A widely-cited 2023 study claiming that loosening zoning restrictions doesn't lead to more affordable housing has been thoroughly discredited after researchers found critical errors in nearly all of its data points, according to a new analysis by Pacific Research Institute. The original Urban Institute paper, which used machine learning to examine newspaper articles about zoning changes between 2000 and 2019, had become a key weapon for anti-development activists opposing housing reforms. But the controversy has now ended with the original consensus intact: relaxing building regulations does increase housing supply and help control prices.
The American Enterprise Institute's review of the Urban Institute study uncovered severe problems with the underlying data. Of the 180 zoning reforms the original study analyzed, AEI found that 60 should be thrown out entirely due to duplication, wrong geographic labeling, or policies affecting only commercial or industrial zones. Among the remaining 120 reforms, another 118 were either misclassified as more or less restrictive, weren't actually major city-wide changes, or lacked enough information to determine their direction. That left just two valid results from the original 180—a sample size too small to draw meaningful conclusions. In contrast, AEI's own analysis found that straightforward, density-boosting zoning reforms can generate steady housing supply growth of 1% to 2.5% per year.
The original Urban Institute paper had concluded there was "no statistically significant evidence that additional lower-cost units became available or moderated in cost in the years following reforms," according to the journal Urban Studies publication. The researchers theorized that new buildings might actually raise costs by bringing amenities that improve a city's overall housing market appeal. In their response to AEI's critique, Urban Institute researchers acknowledged one of their goals was "to assess what machine learning combined with news articles can and cannot reliably capture." Expert observers sided decisively with AEI, with Brookings Institution fellow Tracy Hadden Loh calling the Urban Institute research "huge yikes" on social media, while the Roosevelt Institute's Ned Resnikoff titled his newsletter analysis "New Frontiers in Bad Housing Policy Research."
Most housing experts agree that government regulations play the largest role in driving up rental and purchase prices, regardless of a region's geographic limitations. The debate matters because zoning reform has gained momentum in legislatures nationwide as a strategy to boost construction and reduce costs. Even the Urban Institute appears to have shifted its position: a separate April study from the same organization examining specific upzonings in New York found that seven neighborhood-scale changes collectively produced more than 4,000 additional housing units within four years compared to similar non-upzoned parcels. That newer research was particularly struck by upzoning of former industrial land near higher-income neighborhoods, which "made way for many market-rate homes and a large number of units specifically for households with low and moderate incomes." The professional consensus that liberalizing zoning leads to more construction and lower prices has now emerged from the controversy unscathed.