More Housing, Less Participatory Democracy

By Emily Hamilton

Recent U.S. economic growth has been the envy of the developed world. America has long had one of the world’s most productive economies, and median income in the U.S. rose relative to other high-income countries in the 2010s. This recent surge, however, has been driven by sectors such as tech, retail and healthcare—industries that have a small footprint in meatspace.

By contrast, growth has been lackluster in the physical world. Our annual per capita housing starts (new residential construction) peaked in the early 1970s at 11 units per 1,000 people. That decade’s construction rate bottomed out in 1975 at about 5.5 units per person, but today we’d be lucky to see a rate that high—it hasn’t been achieved again since 2006. As a result, Americans are paying more for housing and getting less, a problem that is most severe in economic powerhouse cities such as the New York metro area and the Bay Area.

People across the income spectrum suffer from underbuilding in housing. All but the wealthiest must make unnecessarily difficult tradeoffs about house size and location. In her self-recommending essay compilation, “On the Housing Crisis: Land, Development, Democracy,” The Atlantic writer Jerusalem Demsas chronicles the consequences of housing supply constraints and identifies potential solutions rooted in political science and economics.

The Limits of Participatory Democracy

The harshest realities of our housing crisis fall on those who have no homes. The unacceptable rate of homelessness that we see in our cities today began rising in the 1980s. It has grown in part due to decades of underbuilding. In careful consultation with academic research, Demsas shows that in cities that don’t have enough housing, the most vulnerable people—those already facing economic precarity, drug problems or domestic violence—end up with none.

While local zoning rules have been around for about a century, the regulatory thicket causing our current shortage is newer. An emphasis on participatory democracy in local government emerged starting in the 1960s, in part as a reaction to unpopular urban renewal policy. In a reaction to top-down decisions in which federal programs funded the bulldozing of (often Black) neighborhoods to make room for highways and public housing, local governments, at federal urging, established processes for residents to weigh in on land use policy.

Opportunities for public input in local policymaking now extend from changing comprehensive plans, which provide high-level guidance on growth, down to deciding whether individual homeowners can add accessory dwelling units (e.g., in-law suites) to their properties. Allowing more opportunities for voters to express their opinions directly to local officials seems like a good thing—it’s theoretically more inclusive. In fact, however, requiring people to spend time and money on making themselves heard skews decision-making toward the interests of higher-income, more politically connected residents, who usually want to block new housing where they live. Demsas explains, “Making it easier for people to lodge their disagreements doesn’t change the distribution of power; it only amplifies the voices of people who already have it.”

As participatory democracy benefits the people with the resources to participate, it also brings out individuals’ NIMBY (“not in my backyard”) sides as they are asked to share their opinions about projects proposed in their neighborhoods. While new housing provides enormous society-wide benefits, no one likes to be bothered by construction noise or see additional cars on the street. Prompting the people who live closest to a proposed development to share their thoughts about it draws a biased perspective on construction.

Even ardent voices for economic progress and growth-supporting housing policy are encouraged to be NIMBYs under our current system. In his viral essay “It’s Time to Build,” venture capitalist Marc Andreesen wrote, “We need to break the rapidly escalating price curves for housing, education, and healthcare, to make sure that every American can realize the dream, and the only way to do that is to build.” Ironically, however, Demsas identified comments that he and his wife submitted to local officials in their exclusionary Bay Area suburb opposing changes that would have allowed multifamily construction.

State-Level Decision-Making

Demsas advances representative democracy and competitive elections as the antidote to the structural NIMBYism of our current system. In particular, she is optimistic about state policymakers setting limits on their localities’ authority to restrict housing construction. She writes, “In the U.S., moving decision-making from the hyperlocal level to the state level is the first step to fixing the broken development process.” Like me and my housing scholar colleagues at the Mercatus Center at George Mason University, Demsas is optimistic about policymakers in both red and blue states experimenting with laws legalizing new construction.

Local governments have the authority to regulate land use because state governments have delegated it to them as part of states’ power to protect their residents’ health, safety and general welfare. Moving decision-making about property owners’ rights to build housing from hyperlocal neighborhood- or city-level committees back up to the state level improves incentives for policies that support housing construction. When these decisions are made with a larger geographical area in mind, the benefits of housing construction—economic opportunity and housing affordability—can be weighed on a more equal footing with the local inconveniences of construction and growth.

Further, at the state level, elections generally feature more party competition and better-informed voters. These factors make it easier for people to observe the effects of public policy decisions and vote to support or oust incumbent politicians on this basis. Demsas applies political science research to the housing and infrastructure issues on which she reports. She translates this research on the current problem of participatory democracy: “When we collectively feel entitled to hold the government accountable, that’s democracy. But when individuals do, that’s something else: institutional capture.” In other words, a few powerful individuals can end up making all the decisions.

For those of us who have been working on housing supply constraints for many years, recent state decisions have been heartening. Facing the country’s most severe land use restrictions, state policymakers in California have passed dozens of laws intended to make more housing feasible to build. Since 2016, these laws have made it possible for builders to provide tens of thousands of new homes.

However, state progress on freeing housing construction is a game of whack-a-mole. When state policymakers outlaw one way of excluding housing construction, local policymakers can often create several others. We’ve seen this with statewide attempts to legalize accessory dwelling units, which has been the most popular area of state limits on local zoning rules so far. In many cases, state policymakers have had to come back year after year to take down new barriers that local governments have thrown up to prevent homeowners from adding second units to their properties.

Courtroom Solutions

Shifting land use decision-making from participatory democracy at the hyperlocal level to representative democracy at the state level is not the only way to open up cities to new housing and infrastructure. Another method is pursuing litigation toward the goal of changing the jurisprudence that gives local governments a wide reach in their authority to regulate development rights. The constitutionality of local zoning was in question until the landmark 1926 Supreme Court case Euclid v. Ambler. Prior to that decision, many legal experts thought that local rules that took away development rights without compensation violated property owners’ Fifth Amendment rights under the takings clause and Fourteenth Amendment rights to due process. In fact, the Supreme Court reversed the district court’s decision, which had found that the zoning ordinance in Euclid, Ohio, was unconstitutional.

Legal scholar Ilya Somin argues that the Supreme Court’s Euclid decision should be added to the anticanon of cases that receive near universal recognition as terrible mistakes in judgment. Somin, a libertarian, has teamed up with progressive law professor Joshua Braver to make the case that Euclid should be overturned. The Fifth Amendment requires that governments compensate property owners if they take some or all of their property to, for example, widen a road. Somin and Braver argue that, under an originalist interpretation of the Bill of Rights, property rights include not just the right to own property, but also the right to use it, including by building housing. If Euclid were overturned, local governments would be able to restrict the right to build housing without compensating property owners only if they could show that doing so served a health and safety purpose. This judicial approach could potentially reduce more barriers to housing construction faster than the state legislative approach.

Today, judicial progress on restoring development rights as a protected property right seems as fanciful as state protection for the right to build housing seemed a decade ago. I felt the same way about state policymakers taking back some of their authority to regulate land use 15 years ago. But, as Demsas points out, land use regulations were a primetime topic at the Democratic National Convention, showing just how far and how fast views are changing on this issue. Overturning Euclid would return the right to build housing to the bundle of “fundamental” rights that are held to be beyond the reach of democratic decision-making, like our First Amendment rights to freedom of expression. Perhaps we will get to read Demsas on land use litigation in the coming years.