Yonah Freemark is the research director of the Land Use Lab at the Urban Institute. His research focuses on the intersection of land use, affordable housing, transportation, and governance. He has published peer-reviewed scholarship in numerous journals, including Urban Affairs ReviewPolitics & SocietyHousing Policy Debate, and the Journal of the American Planning Association.

Thank you for doing this interview with us. Could you tell us about yourself and the work you do at the Urban Institute?

My work is focused on land use, housing, and transportation. I work on public policy issues related to those fields. I’m also interested in econometric methods. My training is in urban studies. I’m always looking for projects that investigate the role of public policies on outcomes related to things like affordable housing.

Could you summarize your paper “Land Use Reforms and Housing Costs?

A lot of jurisdictions throughout the United States are interested in finding ways to increase housing supply and increase housing affordability. One of the mechanisms that has been proposed to encourage that outcome is zoning change. The idea is that if you upzone to allow for an increased number of housing units, then in theory, you should get more housing units. And you should have, as an end result, increased affordability of that housing, because you have more supply to accommodate demand. And the consequence should be a lessening of pressure on the housing stock.

Now, there have been efforts over the past few decades to document the role of land use regulations, which includes zoning, but also a variety of other instruments mostly leveraged by local governments. The studies have tried to assess the correlations between stricter land use regulations and housing supply and housing affordability. Most of that research in the previous decades was focused around essentially correlative associations between these two things. These were done by economists who were using tools like the Wharton land use survey to understand how strict land use regulations were. But just by assessing these associations, we run into some fundamental problems. Notably, the fact that zoning policies are endogenous with other issues in a locality, like their political conditions, their social conditions, or their economic conditions.

Over the past few years, there has been a major uptick in interest in trying to understand the impact of zoning changes, which allows us to get closer to measuring the causal impacts of zoning reform. By looking at the zoning change, hopefully we can get a better idea of what’s going on and the influence of zoning specifically on outcomes. In our new paper, we assess the impacts of such reforms across a large number of municipalities.

We often hear that places that are building a lot of new dwellings, like apartments, also have increasing prices and rents. Is that evidence that an increase in new housing supply causes increases in prices?

No, there’s little evidence for that. Almost all of the research on the influence of housing supply on housing affordability suggests that increased housing supply either improves affordability, or at least does not make it worse. There’s very little evidence that increased housing supply in and of itself is a cause of increased housing costs. I think one of the biggest problems that we run into is that because the private market is the primary generator of new housing supply, the places where the private market wants to invest are often exactly the same places where housing prices are already going up. Folks on the ground see new housing going up and then say, “oh, home prices are still going up in this neighborhood.” But the fact that people want to invest in more housing in a neighborhood is the same reason house prices are going up in that neighborhood.

Your paper is specifically about rezonings. How do you identify the effect of rezoning on housing affordability, as opposed to just the correlation?

Any effort to get at causation in a non-scientifically controlled environment is limited. I should start with that baseline. But most of the research that had been done before this paper had been on the impacts of zoning change in individual cities. For example, in my work that I did in Chicago, I was looking at the impacts of a zoning change in a specific city. There have been similar studies in the US in Minneapolis. There have also been some foreign examples in Auckland, Sao Paulo, and Zurich, that attempt to understand the impact of a zoning change on a specific jurisdiction.

What we tried to do with this study, which was led by my colleague Christina Stacy and supported by a team of folks at Urban Institute, was provide a broader scale view of what zoning reforms in general could do across multiple different cities. There are both positives and negatives from this approach. The positive is that we can say a little bit more about the general outcomes resulting from a zoning change. In general, a zoning change might produce some changes in housing, construction, and housing affordability, and we find some impacts in both of those areas that are differentiated based on the income levels of the folks who could afford different types of housing units.

The problem with that approach is that because we’re looking at hundreds of different individual jurisdictions and cumulating them into a single sample that we’re measuring, we’re not getting into the detailed impacts of specific zoning changes. Different cities pass different zoning changes that have vastly different impacts on the communities around them. Our study pulls them all together because it’s meant to be a national look at outcomes. I think our work can be seen as useful by providing national evidence of the impacts of zoning changes, but not necessarily useful for telling us exactly what the consequences of specific policies are.

You are not trying to create a specific policy recommendation, right?

Right. There’s no evidence in this paper about the impact of any specific type of change. We just don’t have that evidence. What we do show is that downzoning is unambiguously problematic.

That’s interesting. You find that downzoning, where a municipality increases restrictions, worsens affordability. What’s the effect of upzoning then?

This is a general outcome over the course of hundreds of municipalities with different zoning changes in many different markets. This is not to say that any specific zone will have this outcome. But on average, we found the average upzoning would result in a 0.8% increase in housing supply in the short to medium term after the change, three to nine years after the upzoning. What we find is that the increase in housing supply is predominantly on the higher end of the housing spectrum, which makes sense logically, because when you’re building new units, unless they’re publicly subsidized, they’re almost definitely going to be at the high end of the market. We don’t find statistically significant evidence of filtering, which means allowing for lower income people to afford more units.

But I think there are a few things worth keeping in mind. One is that these results are incredibly market dependent. Another is that we’re only talking about three to nine years after a rezoning. Housing construction by itself takes a long time. So filtering is obviously going to take even longer. It’s not surprising to me that we didn’t find that that outcome.

Is there a positive or negative effect, even if it’s not statistically significant?

Increasing restrictions, in other words, downzoning, are associated with significant increases in rent. And we find that upzoning is associated with a decline in rent, but again, it’s not statistically significant. Should we play too much into results that are not statistically significant? I don’t know. That’s up to the reader of the article to decide for themselves.

A candidate to be Chapel Hill’s mayor quoted your study. I want you to tell me if you think this is a correct interpretation of your results, and why or why not you think so. A recent Urban Institute study found that eliminating single family zoning restrictions only increases housing options for wealthy residents, but doesn’t make housing more affordable or accessible for middle or lower income community members.

The problem with using econometric results to inform local policy on specific proposals is that you run into barriers with interpretation. Fundamentally, that interpretation is not as nuanced as it needs to be. The reality is that if you are increasing housing supply in general, you are eventually going to produce a housing market that is larger, and therefore has more availability of homes. We do find that on average, there are more homes available for low income, very low income, even middle income families in the period post upzoning reform, it’s just not statistically significant. In our table five, we find a statistically significant increase in homes available to people with incomes higher than the median. But we also find positive outcomes for all the other brackets of housing affordability. This is a complication of a limited sample, and the extreme variation in zoning changes that we’re looking at. I would not go so far as to say that we show that housing does not increase in supply for folks who are low income, because on average, it actually does increase. Table five is evidence that there isn’t a negative impact of upzoning on housing supply. For people with low or moderate incomes, we don’t find a negative impact, we find a positive impact. It’s just not strong enough to be statistically significant.

It’s interesting that you have statistical significance for downzoning, but not upzoning. Why do you believe that is the case?

We only have some statistical significance for downzonings. In Table five, we have negative coefficients on the impacts across all the different affordability bands, but we only find statistical significance for folks at the middle income. Again, we’re faced with barriers with data availability and the fact that all these reforms are different. It’s the reality of the margins of error related to the rental data available from the census. So it doesn’t surprise me that we weren’t able to find strong statistical significance. One thing that’s also worth keeping in mind is that the reforms that have been executed in the US have been moderate in scale. The effects are also likely to be moderate in scale. If you’re only changing the zoning to a small degree, the idea that that’s going to produce a vast change in your housing environment seems unlikely. And that’s what these data show. The effects are not enormous, because the zoning changes are not enormous in form. If there was a gigantic zoning change, then perhaps we would see a much larger impact.

Using the results of your study and your knowledge of other studies in this literature in general, would you say that loosening zoning restrictions is more likely than not to make housing more affordable for people of various income levels?

I have a paper that I published in the Journal of Planning Literature this spring that attempts to summarize what we know, from a whole variety of different zoning studies and zoning change studies. Downzoning has really negative impacts on housing affordability and housing availability, it is not a positive thing for a community to undertake. Nor does upzoning result in all the positive impacts we would like to see. There’s contrasting evidence based on the community; the market has to be able to respond to the availability of increased housing. If you don’t have a market that’s available to respond, then you’re not going to have any changes to your housing availability, even if there was an upzoning.

What do you mean by a market that’s able to respond?

There has to be a developer who wants to build in those places. If there isn’t a developer who wants to build, then nothing will happen. You could allow skyscrapers in the middle of an agricultural zone in Oklahoma, but it doesn’t mean you’re going to have skyscrapers. We have to be aware of the reality that zoning is not the same thing as construction. These are different concepts!

There’s also a time element here. We only know so much about the way zoning changes can impact conditions over time. It seems to be that it takes a number of years for there to be an impact on construction, which is not surprising, because construction takes a while. Over the longer term, it does seem like the evidence is growing, that increased housing supply results when you upzone. When we look at zoning changes, we try to find zoning changes that are not market targeted. Because the problem with selecting zoning changes that are market targeted, is that you don’t know whether the increased housing units are occurring because there’s a market of developers who want to build there, or because you change the zoning. Or maybe it’s both, you’re just not able to differentiate.

To give you an example of this, I was just in New York City yesterday. If you look down Fourth Avenue in Brooklyn, from downtown Brooklyn, south towards Sunset Park, you see this massive parade of 10 or 12 story buildings that are all either under construction or were recently built, that occurred because of a zoning change. But I don’t have causal evidence to demonstrate that rezoning caused the new construction. Because I don’t have a clear comparison: the zoning change occurred in part because of development demand in central Brooklyn to build. And so I hesitate to use causal language when assessing whether that zoning change really had an impact on Brooklyn, but it’s likely that it did. You could just look at it and say, “wow, this zoning change had this incredible impact on the street and added thousands of homes.” You would not have been able to build these homes without the zoning change.

It’s a story that folks get very riled up about because people really want their communities to stay as they are. Whether you are a resident or an elected official, the reason why you are in your place is because you like your place. So you don’t want to see it change. When you discuss zoning changes, folks get really worried. But I don’t think the evidence is there to suggest that upzoning is going to produce problematic impacts on things like housing, construction, and affordability.

This question is about your paper “Upzoning Chicago: Impacts of a Zoning Reform on Property Values and Housing Construction.” Chapel Hill’s proposed modifications apply townwide, not just in certain neighborhoods, and they apply to single family neighborhoods. How does this differ from the actions that Chicago took? Were any of the areas upzoned in Chicago single family only neighborhoods, like all the neighborhoods that will be impacted in Chapel Hill? No. So there were no single family neighborhoods uptown in Chicago?

No. there have been some more recent changes, but I have not studied those. As far as I know, there’s only been one effort so far to use causal methods to assess the impacts of a single family zoning change. And that’s the one that was done by Daniel Kuhlmann of Minneapolis. What he finds is that housing prices in some neighborhoods went up. He doesn’t look at construction. He finds that some single family parcels became more expensive, which is similar to what I found in Chicago, and I think reflects the fact that there is an increase in development potential in those places. Essentially, increased housing value reflects increased possibility of building more units.

Can you separate the effects of construction versus upzoning? Is it plausible that upzoning increases the value of land because you can construct more buildings on it and therefore house more people, but once you actually construct those dwellings, the average price of a home decreases?

We’re not there yet on the research side, because these single family home ordinances are so new that our ability to differentiate between zoning change and housing construction on affordability is limited. Unfortunately, I don’t think anybody’s done that.

Can you speak about how your results may or may not apply to the single family housing market in Chapel Hill, where most of the landowners are homeowners who want to remain in their homes?

What I do know is that zoning reforms that allow you to build multiple units on a single family lot do not require anybody to build a multi unit apartment building on a single family lot. I’ve never understood the concerns of people in single family neighborhoods that this will affect them personally. If you already own your home, and you don’t want to change it, the law doesn’t require you to change your home. I think that’s a misunderstanding. I think there’s a generalized misunderstanding of the difference between zoning change and requiring you to tear down your home. These are different concepts. The other thing is, if you have more homes in the same amount of land, your service costs as a community should go down. So in theory, your property taxes should not go up per unit. However, that has not been tested empirically.

Earlier this year, you released a new meta analysis of research on zoning. You show that, overall, upzoned areas may or may not experience increased housing construction over the short term, but likely experience small increases over the long term compared to areas without such changes. What would you expect from a town-wide zoning change, like Chapel Hill is proposing? And do you think this would support the claim of those who fear that these changes would rapidly and irrevocably degrade their neighborhoods?

I always find these conversations very strange, because I do not live in a single family home neighborhood personally. I find the idea that having apartments in your neighborhood degrades your neighborhood very strange. I just don’t have any relationship to that kind of claim. There’s no evidence that having additional housing units in your neighborhood will degrade the neighborhood, because there are plenty of really nice neighborhoods with apartments in them. The quality of neighborhoods is not dependent on the exact housing type you have in that neighborhood. So it is true that it will change the neighborhood, the neighborhood might look different.

If the definition of degraded is entirely dependent on the type of housing unit that is in the neighborhood, then I suppose that yes, it could degrade the neighborhood. But if the definition of degraded neighborhood means a neighborhood where people don’t want to live? Absolutely not. There are plenty of wonderful neighborhoods where there are apartments. What are the predicted impacts in a place like Chapel Hill based purely on the limited data that we have from other cities? What I would suspect is a small increase in property costs over the short term followed by a small number of duplexes that are built.

You now live in Washington, DC. What do you miss most from Durham or the triangle?

Bahn’s Cuisine in Durham. It’s cheap. And it’s super good! It’s on Ninth Street. You’ve got to go.

Andrew Kane is a PhD candidate in Financial Economics at Duke University's Fuqua School of Business. His interests are in asset pricing, nominal rigidities, and macro-finance.