Last week, I wrote about the relationship between property rights and human flourishing. Writing on Forbes.com, Chuck DeVore provides further evidence of the value of property rights in lifting individuals out of poverty. Citing a report from the Joint Center for Housing Studies of Harvard University, DeVore concludes, “There is a close connection between the cost of housing, regulatory barriers in the housing market—for instance, restrictive zoning—and poverty.”
The report shows that residents in states with the most restrictive land-use regulations–California and New York–also have the highest levels of poverty. This alone does not indicate a causal relationship. However, the report found that renters paid a much higher portion of their income for housing in California and New York.
California has high poverty, it regulates land the most, has the highest rents and has the second-highest overall cost-of-living behind New York. On the other hand, Texas has the second-lowest poverty rate, the lightest regulatory burden for land use, the least expensive rents and the lowest overall cost-of-living.
Land-use regulations increase the cost of every type of development, including housing. Those costs are eventually passed onto consumers in the form of higher rents and home prices.
The sad irony is that, while driving up the cost of housing through regulations, California and New York have also established extensive welfare systems. In short, they arbitrarily increase the cost of housing and then force taxpayers to pay for programs to benefit those who can’t afford the higher housing costs.
The solution is to repeal land-use regulations, not more welfare schemes.