How Bay Area Land-Use Laws Limit Population Growth
Despite being home to a booming tech industry comprised of such companies as Google, Apple, Facebook, and Adobe, the San Francisco Bay Area realized relatively slow population growth between the years 1990 and 2000 – 12.6% compared to the national growth rate of 13.2%. The problem only worsened in the past ten years, as population growth in the Bay Area between 2000 and 2010 grew by only 5.4%, barely half the national rate. A major impediment to migration to the Bay Area is the lack of available housing, resulting in fairly expensive home prices with a median cost of about $600,000. Though offering some of the highest paying jobs in the nation, people are avoiding the Bay Area in favor of cities that help families maximize their standards of living.
However, the adverse effects of land-use laws are overshadowing the housing market supply shortage as the key driver of the Bay Area’s migration problems. Timothy Lee looks at the Bay Area’s zoning laws and zeroes in on the problem:
In a nutshell, it’s because high-density development is illegal. The city of San Jose has 350 pages of regulations that place an effective ceiling on building density. The regulations include minimum lot sizes, minimum building setbacks, maximum building heights, minimum parking requirements, and so on. Of course, developers can apply for exceptions to these rules, but when they do so, city officials are besieged by what Avent calls NIMBY’s (“Not In My Back Yard”), local activists who strenuously oppose having more people live or work in their neighborhoods.
…By strangling the growth of America’s densest and most productive cities, restrictive zoning laws actually make the nation poorer. When an engineer leaves his $80,000 job in Mountain View for a $60,000 job in Scottsdale, he may wind up with a larger house and more disposable income. But the economy as a whole becomes less productive. In a free market, developers would be allowed to supply more housing in Mountain View so that engineer could enjoy a higher salary and an affordable home. And the phenomenon isn’t limited to the Bay Area. Large, coastal cities like New York and Boston also have high wages but anemic population growth. Meanwhile, people flock to cities like Atlanta, Las Vegas, and Charlotte with lower wages but cheaper housing. Deregulation would not only allow more people to enjoy life in America’s most attractive cities, but it would have a real impact on the nation’s economic growth.
I’ve previously written about the effects land-use laws have on economic growth and migration.
Image via flickr user tanmanforlife