U.S. Housing Crisis Could Benefit From New Zealand Model
Economists and urban planners are encouraging cities to upzone many neighbors and allow for the construction of denser, taller housing like duplexes, triplexes, and townhomes. Upzoning won’t solve the rise in pricing for housing but it’s a necessary first step in solving the affordability crisis and slow the growth of housing costs by meeting demand.
Upzoning is a land-use planning and zoning strategy that involves changing the regulations and restrictions on how land can be developed in a specific area. Most zoning laws in American cities and neighborhoods only allow for a single-unit home. “Upzoning” refers to the process of relaxing or increasing certain zoning requirements, such as density limits, building height restrictions, and setbacks. This allows for more intensive or higher-density development than what was previously permitted under the existing zoning regulations.
American cities, especially those with growing job markets and a healthy influx of new residents, need to build millions of new homes to keep housing from becoming unaffordable. And keeping single-family-only zoning laws in place makes it almost impossible to meet these areas’ housing needs.
New Zealand stands out as an exceptional example of how to successfully boost housing supply through zoning reform. Facing an urgent housing crisis, the island nation implemented upzoning measures that legalized the building of medium-density housing. Not only did this help to slow down skyrocketing housing costs, it inspired a bipartisan, nationwide expansion of the policy.
“The Auckland example is so particularly groundbreaking because it’s no longer a theoretical debate,” Matthew Maltman, an Australian economist who’s closely studied New Zealand’s housing reforms, told me. “It just makes it a lot easier to sell to people.”
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A law passed in 2016 in New Zealand allowed for “gentle density” — making it legal to build duplexes, triplexes, and townhomes on single-home lots. The policy tripled the city’s housing capacity. Between 2015 and 2020, researchers found that new housing units permitted in the city grew from 6,000 to more than 14,300. Auckland went from mostly single-family homes to a much denser mix of multiunit homes and attached single-unit buildings.
The changes not only led to a lot of new housing, it also slowed the pace of rising housing costs. Maltman found a “significant reversal of the trend” of skyrocketing costs in Auckland. “There’s been a significant slowing of rental price growth since the policy was implemented,” Maltman says, referring to the 2016 reforms.
Updating zoning requirements to suit a city’s needs is vital. Many U.S. cities are operating under old, complex regimes of regulations that make it hard to build. Land-use regulations tend to pile up and sometimes contradict each other.
The legalization of accessory-dwelling units — smaller, detached homes like backyard “in-law suites” — in California and in a few US cities, including Seattle, Eugene and Portland, Oregon, has been very successful in spurring construction and addressing housing issues in rural communities.
“The fact that there’s been such extreme developer response to allowing the construction of ADUs suggests that there’s something going right about that policy,” Yonah Freemark, a land use and housing researcher at the Urban Institute says.
While zoning reform won’t solve the entire housing crisis, it’s an important step in the process.
Source: Business Insider