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EHI studies interstate effects of regulatory barriers to housing affordability, and possible federal remedies for them (2015)

 

Regulatory barriers to housing growth and affordability in some of the nation's wealthier states are interfering with the ability of low- and moderate-income Americans to move into those states for better economic opportunities--according to a number of recent studies.EHI is examining whether Congress would have the authority to prohibit unwarranted state and local regulatory restrictions on housing supply ("exclusionary housing policies") that have interstate effects.

     Studies

One major study indicates that a century-long trend of convergence in the average per-capita incomes of different States of the Union has slowed considerably since about 1980. Peter Ganong and Daniel Shoag, Why Has Regional Income Convergence in the U.S. Declined? (Jan. 2015) (posted at: http://scholar.harvard.edu/files/shoag/files/ganongshoagjan2015.pdf). Among the evidence presented in that study is that:

  1. The tremendous housing price inflation in wealthier states since the 1970's is responsible for slowing that migration and convergence;
  2. The greater restrictions on housing growth in wealthier states since that time are strongly associated with that inflation; and
  3. Almost a third of the rise in economic inequality among American states since 1970 (when American incomes were, by historical standards, most equally distributed) may be accounted for by those trends.

EHI recently has reviewed other findings that are consistent with that study. For example:

See, e.g., David Schleicher, City Unplanning, 122 Yale Law Journal 1670, 1693-94 (2013). Also, The Atlantic magazine calculated in early 2014 that:

Derek Thompson, Why Americans Stopped Moving to the Richest States, TheAtlantic.Com, Jan. 10, 2014.

     Legal considerations

Congress may regulate a state or local policy that has harmful economic effects extending into other states, under the Commerce Clause of the U.S. Constitution. Also, a state or local policy that effectively prevents low- and moderate-income Americans from moving to that state arguably violates the Constitutional right of Americans to migrate freely from one state to another. Such a policy also may violate the individual right to equal protection of the laws.

In EHI's view, Congress may prohibit exclusionary housing policies in any or all states, if it concludes that those policies affect commerce in other states or violate individual Constitutional rights. Although we are not aware of any consideration of those interstate effects yet in Congress, and although there are complex questions as to what form of Congressional action might be advisable, potential authority seems to exist.