Housing slowdown blamed on local rules

Boston-area cities and towns are driving up housing prices by forcing developers to conform to an array of land-use rules that make it difficult to build new homes, according to a report that will be released this week.

The report, which is based on a two-year survey of land-use rules in the 187 cities and towns within 50 miles of Boston, points to locally mandated lot sizes as large as 2 acres and overly restrictive wetlands and septic rules as the most significant barriers to housing construction. It also cites local prohibitions on irregularly shaped lots and ''growth caps" limiting the number of units that can be built in a year. The survey did not include the city of Boston itself, where development is denser, or Cape Cod.

Edward L. Glaeser, a Harvard University economics professor and the lead author of the study, said the oft-stated belief that housing in the Boston area is expensive because land is scarce is not accurate. Instead, Glaeser said, ''the housing affordability crisis in Boston is manmade, created fundamentally by regulation."

''I'm certainly not advocating the Houston solution -- I'm not advocating unfettered growth with no attention to the environment or to Boston's historic character," Glaeser said. But ''we're hurting the region, we're hurting the country, by not letting the region develop to its economic potential."

Glaeser is director of Harvard's Rappaport Institute for Greater Boston, which collected the data on land-use rules with the Pioneer Institute, a Boston think tank with a generally conservative bent. Business groups, including the Counselors of Real Estate, the Homebuilders Association of Massachusetts, and the Massachusetts Lumber Retailers Association, paid for the survey, but not Glaeser's analysis of the resulting data or his report.

Glaeser proposes several possible solutions, all of which would give the state a greater role in local development. He says Massachusetts could withhold state money from communities that block development, or create a single entity or regional entities that could overrule local officials. It also might limit lawsuits against developers by forcing losing plaintiffs to pay the developer's legal costs, or replace local land-use regulations with impact fees -- set by the state -- that developers would have to pay to cities and towns.

Several recent studies have found that the high cost of housing in the Boston area is prompting many residents, especially younger people who can't afford to buy a first home here, to decamp for other states. Massachusetts is the only state that lost population in each of the past two years, according to the US Census, and businesses are increasingly worried about attracting and retaining talented workers.

But there is little doubt that Glaeser's proposals will meet fierce resistance. Mark Whitehead, the town planner in Lincoln, one of the towns cited in the report for putting up barriers to development, said residents there value open space and spread-out, country-style living.

''We're definitely working toward trying to bring more affordable housing into the town. But Lincoln is very particular about how that's going to look and those types of things," Whitehead said. ''A lot of towns give lip service to retaining their rural character, and Lincoln actually does it."

On 85 percent of the land in Lincoln, Whitehead said, the minimum lot size is 80,000 square feet, or nearly 2 acres.

Marc Draisen of the Metropolitan Area Planning Commission, part of a coalition of groups that advocates ''smart growth" instead of urban sprawl, said Glaeser's criticism of large lot sizes is ''pretty much on target." But Draisen said Glaeser's focus on environmental rules is misguided.

''I'm sure some communities are using septic and water rules to keep out development, but I think there are also some legitimate concerns," Draisen said.

In the 1960s, the report says, there were 172,459 housing units permitted in the 187 communities surveyed. In the 1980s, the figure fell to 141,347, and in the 1990s it plummeted to 84,105. If the pace of construction since 1990 had equaled the rate of 1960 to 1975, the study argues, the median house price in the region would be $276,100, instead of the current $431,900.

''The law of supply and demand dictates that the only real path to affordability is through more supply," the report states.

The idea that Massachusetts must produce more housing in order to bring down prices is frequently heard on Beacon Hill, and developers have long complained about onerous rules.

But homebuilders say Glaeser breaks new ground by attempting to calculate the actual impact of regulations on construction and price.

''What he does is take all of the anecdotal stuff we've been talking about for years and says, 'Here it is,' " said Finley Perry, president of the Homebuilders Association of Massachusetts. ''The real question now will be whether we can begin to start thinking about what we do want to have, instead of what we don't want to have."

Glaeser found that large minimum lot sizes have the most potent impact on price: An additional acre in minimum lot size raised the median sales prices of homes in a given town by 19.5 percent in 2001. When communities increase minimum lot sizes by a quarter of an acre, about 10 percent fewer homes are permitted, Glaeser found. When towns impose wetlands rules that are stricter than what the state requires, new construction appears to fall by about 10 percent, and stricter rules for septic systems decrease construction by 4 percent.

According to the study, 95 communities zone more than half of their land for lots of at least 1 acre; 27 communities zone 90 percent of their land for lots of at least 1 acre; and 14 communities require minimum lot sizes of 2 acres on more than 90 percent of their land.

The report points to Lincoln, Weston, and Concord as towns that have used land-use rules to quash development. Together, those three towns include more than 61 square miles, or 39,000 acres. But they contain only 12,889 homes, meaning the average home sits on more than 3 acres. Between 1980 and 2002, there were only 1,746 single-family homes permitted in those towns.

''There's no question that at the local level, the zoning boards and town planners are doing exactly what their citizens want them to do," said Glaeser, who recently moved to Weston. ''I'm not suggesting that there is anything unethical or morally wrong about what they're doing. But the region needs to find out how it's going to accommodate new housing, and it also has to realize that citizens of Lincoln or Weston, or homeowners in any community, don't have an incentive to create affordable housing."

In the last two years, Beacon Hill has taken some steps to spur housing construction. In 2004, Governor Mitt Romney signed a measure under which the state will pay communities to approve new residences near transit stops, in town centers, and in abandoned industrial areas. Under that law, called 40R, the state pays $1,000 per unit once local officials change their zoning to allow such construction, and an additional $3,000 per unit once building permits are issued. Twenty percent of the new units must be less expensive than what is available on the market.

Many cities and towns cite additional school costs as a primary reason for their resistance to new residential development. So in 2005, Romney signed another law requiring the state to make up the difference between what communities collect in property taxes from new homes and the cost of educating the children who move into them. That law, known as 40S, is supposed to complement 40R.

State officials say those approaches are preferable to withholding money from towns that block development or overruling local officials on zoning.

''We think that if cities and towns can realize how positive more centered, compact growth can be, then they'll encourage more of it," said Anthony Flint of the state's Office for Commonwealth Development. ''The proof will be when a North Reading or North Andover establishes a district like this that has slightly more dense, compact growth. They'll see that it works out, they'll see that they get more benefits out of it, and there will be a nice district in town with a sense of place and it will just sell itself."

But Glaeser notes that no town has opted for 40R yet, though state officials say about a dozen are currently considering it. He says the state should be wary of building its housing strategy around the appeal of public transportation, and that it shouldn't ignore Americans' appetite for single-family houses and yards.

''It is foolish to overestimate the latent demand for public transportation. Americans are enormously fond of their cars, for good or ill," he said. ''In terms of reducing housing prices, you have to think about car-based living. You just have to do it in an intelligent, livable way."

Scott Greenberger can be reached at greenberger@globe.com.