Wisconsin can follow suit and cut regulations
The dire need for more houses in America has even regulation-heavy cities like Los Angeles, New York City, Minneapolis and St. Paul streamlining rules — and providing a playbook for Wisconsin.
By reducing public-hearing periods and City Council votes, Los Angeles has cut the approval wait time for some apartment buildings from about a year to 60 days, according to The Wall Street Journal. In New York City, voters just voted in favor of three affordable housing ballot proposals, supported by developers and opposed by city officials, to fast-track approvals.
Minneapolis in 2020 reduced zoning barriers to duplexes and triplexes, though it hasn’t ended other rules that make them difficult to build. In 2023, St. Paul went a step further by reducing minimum lot sizes.
There is a growing recognition in states ranging from California to Montana to Washington that government regulation can stifle home construction and affordability, according to Tobias Peter, senior fellow and co-director of the American Enterprise Institute Housing Center.
“But too often they only free the market for affordable housing and not market-rate housing,” he says. “That’s a problem and inconsistent.”
St. Paul, for instance, limits developers to four to five units per lot, said Martha Njolomole, an economist at Minnesota’s free-market Center of the American Experiment, “but developers can build more than five units if some units are ‘affordable,’ begging the question, if it’s feasible to build more than five units on a lot, why not just allow it without the inclusionary zoning requirement?”
There is also concern about losing local control in some areas.
Minnesota’s “Starter Home Act,” for instance, would have pre-empted local zoning by requiring cities to approve duplexes, triplexes and townhomes in all residential zones, including single-family zoned areas. The bill would have allowed more than one unit on single-family zoned lots, authorized accessory dwelling units, or ADUs, reduced minimum lot size requirements, and repealed aesthetic mandates.
Cities strongly opposed to pre-emption — losing local control to the state over land use and zoning decisions — prevented the bill’s final passage.
“Local government’s opposition to pre-emption seems fair in some ways, which means that ideally, cities need to lead on reform,” said Njolomole.
The cause of the housing shortage is a simple one, according to John Phelan, another economist for the CAE in Minnesota.
“We don’t build enough houses,” he says.
He points to an analysis he posted earlier this month on national housing stock trends over the past 20 years. In 2005, 2.1 million houses were started in the United States, but that trend “fell off a cliff.” New home construction fell to 554,000 by 2009. The number of housing starts has fluctuated since then but has been on a downward drift since 2022.
There are numerous reasons more homes aren’t being built, according to AEI’s Peter. But “government regulations are the root cause. If we legalize homebuilding and make more lots available, builders will deliver attainable homes. Our over 30 case studies show that builders can overcome labor shortages and interest rates, but they cannot overcome restrictive government regulations.”
There are a number of factors that have contributed to the housing shortage in Wisconsin, said Jim Steineke, director of government affairs at the Badger Institute.
“The number of lots being created is at historic lows,” he said. “There are skilled labor shortages. Regulatory hurdles make development pricey and the process lengthy. Higher interest rates are keeping people in their homes, where they have much lower rates.
“According to the National Association of Realtors, 25 percent of the cost of a home can be linked to regulatory burdens.”
The Badger Institute in June released a report offering policy solutions for addressing the housing crisis and restoring the American Dream in Wisconsin. “Wisconsin Housing: High Prices, Low Inventory, Workable Solutions” is a compilation of a year of research into and reporting on how to make housing more attainable in the Badger State.
Scholars at AEI have developed a Housing Abundance Success Sequence that Ed Pinto, Peter’s co-director at the AEI Housing Center, says will “unleash a swarm of supply.”
Under this model, government entities would:
- Allow small-lot flexibility for new subdivisions, flexibilities on home dwelling type and lot splits on existing lots, and the flexibility to build homes near jobs.
- Enable by-right zoning, where a project is approved automatically if it meets all the local zoning and building codes, preventing projects from being delayed or killed by a discretionary review from a government body.
- Follow the Keep it Short and Simple (KISS) principle instead of micromanaging the process.
In the Wisconsin Capitol, a number of reform measures are working their way through the legislative process, according to Steineke. The most notable is a “truth in planning” bill that would help eliminate some of the uncertainty over local permitting approvals.
Among other things, the bill would require municipalities to approve residential housing developments if they meet all existing local requirements at the time of application, require local zoning ordinances to align with a community’s comprehensive plan, and require a simple majority vote (instead of a supermajority) of the local governing body to amend a zoning ordinance.
Michael Jahr is former Vice President at the Badger Institute, current CEO of Jahr Productions, and Producer + Director of Liberty at Stake: The Joshua Glover Story.
Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.
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