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Zoning Stifles New Construction in D.C.'s Pricey Neighborhoods
Jenny Schuetz shares new research that finds that where housing prices are increasing fastest in D.C., zoning has prevented any new housing from being added.
According to Schuetz's premise for the research, the facts on the ground don't live up to the promises of politicians, like D.C. Mayor Muriel Bowser, who has promised to build new homes in "every ward and every neighborhood" to prevent displacement in lower-income and minority communities.
A fundamental principle of economics is that when the price of goods or services increases, producers will increase supply. Therefore, when the price of housing in certain cities or neighborhoods increases, developers should build more homes. And indeed, District neighborhoods that saw higher growth in housing values did see more new housing construction—but only where restrictive zoning didn’t impede growth.
To illustrate the point, Schuetz shares graphs an also digs into specific census tracts. The larger conclusion Schuetz builds from these findings is that restrictive zoning exacerbates affordability by limiting new construction and incentivizing upgrades and upsizing, which leads in turn to higher costs.