The city of Austin is laying the groundwork for further deregulation of neighborhood communities, which they say will improve “supply” and “affordability”. However, a newly published study, “Inequality, Not Regulation, Drives America’s Housing Affordability Crisis” by preeminent academic researchers, dismantles the familiar claims that land‑use deregulation facilitates housing supply and creates affordable housing. In fact, in cities like Austin, these deregulation policies can actually make housing less affordable. The study concludes that the real driver of America’s housing affordability crisis is income disparity in the housing market.
Here are important points the study makes:
1. “[T]he key claim used to sell deregulation to the public, improving affordability, does not hold up to scrutiny”. In other words, upzoning our neighborhoods (such as H.O.M.E.) does not increase affordability.
2. The claim that housing unaffordability is caused by an insufficient supply of new housing – supposedly constrained by restrictive land‑use regulations, such as zoning – is not supported by the evidence. “[T]he links between regulation and supply, and between supply and prices, are weak at best.”
3. Housing supply typically increases in response to rising demand and prices, not because of deregulation.
4. “Filtering”—in which market‑rate housing becomes available to lower‑income households after higher‑income households move into more expensive homes —is highly conditional and context‑dependent. In fact, in high‑demand regions such as Austin, the dominant pattern is upward filtering, where lower‑priced homes are taken by higher‑income households, reducing affordability. In fact, any downward filtering is “unlikely to generate widespread affordability in any meaningful timeframe.”
5.. Housing unaffordability has been driven by rising regional incomes that intensified housing demand and drove up prices, leaving non-high-wage workers unable to keep pace—particularly in rapidly growing, highly educated, high‑income metros. As a result, the affordability crisis is most severe for lower‑income households.
6. “Upzoning and deregulation likely have immediate positive impacts on land values and increase wealth inequality between landowners and renters” In other words, those who obtain new entitlements through upzoning and deregulation stand to profit, while the likelihood of affordability is negatively affected.
7. “The idea that today’s housing affordability crisis can be addressed by a simple swing of the pendulum back to a mythical free market for construction – through overriding local authority over zoning and regulation – could well be another “great planning disaster,” along the lines of other great historical mistakes in urban policy for which we have paid dearly afterwards.”
8. “It is unrealistic to think that we can deregulate and build our way out of the affordability crisis with market-rate housing… in any reasonable time frame”.
Long-time readers know that the myth that the land development code is the cause of unaffordable housing has been repeatedly busted in CNC reports here, here, and here. But almost two years into H.O.M.E. phase 1 and a year and a half into H.O.M.E. phase 2, and with the city gearing up to further deregulate land use, this 2026 paper by four planning experts is particularly timely.
Stay tuned for further discussions of H.O.M.E. and the City’s deregulation plans. Facts matter.