Jan 13, 2020

Nebraska Joins Maryland, Virginia, and Oregon with Proposal to Increase Home Building

Nebraska and other states aim to make housing more affordable
Salim Furth Senior Research Fellow

We’ve all heard about out-of-reach housing prices in places like Silicon Valley and New York City. But in recent years, the cost of housing has also been rising fast in places known for steak rather than seafood. Indeed, while home prices in the middle of the country remain far below those in highly regulated coastal markets, they’ve often been increasing at a faster rate.

As I detailed in a recent piece for City Journal, these rising costs prompted bipartisan majorities in Arkansas, North Carolina, Oregon, and Texas to enact legislation in 2019 giving homeowners and builders regulatory relief with the aim of increasing home building and home affordability.  

Just last week, a bill (LB 794) was introduced in Nebraska’s legislature that would limit local regulatory powers by allowing two-, three-, and four-family homes, as well as townhomes and “cottage clusters,” on all residential lots in Nebraska cities of 5,000 residents or more. The bill, which is very similar to a recently enacted Oregon law, is part of the next wave of legislative proposals, including proposals in Virginia and Maryland.

As already noted, the motivation for these bills is the shocking rise in housing costs. For instance, single-family home prices in the Omaha metro area rose 41 percent from 2012 to 2019. In Lincoln, they grew 34 percent during the same period. Home prices in the state’s smaller areas—from Beatrice to Scottsbluff—rose between 31 and 53 percent. For reference, single-family home prices in the New York City and Washington, DC, metro areas grew 27 percent over the same seven years, and the median home price nationally grew 47 percent. Allowing more homes that economize on land, building materials, and utility costs will bring homeownership and market-rate rents into reach for more Nebraskans.

Housing affordability is not the only reason to reconsider single-family-only zoning. Property rights—the rights to own, to build, to create, and to sell—are central human rights. They allow us to choose where we live, how much we work, and with whom we spend our time.

Property rights are also what allow Americans to solve problems, such as housing unaffordability, without government coordination and direction. With strong property rights, those who own land respond to high prices by building more homes, which brings prices back down.

When land use is strictly regulated, the self-correcting market response is impaired. The predictable result in the most regulated and costliest parts of the country, including coastal California and Massachusetts, is a push for rent control and subsidies. These measures help direct beneficiaries, but they further impair the housing market’s ability to absorb growing demand.

The Nebraska and other bills reduce the reach of single-family-only zoning, which is a substantial limitation on property rights because it narrows the possible uses of most families’ most valuable asset. Loosening that limitation to allow the same kind of use—housing—at a slightly higher intensity is a modest but real movement toward expanded property rights and housing affordability.

An interesting distinction among the various new bills is which areas they cover. Like Oregon’s law, the Nebraska proposal would only cover cities above a certain size, exempting unincorporated areas and small towns. (Only 32 cities in Nebraska qualify, while 498 small cities and villages would be exempt.) By contrast, many urban areas in Virginia and Maryland are unincorporated, so exempting unincorporated areas would not work in those states. The Virginia proposal covers the entire state; the Maryland proposal covers census tracts near transit, with concentrations of jobs, or with high incomes.

Individuals who prefer living in a neighborhood of only single-family homes have many options. First, many such neighborhoods exist, far more than neighborhoods of diverse housing styles. Second, newly-built luxury neighborhoods are often in homeowners’ associations, which maintain various private regulations, including bans on dense housing, that go far beyond the requirements of zoning. Finding a single-family neighborhood in suburban America is easy; finding a duplex is hard.

Nebraska’s bill, and others like it, would restore to American cities an attribute that made them such attractive places in the past: high-quality homes at affordable prices.

Photo by David McNew/Getty Images

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