Policy Study

Smart Growth and Housing Affordability

Evidence from Statewide Planning Laws

Executive Summary

State legislatures across the nation are considering statewide planning reforms to grapple with population and urban growth on the metropolitan fringe. Many of these efforts are driven by theoretical concepts of urban planning and practice, and lack a rigorous assessment of their possible impacts and unintended consequences. Nevertheless, the impacts on the quality of life for households and families can be significant, and sometimes they can have unintended negative side effects. This is probably most evident in the case of housing availability and affordability.

Most “Smart Growth” planning reforms adopt as a core principle the goal of increasing housing affordability and diversity. This goal, in fact, is one of the leading justifications for limiting so-called “urban sprawl.” Low-density residential and commercial development, the argument goes, reduces the overall quality of urban life by increasing congestion, promoting social isolation and segregation, and inefficiently using land. More compact higher density land-use patterns, sprawl opponents continue, would improve the quality of life for most people and produce a richer range of housing choices at affordable prices. Centralized land-use planning at the state, regional, and local levels, tied to statewide planning goals, is often promoted as the solution. More than a dozen states have adopted statewide growth-management legislation using this general framework, including states as diverse as Florida, Oregon, Washington, Maine, and Tennessee.

Surprisingly little analysis has examined the real-world impacts of these programs based on their performance despite the potential for significant, negative side effects. Decades of scholarly research has shown growth controls can reduce housing affordability if they increase costs and limit the supply of new units. Yet, with the exception of a few case studies of individual cities and regions, almost no attention has been paid to the practical effects of implementing this new wave of statewide planing reforms; virtually all the attention has centered on designing and passing Smart Growth legislation and implementing the plans. Smart Growth and Housing Affordability: Evidence from Statewide Planning Laws begins to fill this void by assessing the effects of statewide planning on the price and affordability of housing in three key states: Florida, Oregon, and Washington.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.