White House targets local zoning restrictions in push to address rising housing costs

In the president’s annual economic report Thursday, the White House focused on local zoning regulations that play a role in driving home price growth.

The White House Council of Economic Advisers has argued that these zoning rules are a major cause of the housing shortage and suggested the federal government could play a role in encouraging zoning reform.

“Housing shortages and housing affordability have increased over the past 60 years, largely due to local land-use policies that limit housing density and what can be built,” the report said. “These impacts will be felt most by low-income and vulnerable households who are being priced out of the housing market.”

The report argues that zoning restrictions, such as multifamily bans, height restrictions, minimum lot sizes, minimum square feet, and parking requirements, limit the supply of housing and reduce affordability.

For example, minimum lot sizes force developers to build on larger lots than “the market offers,” while minimum parking requirements often exceed demand, increasing costs and the amount of housing that could otherwise be built. will decrease, the report says.

“Relaxing zoning restrictions could increase the supply of smaller, lower-cost housing, leading, at least in some cases, to lower prices and rents, or slower rent growth for existing housing,” the report said. “There is a certain gender.”

Housing costs have been particularly high during the pandemic, as restrictions on new construction and low interest rates have stimulated demand.

The average price of an existing single-family home in February was $384,500, up 5.7% from the same month last year, the paper said. National Association of Realtors.

As the Federal Reserve raises interest rates to the highest level in 20 years in an effort to curb inflation, mortgage rates are now above 7%, further increasing the cost of owning a home.

But home prices have been rising faster than wages for many years. Over the past two decades, home prices have tripled, household incomes have doubled, and the proportion of Americans becoming rent-burdened has increased, the report said.

As President Biden looks set to face former President Donald Trump in a rematch in November, he is seeking to change Americans’ largely negative view of his handling of the economy despite falling inflation and an unexpectedly strong job market. I’m having a hard time.

Inflation has eased significantly since reaching a 40-year high of 9.1% in June 2022, falling to 3.2% last month. Employment growth has also repeatedly exceeded expectations, while the unemployment rate has remained below 4% for the longest period since the 1960s.

The economy has also remained surprisingly resilient despite the Fed’s interest rate hikes and appears to have achieved a so-called “soft landing,” contrary to widespread predictions of a recession.