Single Family Zoning is The Most Expensive Housing Policy Choice

Originally posted on Quora December 1, 2021

A little mentioned problem in any discussion/debate about affordable housing shortages is the higher public costs of single family housing. Single family homes have been a staple of the American dream and middle class achievement forever. Everyone aspires to own one including me, but the higher burden they place on infrastructure, public services and the environment receive scant criticism. Roads, electricity, water, sewage, drainage and even public transportation, garbage collection, fire and police departments cost more per capita in areas where single family houses are the sole or primary domicile. The virtue of housing density is that it creates a lower tax burden and generates more revenue, especially if we used land value capture in lieu of property taxes, than single family housing.

“Smart Growth America tested the model for Madison by comparing a compact development scenario to base-density and low-density scenarios for the Pioneer District, a largely vacant tract of 1,400 acres that the city is considering redeveloping. The three scenarios assumed 4,779 total residential units and varied the total acreage used. The low-density scenario, at 4.1 units per acre, represented the highest annual cost to the city ($14.3 million in services) and generated the lowest amount of revenue per acre ($6,500). The base-density scenario, at 9 units per acre, would cost the city approximately $13.4 million in services and generate about $11,000 in revenue per acre. The compact scenario, at 16.2 units per acre, had the smallest impact on the city’s budget ($12.7 million) and generated the most revenue per acre ($16,000).”

Another rarely mentioned fact is that the development of suburbs has been heavily subsidized since the New Deal. A mortgage interest and property tax deduction is afforded to homeowners but there is no equivalent deduction for renters in urban cores. The FHA, a remnant of the New Deal housing programs, still insures low interest rate mortgages from HUD approved lenders for single family homes but provides no equivalent for condos in mixed use developments if the building is more than 35% commercial. There is also no equivalent for people leasing condos unless you meet HUD’s low income threshold (80% of median area income). Of course, the biggest subsidy to the burbs is the interstate highway system, without which these bedroom communities on the fringes of cities could not exist.