Reason‘s Peter Suderman recently interviewed Ryan Avent about his new piece, The Gated City. I’m looking forward to finding some time next week to read the book.  Judging from Avent’s interview responses, his analysis sounds accurate: Land use laws are distorting the costs of housing in older, denser, and more desirable US cities. That is to say, because of the restrictions that zoning, massing, preservation, and other rules have placed on the supplies of local housing stocks, demands cannot be met, and the prices of land in high-demand regions (New York City, San Francisco, Boston, etc.) exceed those that would naturally arise from the strengths of their local economies.

By itself, the consequence of higher regional housing costs isn’t a reason to gut local land use laws.  High housing costs have driven a lot of redevelopment, and have created a good amount of new wealth.  Furthermore, the benefits of land use regulation in the realms of aesthetics, logistics, historic preservation, and the environment can be priceless.  But the dilemma does suggest that policymakers should be cognizant that they are engaging in a balancing act.  On the issue of such mixed incentives, I liked this:

Reason: You argue that density has a lot of benefits for residents. But if greater density lowers housing prices, then don’t local homeowners have a pretty strong economic incentive to keep density low?

Avent: Yes—up to a point. Limits on development are somewhat like cartels or unions in this way: They allow insiders to capture rents, but only to the extent that they don’t put themselves out of a job in the process. In the short run, productive agglomerations are fixed, but in the long-run they’re mobile. If development rules in Silicon Valley drive enough people to other, more affordable agglomerations, then other innovators may eventually find it advantageous to follow, and the region may lose the unique factor that created the opportunity for rent-seeking in the first place. And in general, this dynamic is one reason why it’s a bad idea to subsidize homeownership. Renters are happy for … costs to stay low.

Avent advocates institutional reforms that would make allowances for greater overall densities by offsetting new development restrictions in certain areas with more lenient guidelines in others. I think a good aesthetics framework can also play a role in successful upzoning.  85 years after Euclid, and much longer since the introduction of local building codes, it should go without saying that, done wisely, land use regulation can be a public good.  But Avent is wrestling with what has become a more urgent topic: In the choking of the present economy, bad land policy has been, and continues to be, an unnamed culprit.  It’s a point that needs to be made.