a reasonable supply of affordable housing, we need to preserve it. This will require shielding affordable housing stocks from global capital markets. This can be done easily with steeper capital gains taxes imposed on speculative property transactions. In Taiwan, land value increment taxes had a chilling effect on property speculation. 

In addition, deed restrictions can limit future sales prices. Alternative ownership arrangements like limited equity cooperatives or community land trusts can ensure permanent affordability. If we don’t act now, we’ll face continual affordable housing crises in the coming decades. But there is an important caveat: preserving affordable housing by limiting the financial upside will impede our efforts to close racial wealth gaps through homeownership. This illustrates the challenges of intervening in complex systems. Once we recognize the complexity, we can consider tradeoffs to find a practical and acceptable compromise.  

At the Lincoln Institute, we applaud the recognition that land policy sits at the roots of major social and economic challenges. But simplistic interventions in complex land and housing systems will not address these staggeringly complex challenges. We cannot rely on increasing the supply of housing as a silver-bullet solution. We must layer zoning reform with other policies, trying different combinations in an iterative process. As we proceed, we should be mindful of the words of H.L. Mencken: “there is always a well-known solution to every human problem—neat, plausible, and wrong.” 

George W. McCarthy is president and CEO of the Lincoln Institute of Land Policy. 

Image: “Missing middle” housing such as this duplex in Portland, Oregon, can provide more affordable options in formerly single-family neighborhoods, but the zoning changes that allow such housing must also mandate affordability and must be part of a broader housing strategy. Credit: Sightline Institute Middle Homes Photo Library via flickr CC BY 2.0.