As 'Blue' States Rezone Their 'Red' Suburbs, It's Not Really About 'Affordable Housing'

As 'Blue' States Rezone Their 'Red' Suburbs, It's Not Really About 'Affordable Housing'
A site plan for the city of Capistrano's new city hall, with a new affordable housing complex next to it. (Screenshot via the City of San Juan Capistrano)
J.G. Collins
A recent opinion piece in The New York Times titled "The Era of Shutting Others Out of New York’s Suburbs Is Ending" discussed a growing trend among state legislatures, particularly in "blue" states, to force changes in local zoning laws in the suburbs to allow more multifamily housing.
The zoning changes to combat what the Biden administration calls "exclusionary zoning" are high on President Joe Biden's governing agenda, and he included it in his original $2.3 trillion infrastructure bill. A White House fact sheet states:

"For decades, exclusionary zoning laws—like minimum lot sizes, mandatory parking requirements, and prohibitions on multifamily housing—have inflated housing and construction costs and locked families out of areas with more opportunities."

The blog of the White House Council on Economic Advisers couched "exclusionary zoning" in racial terms in this statement:

"Exclusionary zoning laws place restrictions on the types of homes that can be built in a particular neighborhood. Common examples include minimum lot size requirements, minimum square footage requirements, prohibitions on multi-family homes, and limits on the height of buildings. ... Zoning laws have been used to discriminate against people of color and to maintain property prices in suburban and, more recently, urban neighborhoods."

The impetus for these initiatives seems to come from The Century Foundation, a Washington and New York nonprofit that bills itself as "a progressive, independent think tank that conducts research, develops solutions, and drives policy change to make people’s lives better" and pursues "economic, racial, gender, and disability equity in education, health care, and work."
The Century Foundation and the opinion piece from The New York Times both couched so-called exclusionary zoning in racial terms almost the same as "red-lining," the now-illegal bank practice of refusing to make mortgage loans to black homebuyers in white neighborhoods.

A Baleful History of Discrimination and Segregation in Housing

There's little doubt that U.S. housing policy was historically racist. New Deal programs such as the Federal Housing Administration (FHA), created by President Franklin Roosevelt to guarantee mortgage loans for home ownership, allowed tens of millions of Americans to buy their first homes. For most, those homes were the first real property ever owned in their family after generations of U.S. citizenship.
But the FHA lending rules were avowedly racist and blatantly segregationist. A 1936 manual for FHA underwriters, for example, described "infiltration" by "inharmonious racial groups." It also stated that "if a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial classes" and warned against an "incompatible racial element" in public schools.

Shamefully, the bigotry continued after World War II. Returning black veterans were largely denied benefits—ostensibly available to them as a reward for their military service—by insidious means. Veterans Administration (VA) loans, for example, were underwritten by the VA, but they first had to be made by private financial institutions that discriminated on the basis of race.

“In New York and the northern New Jersey suburbs, fewer than 100 of the 67,000 mortgages insured by the GI bill supported home purchases by non-whites,” historian Ira Katznelson said. In Mississippi, only two of 3,200 loans went to black veterans.


No one should deny the United States' history of denying black people their right to buy or rent a home on account of race. But we're 60 years from the March on Washington and nearly 60 years from the Civil Rights Act of 1964. Housing discrimination is not only illegal; laws against it are also vigorously enforced.

Today, the biggest barriers to homeownership or a residential lease are income and wealth. Housing—and particularly home ownership—in even a middle-income community is an expensive commodity that requires a significant level of income, and a significant percentage of that income has to be spent on it.

Moreover, housing is aspirational. Saving for the first home is a rite of passage for young people and particularly couples. A vivid childhood memory from more than 50 years ago is my mother getting upset when another relative chastised and embarrassed his wife who had ordered a shrimp cocktail appetizer at a restaurant where the families had gathered.

"Do you want that house or do you want that shrimp cocktail?" he asked.

The wife demurred and canceled the order; but my mother, no shrinking violet, shot dagger eyes at the husband for the rest of the evening and later warned my dad that he had better never embarrass her the way my relative had embarrassed his wife.

But that's how it was. You scrimped, saved, sacrificed, and delayed gratification to come up with a down payment, and then you bought the biggest home you could afford in the best neighborhood you could find.

That no longer seems to be the case. A New York state Senate sponsor of a law to allow rezoning in upscale suburban areas was quoted as saying, "We need to end the policy of exclusionary zoning that disadvantages lower- and middle-income New Yorkers.” It now seems that progressives such as the senator are set to create “affordable” housing in even the most expensive suburbs and frame an economic issue in divisive, racial, and class terms. As with the path taken by the Biden administration with student loan forgiveness, “equity”—not thrift, not delayed gratification, not personal responsibility—rules the federal and New York state governing agendas.
More realistic—and we more cynical—Americans who look at what progressives call “exclusionary zoning” nowadays recognize that economics, not race, is what's at issue. I personally know scores of hard-working, upper middle-income white people—well-paid professionals with advanced degrees from Ivy League universities—who can't afford to live in wealthy towns such as Greenwich, Connecticut; Saddle River, New Jersey; or Chappaqua, New York. But with the accusatory rhetoric of race, even conservatives tend to demur; they're cowed and seem willing to accommodate the demands of progressives, if not accede to them.
The progressive chimera of equal outcomes for all, regardless of ability, education, or accomplishment, seems to be advancing by rule of law.

The Politics of 'Affordable Housing'

But the cynics among us note that these affordable housing initiatives are also likely political, particularly in "blue" states.
Many of the wealthy towns that are being targeted to be rezoned for multiunit dwellings here in New York state, for example, tend to vote Republican. But large, multiunit dwellings in towns and cities zoned for single-family homes will draw lower-income residents who tend to vote with the Democrats. That will affect votes for school boards, town councils, and the seats in state legislatures to expand the political influence of the Democratic urban strongholds to surrounding suburban areas, too.
Adding lower-income residents also causes a diminution of per-capita public services. Part of the appeal of wealthy neighborhoods, and why they're aspirational for most Americans, is the quality of public services, particularly public schools. But those services are funded, most often, by high property taxes on single-family homes that fund a generous per-capita town budget. But a large, multiunit dwelling will distort that per-capita budget because more people, paying a lower per-capita property tax, will be drawing on the town services.

Exclusionary Zoning, But...

Nobody—and certainly no politician—wants to oppose affordable housing and be perceived as a "Mr. Potter," the "warped, frustrated, old man" who obstructed the homeownership dreams of people he viewed as "rabble" in "It's a Wonderful Life," the beloved Christmas classic. But the irony of these urban politicians who will impose less-restrictive zoning in wealthy suburban areas for the purported cause of "affordable housing" is that they do so while ignoring flagrant abuses of existing affordable housing by the upper-income people in their own cities.
Lionel Barrymore as 'Mr. Potter' in the classic Christmas film "It's a Wonderful Life." (Liberty Films, Public domain, via Wikimedia Commons)
Lionel Barrymore as 'Mr. Potter' in the classic Christmas film "It's a Wonderful Life." (Liberty Films, Public domain, via Wikimedia Commons)
A 2015 audit by the Housing and Urban Development inspector general, for example, found that, nationally, more than 25,000 public housing families had incomes exceeding legal limits and enjoyed taxpayer-paid housing subsidies of more than $100 million. More than 10,000 of the units were in New York, the state asserting the greatest need for suburban zoning changes. But the New York Housing Authority that manages these apartments "has no policy" to remove over-income tenants! They've been allowed to stay!
Abuse also occurs with other affordable housing built in private apartment houses. In New York City, developers can build larger buildings if they provide a certain percentage of affordable units. But since means testing only occurs on original occupancy, people whose income grows beyond the limits—and sometimes well beyond the limits—are able to continue living in their apartments at the affordable rent.
The abuse persists because New York and most other states means test residents only when they first apply for residence and not in later years. For example, a stockbroker who makes $400,000 per year accessed a two-bedroom Manhattan apartment as "affordable housing" for slightly more than $722 per month because, he claimed, he was between jobs and had a low income in the year he applied.


It's time to remove the veil of public and affordable housing. Cities need to be transparent in their policies and commence means testing of residents in public and affordable units at least triennially. Those who are "over income" need to be evicted and assisted in finding housing appropriate to their better means.

Older "empty nest" residents occupying two- and three-bedroom apartments in public and affordable housing whose children no longer reside with them should be downsized to single-bedroom units to free up the units for struggling families.

Finally, and perhaps most of all, "blue" cities such as New York need to rethink their "sanctuary city" policies. Subsidized housing is a form of welfare, and as Nobel laureate economist Milton Friedman told The Wall Street Journal in 2006, "You can't have open immigration without largely the elimination of welfare." It's aggressively antithetical and disingenuous for politicians to demand zoning changes in suburbs to accommodate affordable housing while simultaneously defending sanctuary cities that welcome illegal immigrants.

Suburban leaders shouldn't be cowed by demands for "equity" from their urban counterparts.

J.G. Collins is managing director of the Stuyvesant Square Consultancy, a strategic advisory, market survey, and consulting firm in New York. His writings on economics, trade, politics, and public policy have appeared in Forbes, the New York Post, Crain’s New York Business, The Hill, The American Conservative, and other publications.