How Affordable Housing Can Transform Ann Arbor

Throughout our history Americans have migrated in search of opportunities, from the pioneers who settled the west, to the Great Migration of African Americans from the south. However, as Timothy Noah points out in his Washington Monthly column “Stay Put Young Man,” following the financial crisis of 2007 Americans have migrated at a far lower rate than ever before, with only 1.7% of Americans migrating between states in 2011-12; this is less than half the rate of  the 1950s. Additionally, those who have migrated tend to leave more prosperous cities, such as San Francisco or New York for cities with less opportunity, in states such as Texas or Nevada due to the lower cost of living cities in these states offer. As a prosperous city already, Ann Arbor – by embracing development – can become the economic hub of Michigan.

The “American Dream” is an idea centered on the belief that if people just work hard in America they can be successful. This dream was generally achieved through migration accompanied by low barriers to entry. For example, when the pioneers moved west, the Homestead Act guaranteed them large plots of free land to develop as they saw fit. However, as America developed, land no longer was freely available and became subject to various land-use regulations – in particular zoning laws – the most restrictive of which are in prosperous parts of America.

Restrictive or “exclusionary” zoning laws prevent the supply of housing to meet demand, which increases the price of housing. In The Gated City Ryan Avent lays out how “exclusionary zoning” works in practice:

In some cases, there are explicit zoning limits. Buildings can only be so tall or can only be used for commercial or industrial purposes… In many cases, neighbors opposed to new developments in their neighborhood lobby the government to change either the zoning rules or historical designations in order to block development projects. And in some situations, no actual law or regulation is necessary to limit redevelopment—community opposition is sufficient to do the work of curtailing supply.

The classic example of exclusionary zoning has been San Francisco. In San Francisco, despite recent prosperity due to a technology boom, the restrictive zoning policies have led to narrowly concentrated gains and a dramatic increase in the cost of living. Thus, while San Francisco has boomed, the city has seen net migration. This trend has played out across the country. According to the Equality of Opportunity Index from Harvard, people are actually leaving many of the cities that have the greatest economic mobility.

Ann Arbor has a similarly restrictive zoning policy. As I laid out in “Rising to New Heights”:

The current zoning policy of Ann Arbor limits the quantity and height of development in Ann Arbor. While there has been a significant increase in high-rise development since the height restriction was loosened in 2004, much of Ann Arbor, particularly outside of the urban core, remains single-family style housing. This has driven up rents and has made it so residents of Ann Arbor spend a staggering 37.4% of their income on rent versus 30.9% nationwide, despite a smaller living space.

Contrast this to a place like Texas that has free zoning laws. These zoning laws have allowed for an affordable supply of housing, which has encouraged an influx of migrants from more prosperous areas, such as San Francisco, despite fewer opportunities. While Texas has a low rate of unemployment, many states with high rates of in-migration also have unemployment rates above the national average. It is for this reason that while people once moved in pursuit of opportunities, they are now moving to places they can afford.

This provides a golden opportunity for Ann Arbor. Ann Arbor is a great place to live and is more prosperous than much of Texas. By liberalizing its zoning laws and embracing development, so that housing is affordable, Ann Arbor can become the economic hub of Michigan.

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