The Labyrinthine Rules That Created a Housing Crisis

Consider how a home is built in America. Long before the foundation is poured, the first step is to check the rule books. For the uninitiated, the laws that govern the land appear hopelessly technical and boring, prescribing dozens upon dozens of requirements for what can be built and where. Zoning ordinances and other land-use regulations or zoning ordinances reach far beyond the surface-level goal of preserving health and safety. Instead, they reveal a legal regime stealthily enforcing an archaic set of aesthetic and moral preferences. Preferences that flourished out of a desire to separate Americans by race have evolved into a labyrinthine, exclusionary, and localized system that is at the core of the housing crisis—and very few people know about it.

In America, we’ve delegated the power over how our land is used to the local level, and seeded the process with various veto points. We’ve done this under the misguided assumption that decentralization will make the process more democratic. In reality, this system has resulted in stasis and sclerosis, empowering small numbers of unrepresentative people and organizations to determine what our towns and cities look like and preventing our democratically elected representatives from planning for the future.

[ From the July/August 2023 issue: Colorado’s ingenious idea for solving the housing crisis ]

Say you own a single-family home. You and your partner bought it during the pandemic purchasing frenzy, and now you find yourself blessed with a child. You decide that you’d love to have your father move in with you to help with child care when you return to work. Although you love your dad, making sure he has his own living space is probably best for everyone involved.

So you decide to build a little backyard cottage, sometimes called a “granny flat,” a “mother-in-law suite,” or, more formally, an “accessory dwelling unit.” But then you discover that your property is not zoned for a secondary home, no matter how small. You’re annoyed—It’s not like I’m trying to build an apartment building, and this is my land right? You go to city hall and ask the planner to help you fill out an application for a variance. You’re pretty handy, so you’ve worked out the specifications for the home you’re building (again, on your property) and you submit your application to the city.

Next you attend a city-council meeting, where you’re No. 3 on the agenda. You wait your turn for hours, thinking, Who could possibly have time for this? while listening to people who claim to be your neighbors—you don’t recognize them—complain about bike lanes. Finally, you’re up, and you get a question about parking availability. You tell the council that your father is going to share your car, and that you already have a two-car driveway and a garage. You’re then peppered with questions about whether the structure will cast shadows on your neighbors’ property, whether you intend to rent out the unit someday, whether you’ve looked into potential environmental damage to your lawn, whether you promise to respect the historic integrity of the neighborhood. Someone makes a comment about “out-of-towners” with their big money coming and driving up the prices. But then the meeting is over, and you hope that’s the last of it.

It isn’t. In the following months, you’re asked to make a bunch of changes to your plan and resubmit it. Unfortunately, someone on your block has made it his business to draw out this process as long as possible. He is frustrated by all the new homes going up as the suburb grows. Apparently he thinks they’re ugly. You end up negotiating directly with him and realize that, if you reconfigured the cottage and got all the legal approvals necessary to satisfy his concerns, you’d have to shell out an extra $20,000 that you don’t have. Often, you consider giving up.

But let’s say the local authorities get around to granting permission. That’s not necessarily the end of the road. A determined opponent could sue, claiming that your little cottage will degrade the environment or that you ignored some minor permitting technicality, or he could fight to get your neighborhood added to a historic registry, and on and on. Proving that you’ve actually harmed the environment or degraded the neighborhood character is secondary; the claim alone is enough to keep your plans—and your life—in limbo.

Not every story about housing development is quite this miserable, but many are. The most unlikely part of this saga is that our protagonist even tries to get an exception from the existing, restrictive rules. Most people wouldn’t bother with a variance; they would just give up. Developers don’t like to bother with variances, either; they want to avoid the serpentine process our unlucky hero found herself trapped in.

[ Jerusalem Demsas: Meet the latest housing-crisis scapegoat ]

For our fictional new parent, the costs are weighty: A grandfather is deprived of the chance to live with his family, a grandchild is deprived of that relationship, two parents are forced to shell out thousands of dollars for day care, and the people who wanted to buy the grandfather’s home now have to look elsewhere. The knock-on effects are endless. The parents will have less money to save for their child’s future, and they will drive up the demand—and thus prices—for day-care services; they may even have to subsidize the grandfather’s elder care. These individual setbacks can seem minor, but multiplied across tens of thousands of communities, they add up to a national tragedy.

The American population is growing, and aging, and in many cases looking for smaller houses. But the types of homes Americans need simply don’t exist. All across the country, local governments ban smaller houses (have you tried looking for a starter home recently?), apartment buildings, and even duplexes—the sorts of places a grandparent, or a young person, or a working family might want to live. The shortage has been estimated at 4 million homes, and that scarcity is fueling our affordability crisis. In the end, whatever does get built reflects the cost of delays, the cost of complying with expensive requirements, the priced-in threat of lawsuits, and, most important, scarcity.

Americans are aware by now that the housing affordability crisis is acute, but many don’t understand what’s causing it. All too often, explanations center on identifying a villain: greedy developers, or private-equity companies, or racist neighbors, or gentrifiers, or corrupt politicians. These stories are not always false, nor are these villains imaginary, but they don’t speak to root causes.

I’ve told these stories myself, often identifying NIMBYs as the villains. This term, an acronym for “not in my backyard,” is used to refer specifically to those who support something in the abstract but oppose it in their neighborhood. But NIMBY has experienced the sort of definitional inflation that happens to all successful epithets and now refers to anyone who opposes development for the wrong reasons.

An intense focus on the moral failings of various people and organizations can be a distraction. Exposing terrible landlords is important, but perhaps even more important is addressing why they have so much power. Pointing out that a billionaire is trying to thwart the construction of townhouses in his affluent neighborhood is useful, but even more useful is understanding why he might succeed.

I believe that opposing housing, renewable-energy development, or even bike lanes for bad reasons is wrong (and my disdain for people who do so is evident in many of these articles). But NIMBYs are a sideshow. A democracy will always have people with different values. The problem is that the game is rigged in their favor. NIMBYs haven’t won because they’ve made better arguments or because they’ve mobilized a mass democratic coalition—I would very much doubt that even 10 percent of Americans have ever seriously engaged in the politics of local development. NIMBYs win because land politics is insulated from democratic accountability. As a result, widespread dissatisfaction with the housing crisis struggles to translate into meaningful change.

[ Jerusalem Demsas: Housing breaks people’s brains ]

When democracies fail to translate voter desires into reality, we should try to identify what’s causing the disconnect. In this case, the trouble is that our collective frustration about our economic outcomes is directed at elected officials who have little or nothing to do with how our land is used. We should change that.

The politics of land should play out in the domain of democratic participation instead of leaving it to the zoning boards, historic-preservation committees, and courtrooms. Instead of relying on discretionary processes subject to review by countless actors, governmental bodies, and laws, states should strip away veto points and unnecessary local interference.

In general, debates about how our land is used should happen where more people are paying attention: at the state level, where governors, watchdog institutions, and the press are able to weigh in and create the conditions for the exercise of public reason. Not at the hyperlocal level, where nobody’s watching and nobody’s accountable.

Right now we have theoretical democracy: democracy by and for those with the lawyers, time, access, and incentive to engage in the thorny politics of land. But despite the pretty name of “participatory democracy,” it is anything but. “Democracy is the exercise of public reason,” the political philosopher John Rawls wrote. Relatedly, the economist and philosopher Amartya Sen argued that “democracy has to be judged not just by the institutions that formally exist but by the extent to which different voices from diverse sections of the people can actually be heard.”

All 340 million of us could, I suppose, become obsessed with land-use regulations and show up at dozens of meetings a year to make our voices heard. We could worm our way into sparsely attended communities and spend hours going back and forth with the unrepresentative actors who have the time, the money, and a curious combination of personality traits, and who have already hijacked this process. But we won’t. And a true democracy does not simply offer the theoretical possibility of involvement in decision making: It offers institutions that can hear us where we are. The rules that govern land are the foundation of our lives. Americans should take a closer look into how they are determined.

This article has been adapted from the introduction of On the Housing Crisis: Land, Development, Democracy.